The Wisconsin Department of Revenue (WDOR) has launched a limited audit initiative focused on retirement income reporting — specifically, IRA distributions that may qualify as Qualified Charitable Distributions (QCDs).

WHY YOU MIGHT RECEIVE A NOTICE

As part of this project, some Wisconsin taxpayers — particularly those age 70 ½ and older — may receive a notice of additional tax due if the WDOR's records don't clearly show that certain IRA distributions were made directly to charitable organizations as QCDs. 

The WDOR receives retirement distribution data from the IRS and financial institutions, but this information does not indicate whether a distribution went directly to a charity. As a result, even taxpayers who correctly made a QCD may still receive a notice or bill. 

The first wave of notices was issued during the first week of October, and the WDOR plans to send additional rounds weekly throughout October and November. 

If you receive one of these notices, review it carefully — in many cases, the amount listed as "due" may not actually be owed. 

WHAT TO DO IF YOU RECEIVE A NOTICE

If you're contacted by the WDOR, don't panic. These cases are typically straightforward to resolve. You generally have 60 days to appeal, and your response should include documentation showing that your IRA trustee made the distribution directly to a qualified charitable organization. 

 Acceptable Documentation Includes: 

• Acknowledgment from the charity confirming the date(s) and amount(s) of the contribution and stating that no goods or services were provided in return. 

• Written acknowledgment of the contribution from the qualified organization, including the contribution date(s) and amount(s).Proof of distribution, such as an electronic funds transfer record or a copy of a check issued from your IRA directly to the charity. 

• Be sure to include your Tax Account Number (TAN), Letter ID, and tax period listed on the notice when submitting documentation. 

Appeals can be submitted electronically through MyTaxAccount, by fax, or by mail. 

WE'RE HERE TO HELP

 If you receive a WDOR notice or have questions about your Qualified Charitable Distribution, contact Hagen CPA. Our tax professionals can help you review your documentation and respond appropriately to ensure your charitable giving is properly recognized.