The Wisconsin Department of Revenue (WDOR) has begun a limited audit project focused on retirement income reporting. As part of this effort, some taxpayers may receive a notice of additional tax due if the department’s records don’t clearly show that certain IRA distributions were made as Qualified Charitable Distributions (QCDs).
The WDOR receives retirement plan distribution data from third parties and the IRS, but this information doesn’t indicate whether a distribution was made directly to a qualified charitable organization. Because of that, you might receive a notice even if your IRA distribution was properly made as a charitable gift.
If you do receive a notice, review it carefully. In many cases, the amount listed as “due” may not actually be owed if your IRA distribution qualified as a QCD.
How to Respond
If you receive a notice or bill from the WDOR, don’t panic. In most cases, this can be resolved by filing an appeal within 60 days. Your appeal should include documentation showing that the distribution was made by the trustee of your IRA directly to the qualified organization.
Acceptable documentation should include:
- Proof of the distribution, such as an electronic funds transfer record or a copy of a check issued from your IRA directly to the charitable organization and;
- A written acknowledgment from the charitable organization that includes the contribution date(s) and amount(s) and that no goods or services were provided in exchange for the contribution
Be sure to write your tax account number (TAN), letter ID, and the tax period listed on your notice on all documents you include with your appeal.
The appeal can be submitted online, via fax or mailed in correspondence.
We’re Here to Help
If you have questions about this notice or need help verifying your Qualified Charitable Distribution, contact your Wegner CPAs tax advisor for guidance.
