SI 01130: Resources Exclusions
TN 66 (09-11)
Citations:
Social Security Act as amended, Section 1613(a)(13) ;
P.L. 105-306 , Section 7
A. Introduction
This section provides policy and procedures applicable when a tax-exempt organization gives a gift to a disabled child with a life-threatening condition; specifically when we can and cannot exclude such gifts as resources. For information regarding gifts from non-organizational donors, see SI 00830.520.
B. Definitions pertinent to this exclusion
1. Child
Apply this exclusion only to a child who has not attained age 18 and who has a life-threatening condition.
2. In-kind gift
An in-kind gift is any food, shelter, or other item donated to the child or to another individual on the child’s behalf. An in-kind gift cannot be cash itself.
3. Benefit of the child
A gift is for the benefit of the child if the giver intends the gift for the use, welfare, or enjoyment of the child. However, the gift still meets the benefit of the child criteria if it benefits more people than just the disabled child; for example, shared electronics like a computer or television or a family trip. Interpret this definition broadly.
4. Section 501(c) (3) tax-exempt organization
Under the Internal Revenue Code, a section 501(c) (3) tax-exempt organization is a corporation, or any community chest, fund, or foundation, organized and operated exclusively:
for religious, charitable, scientific, testing for public safety, literary, or educational purposes; or
to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment); or
for the prevention of cruelty to children or animals.
Neither private shareholders nor individuals may benefit from any part of the net earnings of the organization. A substantial purpose of the organization may not be lobbying or attempting to influence legislation. The organization may not participate in or intervene in any political campaign for or against any candidate for public office. The Internal Revenue Service (IRS) issues certification to organizations that qualify for this exemption. For information on how to develop evidence of certification, see SI 00830.750E.
C. Policy regarding gifts
1. Eligibility for the exclusion
Eligibility for the exclusion depends on both the giver of the gift and the recipient. The recipient of the gift must be under age 18 and have a life-threatening condition. The donor must be an organization described in Section 501(c) (3) of the Internal Revenue Code of 1986, which is exempt from taxation under Section 501(a). For more information regarding section 501(c) (3) organizations, see SI 01130.689E in this section.
2. Gifts to exclude as resources
Exclude the following gifts (described in SI 01130.689B.1.) given by a tax-exempt organization to, or for the benefit of, a child from resources:
Any in-kind gift not converted to cash; and
Cash gifts to the extent that the total cash excluded under this provision does not exceed $2,000 in any calendar year. Cash the individual receives in excess of $2,000 in a calendar year is subject to regular resource counting rules. For example, we exclude $2,000 of a $2,500 gift and count the remaining $500 as a resource in the month following the month of receipt.
For instructions on how to determine whether a gift card is considered cash or an in-kind gift, see SI 00830.522.
3. Gifts converted into cash
a. The cash as a resource
If the individual sells a gift previously excluded as a resource under the policies in this section, the cash from that transaction counts as a resource in the month following the conversion unless it meets some other resource exclusion. For a list of excluded resources, see SI 01110.210.
EXAMPLE: If the gift sold was the house, where the child resided and the individual states that he or she has designated the cash from the sale to purchase a replacement home, exclude the conversion cash. For information on funds from the sale of a home if reinvested timely, see SI 01130.110.
NOTE: Do not apply the resource exclusion relevant to cash gifts up to $2,000 (SI 01130.689C.2, this section) to the converted funds at any point after conversion.
If the individual trades or gives away the funds for less than fair market value, consider whether a period of ineligibility applies. For information on resource transfers see SI 01150.003 and regarding determining fair market value, see SI 01150.005.
b. New items purchased with conversion funds
Do not count as a resource any item the individual purchases with the conversion funds if you could exclude the item under a different SSA provision. For example, if the individual sells the family’s only car and uses the funds to purchase another car or to buy an excluded burial contract for the child, exclude both of those new resources. For a list of excluded resources, see SI 01110.210.
4. Multiple cash gifts in the same calendar year
A child may receive multiple cash gifts in the same calendar year. Add the individual value of the cash gifts together and exclude them as resources up to the $2,000 total value per SI 01130.689C.2, in this section. Count the value of the cash gifts as a resource only after the total value exceeds the $2,000 threshold.
EXAMPLE: When a child receives several cash gifts totaling $2500 over the course of a year, exclude the initial $2000 as a resource and count the remaining $500 as a resource in the month of following the month of receipt.
5. Effective Date
Apply this provision to gifts received on or after 10/28/96.
6. How deeming relates to the exclusion
Exclude a gift to a parent whose resources are subject to deeming if the gift is for the benefit of a child described in SI 01130.689B.2. For example, exclude the gift to the parents as part of the gift to the child if the parents receive a trip to Disney World to accompany their child when the child’s trip is excludable under this provision. The parents’ portion of the gift benefits the child to the extent that it allows the parents to accompany him, provide supervision, support, companionship, etc.
7. Income Exclusion
Exclude from income those gifts excluded from resources in this section. For complete instructions regarding how to treat gifts to children with life-threatening conditions as income, see SI 00830.750.
8. Interest and Dividends
Do not exclude from income or resources any interest or dividends earned on item excluded under this provision.
D. Procedure for documenting gifts and life-threatening conditions
1. Documentation of the gift
Document the individual's allegation of receipt of a gift as described in this section by noting:
date of receipt;
amount or value of gift;
type of gift (cash or in-kind) and if in-kind, what it is specifically; and,
tax-exempt donor organization’s name, address, and phone number.
Document all of the information on a Report of Contact (DROC), as well as any other material evidence submitted by the tax-exempt donor organization, and lock the DROC. For more information on how to document evidence, see GN 00301.286 and MSOM EVID 001.003.
2. MSSICS Screens
Complete the appropriate MSSICS pages (e.g., RFIA, RCSH, RHPI) documenting the type of gift and how the individual is holding the gift. Code the exclusion reason with the tax-exempt donor organization's name.
3. Documentation of the life-threatening condition(s)
Accept an oral or written statement from the organization that it gave the gift to or on behalf of the child based on the child having a life-threatening condition; no additional medical development is necessary. Annotate the DROC with this information and lock it.
E. Procedure for verifying tax-exempt status of donor organizations
A gift from a tax-exempt organization requires proof of the organization’s current tax-exempt status from the IRS.
1. Precedent exists for organization
Determine if the donor is an IRS approved tax-exempt organization by entering the name of the organization and searching the Atlanta Precedent and Contacts (APAC) intranet site: http://atlcfapps.bi.ssa.gov/APAC/
If a precedent exists, and the provisions of this section apply to the gift, create a DROC noting APAC precedent as proof of the organization’s tax-exempt status and lock it.
2. To create a precedent
If no precedent exists, contact the donor organization and request that they fax or send a copy of its State non-profit certification or its determination letter from the IRS.
When evidence is in hand:
Note the date the State non-profit certification or determination letter from the IRS was received on a DROC and lock it,
Fax the evidence into eView or NDReD, and,
Go to the APAC intranet site and follow the steps listed there to create a national precedent. To create the precedent, categorize the contact type as “non-profit organization” and the precedent type as “IRS tax-exempt certification.”
3. Verify the organization’s tax-exempt status if it is questionable
a. Confirm tax-exempt status with the IRS
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If evidence indicates the organization’s tax-exempt status may have been revoked, go to the IRS web site and review both of the current lists of organizations from which the IRS has recently revoked tax-exempt status at:
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If the donor organization is listed on the IRS “Revocations” pages, note the date the tax exempt status was revoked on a DROC and take the steps described in SI 01130.689E.3.b. this section.
NOTE: You may be able to obtain the EIN to plug into the IRS website as follows:
Go to the SSA Digital Library
Select the Quicklist of Databases
Select Associations Unlimited Thomson Gale
Select: IRS DATA ON NONPROFITS and complete the search form
b. Organization has lost its tax-exempt status
Do not apply the resource exclusion described in this section to the gift. Count the gift as unearned income in the month of receipt and as a resource in the following month. For income policy and procedures regarding gifts from any organization that is not tax-exempt, see SI 00830.520.
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Document on a DROC:
The date the organization was added to the IRS “Revocations” list;
The source of this information; and
That the gifts to children with life-threatening conditions resource exclusion does not apply because the donor organization is not tax-exempt, per IRS records, and lock the DROC.
F. Examples of how to treat the types of gifts children may receive
1. Benefit of the Child
The Make-A-Wish Foundation provides a trip to Walt Disney World to a terminally ill child. The trip includes transportation, food and lodging, and $1,500 for other expenses. The trip includes all expenses for the child, his parents, and his sister. Exclude the entire gift from income and resources, even the portion that allows the parents and sister to accompany the child. The parents provide supervision and assistance, which allow the child to take the trip. The primary benefit of parents’ participation in the trip is to facilitate the eligible child's enjoyment of the vacation.
2. Multiple Gifts
From December 2010 to January 2011, three separate tax-exempt organizations provide cash gifts to a terminally ill child:
The first organization gives the child’s representative $1800 on December 11, 2010;
The second gives $500 on December 21, 2010; and
The third gives the child $880 January 2, 2011.
The child received $1800 + $500 = $2300 total in December 2010. We exclude $2000 of the $2300 as income per SI 00830.750C.3.c. The remaining $300 is countable income in December 2010.
NOTE: We count the $880 the child received on January 2, 2011 toward a new $2,000 annual income exclusion threshold as the payee received the money in a new calendar year. For information on the income exclusion for gifts to children with life-threatening conditions, see SI 00830.750.
Any funds received and excluded as income in December, which are still in the payee’s possession as of January 1, 2011, will be regarded as a resource. If by January 1, 2011 the payee has not spent any of the $2300 that he or she received in December 2010, we exclude only the first $2000 under the resource exclusion and count the remaining $300 as a resource.
3. Gifts converted into cash
In August 2010, a non-profit organization donates ownership of a timeshare to a child’s payee (on the child’s behalf) with the intention that the payee could take the child on vacation. The timeshare meets the definition of an in-kind gift; thus, we can exclude it from income and resource counting under this provision. Do not count the value of the timeshare ($15,000) as income to the child in the month it was received (August 2010) or as a resource in the following month (September 2010).
In December 2010, the payee sells the timeshare for $15,000 and deposits the funds into her checking account. Count the cash received from the sale as income in the month of conversion (December 2010). If the cash from the conversion is still in the payee’s bank account by January 1, 2011, we count the entire amount as a resource.
G. REFERENCES
GN 00301.286, Electronic Evidence Documentation and Retention
SI 00520.800, Facility Determinations
SI 00810.410, Infrequent or Irregular Income Exclusion
SI 00815.550, Receipt of Certain Noncash Items,
SI 00830.500, Interest income,
SI 00830.520, Gifts,
SI 00830.750, Income exclusion, Gifts to Children With Life-Threatening Conditions
SI 01110.210, Excluded Resources
SI 01130.630, Cash and In-Kind Items Received for the Repair or Replacement of Lost, Damaged, or Stolen Excluded Resources
SI 01150.001, What is a Resource Transfer
SI 01150.005, Determining Fair Market Value
MSOM EVID 001.003, Evidence Screen (EVID)
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