This tax court case is about a donation being disallowed (not a qualified receipt) from a church that stopped paying employment taxes for their employees. Sound familiar? It should, this is part of the Indianapolis Baptist Temple (IBT) saga. Please read our post from last week on what really happened with IBT.
Mr. Taylor, made a donation of $8647 in 1996 to a IBT. The IRS had already determined IBT no longer qualified to receive tax deductible donations for it’s failure to pay employment taxes.
At trial, Taylor “did not introduce any evidence” to support his position.
There are two important points to understand. First, if you are a plaintiff in a lawsuit and you don’t provide any facts and any evidence to support your complaint, you lose 100% of the time. Plaintiffs bear the burden to prove their case and move the case forward. Neither happened here.
Second, the IRS had already spent years trying to get IBT to pay it’s employment taxes. The church refused and the IRS determined IBT was not a qualified organization. This was all before Taylor made his donation. The court ruled against Taylor because he failed to provide any facts or evidence to support his position and because the IRS had already determined the church no longer qualified.
This has nothing to do with a bona fide 508(c)(1)(a) church being able to give tax deductible receipts.
If you claim a tax deduction for a charitable donation and don’t have a qualified and timely receipt, just like the Taylor case, you lose even if your nonprofit is a 501(c)(3). See Jolene M. Villareale v. Commissioner; T.C. Memo. 2013-74; No. 18616-11 a donation that was disallowed to a 501(c)(3). See also Durden v. Commissioner of Internal Revenue, 051712 FEDTAX, 17441-09 where a donation to a 501(c)(3) church was disallowed.
See Jack Lane Taylor v. Commissioner (2000)