Disclaimer: This blog does not constitute legal advice.

For complete details and more information, refer to:Charitable contributions: Written acknowledgments (IRS)Charitable contributions: Quid pro quo contributions (IRS)The Dos and Don’ts for Charity Auctions (A. Michael Gellman, CPA, CGMA)

Hosting a charity auction for the first time? The IRS has a few requirements for “written acknowledgements”, AKA receipts, for donations to auctions. Without a compliant auction receipt, your donors can’t get (their much desired) tax deductions from their donations.

Use our Auction Receipt Checklist for U.S. Auctions to ensure your receipts are fully compliant with IRS laws.

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Select your country and let CharityAuctions email compliant tax receipts for you.

Before You Send Out Your Auction Tax Receipts…

A quick note while we’re talking about auction receipts: Don’t forget to check if you’re required to collect sales tax on auction items.

Many areas count auction transactions as a sale—even for nonprofit auctions. They require you to withhold the proper amount from the final bid and send the taxes to your tax authority.

Check your state, city, or county laws for specific sales tax rules.

How to Determine the FMV of Auction Items & Experiences

For receipts for item winners, you’ll need to provide the FMV of the item or experience. FMV stands for Fair Market Value. It’s the price the item is worth, or more specifically, the price the item would sell for on the market.

Sometimes determining an FMV isn’t straightforward. Here’s what to do when you can’t assign an FMV to an item:

First, determine if there’s a comparable item or service. Use that item/service to provide a “good faith estimate.” For example, a craft session with a school art teacher can be estimated by the price of a similar craft class for kids.
BUT if there is no comparable item or service (like a “Principal for a Day” experience), there is no FMV. Your donor cannot receive a tax deduction.

The FMV of "Crafts with the Art Teacher" can be determined by the price of a craft class

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Auction Receipt Checklist

Download the Auction Receipt Checklist - US

The IRS has different requirements for receipts to donors who donate items for auctioning and for receipts to donors who win items from bidding.

In order for your item donors to receive a tax deduction for $250+ contributions, you must send a written acknowledgement (this includes email). But it’s best practice to send receipts for all contributions, no matter the donation size.

Item Donor Receipt Checklist:

For all item contributions valued at $250+, send a written acknowledgement that includes:

✔ Your organization’s name

✔ Your tax ID

✔ Date of the contribution

✔ The donor’s name

✔ Description of the donated item/experience

✔ Statement that “No goods or services were provided by the organization in return for the contribution.”

Do NOT include:

✘ Value (FMV) of the item/experience

✘ Statement that their contribution is tax deductible

The donor is responsible for reporting the value of their contribution. They’re also responsible for determining whether the item is tax deductible or not.

Item Winner Receipt Checklist:

When a donor wins an item, it’s considered a quid pro quo transaction. The IRS defines this as “a payment a donor makes to a charity partly as a contribution and partly for goods or services.”

A written acknowledgement must be given for quid pro quo transactions above $75 (but again, it’s always best to send a receipt for every donation).

For all winning bids above $75, send a written acknowledgement that includes:

✔ Your organization’s name

✔ Your tax ID

✔ Date of the contribution

✔ The donor’s name

✔ Name of the item/experience

✔ Good faith estimate of the FMV (Fair Market Value) of the item/experience

✔ Amount paid for the item/experience

✔ Disclosure statement that “The amount of the contribution that is deductible for federal income tax purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the fair market value of goods or services provided by the charity.”

Do NOT include:

✘ Other advice on tax deductions

Notice that the donor only receives a tax deduction for the amount paid over the FMV.

Or learn more about auction analytics and reporting here.