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Nonprofit Law/Tax implications of returned charitble gift


A donor of over $7,000 cash towards a particular project is now asking for his donation back siting the project was never done. This is indeed the case to this point.  What are the tax implications and proper reporting requirements from the non profit entity.

It appears from your question that the nonprofit is agreeable to returning the donation as you only asked, " What are the tax implications and proper reporting requirements from the non profit entity?"  I have in my profile that this free forum is only for general questions relating to IRS federal exemption issues of 501(c)(3) organizations. Therefore, I am assuming that you are referring to a 501(c)(3) organization.

For refunds of donations where a deduction was taken in a previous
year, the donor would put that amount on line 21 of his or her form 1040 as stated in IRS
publication 17 on page 84 of -- "A recovery is a return of an amount you deducted or took a credit for in an earlier year. The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040)."

But you asked about the nonprofit's requirements.  The organization must send to the IRS a 1099-Misc indicating the amounts of the refunds given to persons if the amount is $600 or more and the organization had previously given an acknowledgement of donation to the donor.

See the first column of page 1 under "Specific Instructions"
which is the IRS instructions for form 1099-Misc
--start of excerpt  ---
At least $600 in rents, services... other income payments
--end of excerpt  ---

Details about recovery rules are on page 22 of of
"Taxable and Nontaxable Income" (it may take about 15 seconds to
load from IRS site)

The statutory authority for the individual's treatment is 26 U.S.C 111 "Recovery of Tax Benefit
Items" which you may review at:

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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