New IRS Gift Substantiation Guidelines Opposed by National Council of Nonprofits

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Money-and-SS

Social Security Card / 401(K) 2012

November 22, 2015; Fox News

A new voluntary gift substantiation regime proposed by the IRS is being opposed by the National Council of Nonprofits as well as a number of individual state associations of nonprofits.

The system would provide an alternative to the “contemporaneous written acknowledgements” now in use by providing 501(c)(3) nonprofits with the option to report gifts over $250 to the IRS by the donor’s social security number. Though it is not intended to be mandatory, it is seen as being confusing, unnecessary, and potentially injurious to giving. NCN’s statement reads:

The National Council of Nonprofits’ position is that the proposed voluntary reporting regime is inappropriate because the process could impose significant costs and burdens on nonprofit organizations, would create public confusion and disincentives for donors to support the work of nonprofits, and could lead fraudulent actors to increase targeting donors and reputable nonprofit organizations. Moreover, Treasury and the IRS state in the proposed rule that the current system of contemporaneous written acknowledgement of donations “works effectively, with the minimal burden on donors and donees.” Adding a potentially confusing parallel reporting regime that needlessly introduces the risks of fraud, identity theft, and decreased donations to the community should be rejected.

There are a number of reasons why nonprofits might want to oppose the measure:

  1. The measure appears unnecessary.
  2. The collection of donor Social Security numbers might make donors nervous and depress donations.
  3. The IRS has not been able to ensure security for taxpayers, and this provides yet one more pool of data to be accessed.

NCN’s analysis can be read here. —Ruth McCambridge