Diaper Bank Tax Credit
What is the Diaper Bank Tax Credit?
By donating cash, stock, bonds, real property or other marketable securities to a qualified diaper bank, Missouri taxpayers:
- Help fund diaper banks to assist infants, children, or incontinent adults with disposable diapers or other hygiene products, and
- Can receive a tax credit for up to 50% of their contribution of $100 or more.
What is a qualified diaper bank?
Qualified diaper banks meet the following requirements:
- Nonprofit entity located in the state of Missouri;
- Established for the purpose of collecting or purchasing disposable diapers or other hygiene products for infants, children or incontinent adults and regularly distributes such diaper or hygiene products to two or more schools, health care facilities, governmental agencies, or other nonprofit entities for eventual distribution to individuals free of charge;
- Exempt from federal income taxation.
How does diaper bank become a qualified agency?
To qualify, each year the diaper banks provide:
- A completed Application form
- A copy of their certificate of incorporation;
- A tax-exempt certificate from the Internal Revenue Service; and,
- A brief statement of their primary business functions including the agencies to which products were distributed.
Where are qualified diaper banks located?
What role does Department of Social Services' (DSS) play for this tax credit?
Department of Social Services (DSS) administers the tax credit.
Who can claim this tax credit?
- A person, firm, partner in a firm, corporation, or a shareholder in an S corporation doing business in the state of Missouri and subject to the state income tax imposed in chapter 143 RSMo;
- An insurance company paying an annual tax on its gross premium receipts in this state;
- Any other financial institution paying taxes to the state of Missouri or any political subdivision of this state under chapter 148 RSMo;
- An express company which pays an annual tax on its gross receipts in this state pursuant to Chapter 153 RSMo;
- An individual subject to the state income tax imposed in Chapter 143, RSMo;
- Any charitable organization which is exempt from federal income tax and whose Missouri unrelated business taxable income, if any, would be subject to the state income tax imposed under chapter 143, RSMo.
The amount of the claimed tax credit may not exceed the amount of the taxpayer’s state income tax liability for the year the credit is being claimed and can not exceed fifty thousand dollars ($50,000) per taxable year.
Any tax credit that cannot be claimed in the tax year associated with the contribution may be carried forward and used against a taxpayer’s state tax liability the next tax year.
How does the credit work?
- (Step 1) Annually, diaper banks desiring to participate in this tax credit program must submit an Agency Eligibility Verification application and supporting documentation to DSS to determine qualification status for the next state fiscal year.
- (Step 2) DSS notifies diaper banks of their eligibility and equally apportions the total available tax credits among the eligible banks. These credits are effective beginning July 1 of each state fiscal year. The amount of credits available cannot exceed the dollar amount stated in RSMo. 135.621 in a state fiscal year (July 1 through June 30).
- (Step 3) If determined eligible by DSS, the diaper bank may begin receiving contributions eligible for the tax credit beginning July 1. Note: Diaper banks are permitted to decline a contribution from a taxpayer.
Annually, DSS publishes a list of qualified diaper banks which are eligible for the Diaper Bank Tax Credit. To request a copy you may call (573) 751-7533 or write to us at the following address:
Department of Social Services
Attention: Diaper Bank Tax Credit Program
PO Box 853
Jefferson City, MO 65102-0853
If a diaper bank has a change in business functions that impacts their qualifying status, they must contact the Department of Social Services within 30 days. The Department of Social Services will review the eligibility to participate in the tax credit and notify the agency of the determination within 30 days of receiving the notification of change.
- (Step 4) A donor contributes to a qualified diaper bank. Note: There is a $100 minimum contribution, of which 50% is tax-credit-eligible. Donors can claim up to a $50,000 credit per tax year.
- (Step 5) The diaper bank and the taxpayer must complete their portion of the Diaper Bank Tax Credit Application. Applications and supporting documentation must be submitted to DSS by the qualified diaper bank within twelve (12) months of the donation date. Applications received after one year of the donation date will be void and the right to the tax credit is forfeited. Required documentation varies depending on the type of donation:
Supporting Documentation Required:
- For a cash contribution, a legible receipt indicating the name and address of the diaper bank; name, address and telephone number of the contributor; amount and date the contribution was received; and, signature of a representative of the diaper bank receiving the contribution.
- For a contribution made by check, a photocopy of the canceled check, front and back (if not possible, then a copy of the original check and a receipt from the diaper bank home including the same information required of a cash donation).
- For a contribution made by credit card, a legible transaction receipt with the name and address of the diaper bank; contributor’s name, address and telephone number; amount and date the contribution was received; and, signature of a representative of the diaper bank receiving the contribution. Note: Receipts should have the credit card account number redacted.
- For a contribution made by money order or cashiers check, a legible copy of the original document with the name and address of the diaper bank; contributor’s name, address and telephone number; amount and date the contribution was received; and, signature of a representative of the diaper bank receiving the contribution.
- For a contribution made by stock, bonds and other marketable securities, values of contributed stocks and bonds must be determined by a reputable source (e.g., Wall Street Journal, New York Stock Exchange [NYSE], National Association of Securities Dealers Automated Quotations [NASDAQ], etc.) Required information includes the source, value and date the stock was valued and how the bond amount was determined.
- For a contribution of real estate, the value of contributions of real estate shall be equal to the lower of at least two qualified independent appraisals for commercial, vacant or residential property with a value of more than $50,000. Commercial, vacant or residential property having a value of $50,000 or less requires one appraisal.
- For contributions that include a benefit to the donor, documentation will depend on how the type of contribution is made (i.e., cash, check, etc., please see above.) Additional information required includes the type of function or event from which the benefit was received, description of the benefit received (if an auction item, identify the item received), gross amount of the contribution, fair market value of the benefit and how the fair market value of the benefit was determined.
- (Step 6) Within 45 days of receipt of the tax credit application, DSS determines tax credit eligibility and will notify the following parties:
- Taxpayer (notification will include the approved tax credit amount);
- Missouri Director of Revenue.
Note: DSS issues tax credits in the order applications are received.
How are tax credits redistributed?
- At least quarterly, DSS will review the cumulative amount of approved tax credits. If a diaper bank fails to use all or some percentage of its apportioned tax credits during a predetermined period, DSS may redistribute unused tax credits to diaper banks that have used all or most of their apportionment. Redistribution during a fiscal year will ensure, to the maximum extent possible, that taxpayers can claim all available tax credits.
- DSS will notify diaper banks affected by the reapportionment of tax credits. DSS will allow a 30-day comment period on redistribution and consider planned future uses of the tax credit allocation. DSS decisions regarding reapportionment are final.