Today TaxMama hears from Alice in the TaxQuips Forum with an interesting concept. “As a non-profit organization we receive contributions from members and for their generosity we give them vouchers (with dollar amounts) that they can redeem for future events. My question is if we write off these old unused vouchers in our books, can these members take the unused vouchers as additional tax deductions? These vouchers were originally deducted from their total contribution to reflect the true value of the gift. Do we have an obligation to let these members know about the tax implication if there’s any?”
That’s an interesting question. No doubt, the vouchers have an expiration date on them, so the members don’t need to be notified.
They may only take a contribution deduction in the year they spend the money. So if the vouchers become worthless two years later, they couldn’t take the deduction at the time.
As I see it, your obligation was to provide the information about the tax deductibility at the time they received the vouchers. After that, it’s up to them to use them, gift them, or forget about them.
Though, clearly, everyone wins if they come to more events, right? As a promotion, what you may consider doing, is to send out a letter to everyone who has these vouchers, offering to extend the useful date for another X number of weeks, so they can come to events this year. It may bring some people back – and increase your participation. Just a thought.
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