IRS Gift Substantiation Proposal Could Burden Nonprofits

The Internal Revenue Service has published proposed regulations regarding the "contemporaneous written acknowledgement" requirement for contributions of $250 or more. Under current law, nonprofits must provide donors certain written documentation regarding receipt of donations, such as "the amount of cash and a description of any property other than cash contributed" and "whether any goods and services were provided by the donee organization in consideration for the contribution." The IRS is proposing that nonprofits, on a voluntary basis at this time, file an additional new information return with the Service by February 28 every year and give a copy of it by that date to each contributor of $250 or more to substantiate the contribution. Among other things, the return would require the nonprofit to collect the donor's Social Security number, an action which would impose other legal requirements on nonprofits to retain and protect those Social Security numbers from identify theft. A mandatory version had been considered and rejected in the past because the proposal raises numerous legal, policy, and confidentiality problems. The IRS is accepting public comments on the proposed rule change through December 16. (See tips on submitting comments.) The National Council of Nonprofits is evaluating the proposed regulations and is seeking input from nonprofits on how it would affect recordkeeping, privacy, and other practices.

Post date: October 7, 2015
Topics: News from the National Council

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