There has been a recent surge in memes and social media posts spreading misinformation about charitable donations made at the checkout counter of stores. These posts suggest that stores are using customer donations to fund their own tax deductions, but this is not true. Donations made by customers at the register are not tax-deductible for the store or business as they are merely acting as conduits for the donations. The only taxpayer who may be able to claim the deduction is the customer who made the donation. To claim the deduction, customers must follow the normal rules for making a charitable deduction, including itemizing deductions, donating to qualifying organizations, getting a receipt, and adhering to limits on deductions.
Store promotions where businesses donate a portion of their proceeds to charity are different from customer donations at the checkout counter. In these cases, businesses can claim a deduction for the amounts donated as they are taking those amounts into income. However, companies are generally limited to a deduction that doesn’t exceed 10% of taxable income under section 170(b) of the tax code.
Misinformation about charitable donations at the checkout counter can have damaging consequences. It can create disincentives for giving, which could impact the significant amount of money raised through point-of-sale fundraising campaigns. In one case, a customer filed a lawsuit against CVS alleging that the company collected donations from customers to pay off its own debt to the American Diabetes Association. However, CVS clarified that they participated in a joint campaign to fight diabetes, with customer donations being forwarded to the ADA and deemed tax-deductible for customers who made the donations.
As misinformation continues to spread, it’s essential for consumers to understand the rules surrounding charitable deductions and not be deterred from giving at the register out of fear of benefiting the store’s tax deduction. While giving directly or through other platforms is a viable option for those who prefer more direct interaction with charities or have concerns about recordkeeping, following the rules for charitable deductions can ensure that the deduction belongs to the donor. It’s important to be informed and not let misinformation hinder charitable giving in any form.
