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Focus on Not-For-Profits: IRS Proposal to Provide Social Security Numbers of Donors Causes Concern

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An IRS Proposed Regulation issued in September concerning donor disclosure options for tax-exempt organizations has caused concern in the charitable giving world.
December 23, 2015

An IRS Proposed Regulation issued in September concerning donor disclosure options for tax-exempt organizations has caused concern in the charitable giving world. The current charitable contribution deduction rules place the substantiation burden upon the donors. The donors are required to have contemporaneous written acknowledgements from the charities before filing their income tax returns claiming the charitable deductions.

The new Proposed Regulation would provide charities an alternative way of substantiating donations of $250 or more from donors. The proposed option would include detailed disclosure of donor information in a specific use information return that the IRS would develop after the regulation is adopted.  No later than February 28 of the following year in which the contribution is made, the organization would report data to the IRS – such as the donor’s name and address, donor’s Social Security number, the amount and nature of the contribution, and whether the charity provided goods or services in return for the contribution ("quid pro quo”), including a description of the good faith estimate of the amount of the quid pro quo.

It should be noted that the Proposed Regulation is supposed to be completely voluntary for charities. The IRS has further clarified that the proposal would not mandate disclosure changes for charities, but rather would provide them an additional option for how to substantiate donations for donors. As proposed, charitable organizations would be allowed to continue under the current donor acknowledgment rules.

The controversial nature of the new Proposed Regulations has resulted in the introduction of a Senate bill (S. 2370, 12/08/2015) to block the proposed rule addition. Senator Pat Roberts, who introduced the bill, stressed the additional administrative burden the rules would impose on charities, the privacy issues of donors inherent in the additional disclosures, and the potential for fraud and theft of personal information.

Please reach out to RubinBrown professionals with questions or inquiries regarding the Proposed Regulation. The proposed additions to the rules will be specifically addressed at the upcoming Not-for-Profit RubinBrown Seminars, scheduled for January/February 2016.

 

Registration links for the Seminars:

St. Louis:
Not-For-Profit Update
7:30 AM - 10:00 AM
Donald Danforth Plant Science Center
975 North Warson Road
St. Louis, Missouri 63132

Denver:
Not-For-Profit Update
7:30 AM - 10:00 AM
RubinBrown Denver Office
1900 16th Street - Suite 300
Denver, Colorado 80202

Kansas City:
Not-For-Profit Update
7:30 AM - 10:00 AM
Overland Park Convention Center
6000 College Blvd.
Overland Park, Kansas 66211

 

Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.

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For more information, please contact:

  • Kim Ryan, CPA (CA), JD, LL.M — Denver
  • Tax Manager
  • Not-For-Profit Services Group
  • 303.952.1208
  • kim.ryan@rubinbrown.com