Quick Summary
The IRS is intensifying scrutiny of charitable contribution deductions, particularly non-cash donations of hard-to-value assets such as artwork, privately held businesses and intellectual property, as the agency resumes activity following 2025 staffing disruptions. Taxpayers and organizations should maintain thorough documentation and obtain qualified appraisals to substantiate the value of any contributions claimed on their returns.
The IRS is expanding its examination of charitable contribution deductions, particularly those involving non-cash donations. Tax professionals are seeing an increase in IRS audits focused on charitable donations of assets that are particularly hard to value, such as artwork, privately held businesses, medical devices, intellectual property, and electronics.
The renewed audit activity follows years of IRS enforcement efforts involving syndicated conservation easement transactions and other arrangements in which taxpayers claimed deductions based on allegedly inflated asset values. In just the past six months, IRS practitioners have reported seeing an increase in asset donations with potentially inflated values and donations going to fake charities.
The IRS has long identified charitable contribution schemes as an area of concern. Although legitimate charitable giving remains an important component of the tax code, taxpayers must be able to substantiate both the donation and the fair market value of the property contributed. IRS examiners are increasingly focused on valuation methodologies and supporting documentation when reviewing charitable deductions.
This increased scrutiny is significant given the volume of non-cash charitable contributions claimed each year. IRS data indicates that taxpayers reported more than $160 billion of non-cash charitable contributions in 2023. About one third of these contributions came from higher-income taxpayers making $10 million or more who donate assets such as corporate stock, mutual funds, and other investments.
The IRS experienced a decline in both the number of tax return audits completed and revenue collected during 2025. This followed a period of significant disruption, including the loss of nearly a quarter of the IRS workforce in early 2025, as well as high leadership turnover during 2024 and 2025. As the agency stabilizes and resumes activities, tax practitioners are reporting an increase in new examinations, particularly those focused on charitable contribution deductions.
When claiming a charitable contribution deduction, taxpayers should remember several important requirements. Generally, cash contributions made to qualified charitable organizations are deductible if the taxpayer maintains appropriate records, such as bank statements or written acknowledgments from the charity. For contributions of $250 or more, a contemporaneous written acknowledgment from the charitable organization is generally required. Non-cash contributions often require additional substantiation, and donations of property above certain thresholds may require a qualified appraisal and completion of Form 8283. The deduction is generally based on the property’s fair market value at the time of the contribution, making accurate valuation critical.
As the IRS continues to increase its focus on charitable contribution compliance, taxpayers should ensure that they maintain thorough documentation and obtain qualified valuations when required. While charitable giving remains an important tax planning tool, the recent audit activity serves as a reminder that deductions must be properly supported and reported. Organizations and donors alike should be prepared to substantiate both the existence and value of charitable contributions if they are selected for examination.
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