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  #1  
Old 03-06-2017, 04:25 PM
nhcoc nhcoc is offline
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Returned Donation Chk and IRS Report

I had a donation check returned for insufficient funds and not sure how to properly handle. One way is to delete the deposit, then delete the donor record and redo the deposit but that creates bank reconciliation problems. It doesn't appear to be simply a matter of creating an offsetting entry because that would still leave the original NSF check on the year end IRS donor report although it would handle the reconciliation problems.

Any ideas?
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  #2  
Old 03-07-2017, 03:39 AM
Rustler Rustler is offline
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If the issue is making an entry for the bad check, I do it this way

1. enter a payment in the bank register in that amount and use a bad debt expense account (create one first if you need to in the chart of accounts), change the check number block to NSF
2. do the same thing as a payment if the bank hit you with bounced check fees

at this point your QB bank register will match the banks accounting

3. Now it is up to you, most counties have a procedure you must follow for bounced checks, then if the procedure does not work you can turn it over to the county attorney for processing - so you should get that procedure cause if you do not follow it, when you do go to the county attorney they will want you to start all over.

as part of that procedure I create a new invoice, I create and use an item called NSF check-fee which has an income account selected on the item screen.
list that item and enter the amount of the bad check
use that same item again and enter your company bounced check fee and/or the banks fee amount

OR, of course you can just forget trying to recoup the funds, in that case ignore step 3

-------
If the issue is the donor report for year end, as I understand it that report is for the individual you do not actually send it to the IRS.

You could export the report to excel and add a line noting that donation #xx was returned as NSF on this date and reduce the total amount.
or
Just issue the report, it is true as of the ending year date, and it is up to the donor to deal with the IRS if his donation deduction is questioned.
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  #3  
Old 03-07-2017, 10:55 AM
nhcoc nhcoc is offline
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Rustler,

Thanks for the reply. I think what will happen using the method you describe is that the donor report at the end of the year will be overstated. It seems that you cant have it both ways either you overstate the donor report or deal with a bank reconciliation problem.
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  #4  
Old 03-07-2017, 11:17 AM
nhcoc nhcoc is offline
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Rustler,

I tried your approach and although the bank account was reconciled the donor report was indeed overstated. Seems you just can't have both worlds.
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  #5  
Old 03-07-2017, 06:52 PM
Lorin Browning Lorin Browning is offline
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Alternative: Go to Customer Payment screen and click on Record Bounced Check which is at the top right in the Premier Not for Profit version. If may be in the version you use also. What QuickBooks does depends on whether the payment has been deposited.

Moral to the story: Don't send out receipts until the check clears. The taxpayer doesn't need the receipt until tax time.
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Last edited by Lorin Browning; 03-17-2017 at 10:01 PM.
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  #6  
Old 03-08-2017, 03:52 AM
Rustler Rustler is offline
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The bounced check button

1. cancels the payment against the invoice, which is now open. If that is in a closed or reported period that poses a problem, as well putting the invoice back on the aging report. Not to mention if this happens over year end, it changes previous year income.

2. creates a new invoice for the fee you charge the customer for issuing a bounced check, and that invoice has no relation or link to the invoice which is now open.

It also creates yet more accounts in the CoA for you, bounced check fee expense, bounced check income

If the check is "undeposited" and it has already been reconciled, that reconciliation is now wrong as will the future ones be.

History has changed when you use that button, the fact is an invoice was paid, a check was deposited.

The customer is sent two invoices, the original (which in his books is paid) and the fee invoice. In my experience, the payable clerk gets an invoice (and remember the invoice number is the same (as is the customer PO number if there was one), there is no annotation that the check bounced on it) he looks it up, says we paid this, and in the circular file it goes.
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