The U.S. Treasury Department and the Internal Revenue Service published proposed regulations in September that would permit, but not require, charities to file a new information return with the IRS (in addition to Form 990) by February 28 every year to substantiate contributions of more than $250 in value—something many nonprofits, including the Philanthropy Roundtable, opposes.
The new return would require the charity to collect the donor’s name, address, and Social Security number or other taxpayer identification number. The stated purpose of this regulation is to “simplify” current law requiring individuals and organizations claiming a charitable deduction for contributions of $250 or more to obtain a written acknowledgement from the charitable nonprofit receiving the donation, while providing the IRS with an alternative means to substantiate charitable contribution deductions.
The Philanthropy Roundtable is joining colleagues in the charitable sector in filing comments and even a friend-of-the-court brief in response to this proposal which make the following points:
- Current law is working. Neither charities nor donors are seeking change.
- The proposed change increases the administrative burden on charities that will continue to acknowledge gifts of all sizes from donors as a function of good stewardship while additionally completing an unnecessary return for the government.
- The IRS is violating its own advice to taxpayers about never giving out their Social Security numbers unless “absolutely necessary.”
- Given the danger of identity theft, charities themselves are understandably reluctant to collect and store donors’ Social Security numbers, and are justifiably concerned that the suggestion of such disclosure will significantly reduce charitable donations.
- The fact that the proposed rule is voluntary at the moment provides little assurance that it will not become mandatory in the future.
We’ll keep you posted as more details become available.