SVdP Opposes Proposed New IRS Regulation – Serious Concerns with Donor ID Security
Public Comments Needed by December 16
There is a proposed new IRS regulation that will require nonprofits to collect the Social Security numbers of donors who make a cash donation of $250 or more.
According to the new voluntary gift substantiation proposal, charitable nonprofits would need to file a new, separate information return with the IRS (in addition to the Form 990) by February 28 every year to substantiate contributions of more than $250 in value.
Public comments are needed by Wednesday, Dec. 16, 2015.
Click here to comment to the IRS.
The new informational tax return (“Donee Report”) would require the nonprofit to collect the donor’s name, address, and Social Security number or other taxpayer identification number. Nonprofits taking this option would also be required by that date to provide a copy to each donor listed (but only the portion that contains “information related to that donor”).
The National Council of the Society of St. Vincent de Paul opposes this proposed new IRS regulation.
Multiple Serious Issues with Proposed Legislation
There are a number of reasons why SVdP and other nonprofits oppose the measure:
- Concerns about identity theft. The IRS has not been able to ensure security for taxpayers, and this provides yet one more pool of data that could potentially be breeched.
- Requests for Social Security numbers could result in reduced charitable contributions. The collection of donor Social Security numbers might make donors nervous and discourage people from making donations.
- The proposed Donee Reporting Rule conflicts with the IRS’ advice to taxpayers. The IRS advises taxpayers on its website and on a YouTube video to only give out their Social Security numbers when “absolutely necessary.” Yet the IRS proposed voluntary system essentially requires nonprofits to do just that: ask donors to give out their SSNs when it is not absolutely necessary.
- The measure appears unnecessary. The current contemporaneous written acknowledgement system is working.
- Just because the proposal is voluntary now is no reason to ignore its potential adverse impacts. Some might say they are not concerned about the proposed Donee Report Rule because it is purely voluntary at this time. This voluntary reporting system could well become a watchdog group’s idea of a “best practice” that all “good” nonprofits are then prodded to adopt.
The National Council of Nonprofits, a group representing 25,000 non-profit organizations, is taking a stand against the proposed rules.
It statement reads in part:
“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,” said the group in a statement. “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.”
Click here to read the full statement from the National Council of Nonprofits.
How you can help
Nonprofit organization leaders and members are encouraged to submit comments to the proposed regulations in order to explain the real-world consequences of the rule to help inform government officials before a final decision is made. Many concerned citizens have already submitted comments, but government decision-makers need to hear from as many people as possible, whether you want to file a lengthy analysis, a short opinion or even just a sentence.
The IRS is accepting public comments on this proposed rule change through December 16. Below is the link to comment directly to the federal government about this proposal:
Comment to the federal government
Suggested Comment
“I am contacting you to register my opinion that the (IRS) Proposed Rule: Substantiation Requirement for Certain Contributions be discarded immediately. This proposal would have a disastrous effect on nonprofit organizations and charities. The public is well aware of the need to protect their Social Security numbers from identity theft as advised by the government and will be unwilling to give out a SSN when making donations.
Even the government recognized the problem of identity theft and quit requiring military members/spouses to have their SSNs printed on checks as had been the practice for decades. The proposal to require people to submit their SSN with donations will stop many people who have been charitable donors from providing support to non-profit organizations or charities. If a donor is audited and cannot find proof of their donation, they can contact the charity or nonprofit for a copy of the previous acknowledgment.
In addition, the proposal places a considerable burden of additional labor and mailing costs on the charities and nonprofit organizations to prepare the form and letters to every donor. As a charitable, nonprofit organization, we do everything possible to stretch our donor’s dollars to meet the ever increasing needs in our communities. We cannot afford to lose donations and increase costs for this burdensome and unnecessary proposal.”
For more information on Development, contact:
Steve Martinez
314-576-3993 ext. 213
smartinez@svdpusa.org
SVdP Frederic’s E-Gazette 12-10-2015
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