January 8th, 2016:
UPDATE: The Treasury Department and IRS announced today that it is withdrawing the proposed Gift Substantiation regulation that you worked so hard to defeat. Together, we did it!
The proposed regulations would added a new informational tax return (“Donee Report”) would have required the nonprofit using it to collect the donor’s name, address, and Social Security number or other taxpayer identification number and also provide a copy to each donor.
From Dave Thompson, the National Council of Nonprofits VP of Public Policy:
The Treasury and the IRS received 37,977 comments during the rulemaking period that ended on December 16, virtually all of them hostile to the proposal. TANO, working with other national groups, submitted comments on behalf of the nonprofit community making the case that the collection of SSNs would “expose the public to increased risk from identity theft, impose significant costs and burdens on nonprofit organizations, and create public confusion and disincentives for donors to support the work of nonprofits.”
With today’s announcement, which will be published in the January 8 Federal Register, the federal government does just that – publicly and officially withdraw the proposed regulation. The notice in today’s Federal Register explains the government’s thinking:
“The Treasury Department and the IRS received a substantial number of public comments in response to the notice of proposed rulemaking. Many of these public comments questioned the need for donee reporting, and many comments expressed significant concerns about donee organizations collecting and maintaining taxpayer identification numbers for purposes of the specific-use information return. In response to those comments, the Treasury Department and the IRS have decided against implementing the statutory exception to the CWA requirement, and therefore that exception remains unavailable unless and until final regulations are issued prescribing the method for donee reporting. Accordingly, the notice of proposed rulemaking is being withdrawn.”
The withdrawal of the flawed regulatory proposal is very good news for the public, for donors, and for the nonprofit community. The government was convinced that its proposal would have contributed to identity theft and was out of line with all other instructions from law enforcement agencies and the nonprofit community regarding the need to keep Social Security numbers private. The victory also demonstrates that the comments from concerned citizens swayed the thinking and actions of government officials, providing clear proof that engagement in advocacy generally, and in the regulatory process specifically, is both vital and effective.
December 11th, 2015:
The U.S. Treasury Department and the Internal Revenue Service published proposed regulations in September that would permit, but not require, charitable nonprofits 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.
The new informational tax return (called the “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”).
TANO, along with The National Council of Nonprofits’ believe the proposed voluntary reporting regime is inappropriate because the process could impose significant costs and burdens on nonprofit organizations, could create public confusion and disincentivize 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 background description of the proposed rule that the current system of contemporaneous written acknowledgement of donations “works effectively, with the minimal burden on donors and donees.” The proposal would create an additional reporting burden on nonprofits (many of whom are working with a limited administrative bandwidth), and needlessly introduces the risks of fraud, identity theft, and decreased donations to community organizations.
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 on how you think this regulation will affect you – your comment is vital.
As a donor, a nonprofit staff or board member, or just a concerned Texas citizen that values privacy and the protection of your personal information, TANO asks that you voice your opinion. Together, we can protect the system that sustains our nonprofit organizations, and allow them to fulfill their mission, and keep Texas the state that values its nonprofits, its supporters and its civil liberties.
NOTE: Please submit your comments by December 16th
Learn more about the regulations and how you can spread the word:
- Key Considerations and Concerns of the nonprofit community: Talking points about the proposed IRS Regulations
- Submitting Comments Tips and templates for filing effective comments
- Tips for Submitting Effective Comments to the Internal Revenue Service
- Article: Taking the Mystery Out of Filing Comments on Proposed Rules, National Council of Nonprofits