Dec. 16 Deadline to Weigh in on IRS "Voluntary" Gift Substantiation Proposal

December 3, 2015

In October, the League informed orchestras that the Internal Revenue Service (IRS) has published proposed regulations regarding the requirements for acknowledging charitable contributions. The IRS is accepting comments in response to the proposal through Wednesday, December 16.

The regulations would establish a new voluntary process for nonprofits to file an alternative information return to the IRS by February 28 each year, and give a copy of the record of the donation by that date to each contributor of $250 or more to substantiate the contribution. The return submitted to the IRS would require the nonprofit to collect donors' Social Security numbers or tax identification numbers, names, and addresses.

Under current law, nonprofits must provide donors written documentation regarding receipt of donations of $250 or more, 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."

Orchestras have responded to let us know that the new proposal would be costly to administer and have a chilling effect on donations . Nonprofits across the charitable community are expressing the following serious concerns: 

  • Donors will be less likely to give if they may be expected to disclose Social Security numbers or tax identification numbers. (The IRS currently advises individuals to protect their tax identification numbers from fraud by only providing them when "absolutely necessary.")
  • Collecting tax identification numbers would impose other legal requirements on nonprofits to retain and protect those numbers from identity theft.
  • The costs associated with implementing the proposed procedures would take essential resources away from orchestras' artistic missions and service to their communities.
  • In the draft rules, the IRS states that the current disclosure process "works effectively, with the minimal burden on donors and donees" and predicts that the newly proposed "donee reporting will be used in an extremely limited number of cases." 
  • Given the costs, risks, and diminished giving that may result, it is unnecessary and harmful to put such a new system in place, even on a voluntary basis. 

The League will be filing comments on behalf of orchestras in response to the proposal.  We also encourage individual orchestras to weigh in directly with the IRS by filing comments by the December 16 deadline. Your orchestra can do this by using our easy-to-navigate system that is connected to the Federal Register docket designated for this issue.  Please keep in mind the following tips:

  • Your comments will be available to the public.
  • Comments needn't be long to be effective.
  • Comments are most useful when tailored to describe the impact the proposed policy would have on your orchestra. 

The League is a member of the National Council of Nonprofits, which has prepared excellent additional background information on this topic. After the comment period closes, the IRS must consider public responses before considering issuing final regulations. We will keep you posted on further developments, and feel free to This email address is being protected from spambots. You need JavaScript enabled to view it.  in the meantime if you have any questions about this topic.
 
Submit your comment to the Federal Register!