The IRS is starting to check donations. What's the limit?

Since the beginning of 2024 Tax Office Intensifies checks on donations made between household members and 3rd parties. The amendments are designed to prevent taxation avoidance and to reduce fraud related to cash flows. Key document, which is the filing of a donation to the office, may mean avoiding serious consequences, including financial penalties and criminal-tax proceedings.

What's under control?

Donations It's a popular way of transferring assets between household members. These may be both cash and real estate, cars and another valuables. However, the provisions make it clear that any donation exceeding certain quota thresholds must be notified to Tax Office within six months of receipt.

The key elements to be controlled are:

1. Bank transfers: Verification of transfer titles and compliance with declared donations.
2. Fixed assets: Transfer of real estate, cars or valuable movables.
3. Cash transactions: In particular, those that are not documented by bank transfer.

Quota thresholds and donation

The thresholds above which a donation is required shall depend on the taxation group in which the recipient is located:

• Group I: Married couple, parents, children, grandchildren, siblings – to PLN 10 434 No report.
• Group II: Son-in-law, daughter-in-law, brother-in-law – to PLN 7878 No report.
• Group III: Unrelated persons – to PLN 5308 No report.

Donations above these amounts must be reported on the form SD-Z2 within 6 months of receipt. deficiency of notification results in the imposition of a donation taxation which may even be 20% the transferred assets.

High penalties for errors and omissions

The taxation Office has introduced fresh tools for analysing financial flows, including systems for automatically comparing data from bank accounts, taxation returns and another sources. Where irregularities are detected, the taxable individual may be subject to the following penalties:

1. Donation tax: 20% of the value of an unreported donation.
2. Carno-carbible fines: It ranges from respective 1000 zlotys to even PLN 50 thousand, depending on the scale of the offense.
3. Criminal and fiscal proceedings: In the case of gross infringements, it may consequence in additional penalties and even a court judgment.

Key changes in 2024

Since January 2024, a number of crucial changes have been introduced:

• Extension of control: It besides applies to donations below the thresholds if taxation avoidance is suspected.
• Faster access to bank data: taxation offices now have simplified access to payer bank accounts information.
• Extension of the control period: Checks may include transactions even carried out 6 years back.

How to avoid problems with the IRS?

To avoid unpleasant consequences, it is worth following any basic principles:

1. Documentation of donations: Each transfer should contain an appropriate title, e.g. “A gift for a son”.
2. Submission of the SD-Z2 form: In the case of donations exceeding the quota thresholds, they must be notified immediately to the office.
3. Consultation with a lawyer or taxation adviser: For larger donations, it is worth utilizing professional aid to avoid formal errors.
4. Regular checking of regulations: taxation law in Poland is changing frequently, so it is worth keeping up with fresh regulations.

Practical example

Mr. Jan gave his boy PLN 50,000 as financial support to acquisition the apartment. The transaction was made by bank transfer, but Mr. Jan forgot to make a donation to the IRS. The audit revealed that the donation was registered as undeclared. As a result, the boy of John was obliged to pay PLN 10,000 tax and additional fines of PLN 5000 For not reporting.

Why does the IRS tighten up the controls?

According to the Ministry of Finance data, in 2023 the value of donations not reported to offices amounted to more than PLN 3 billion, which represents a crucial failure of the state budget. The fresh regulations and tightened controls aim to seal the taxation strategy and increase gross to the Treasury.

If you plan to donate soon, make certain you comply with all legal requirements. This will not only save you the problems with the IRS, but will besides avoid severe financial penalties.