New Gift Substantiation Rules Under Consideration

October 22, 2015

Weighing in on IRS "Voluntary" Gift Substantiation Proposal

The League is partnering with the National Council of Nonprofits to share the following important update, and coordinate a response:  The Internal Revenue Service (IRS) 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, file an alternative new information return to the IRS by February 28 every year, and give a copy of the record of a donation by that date to each contributor of $250 or more to substantiate the contribution. Among other things, the return submitted to the IRS would require the nonprofit to collect the donor's tax identification number, an action which would impose other legal requirements on nonprofits to retain and protect those numbers from identify theft.

The IRS is accepting public comments on the proposed rule change through December 16. The League is partnering with the National Council of Nonprofits and Independent Sector to evaluate the proposed regulations and prepare to submit comments. Please contact Heather Noonan This email address is being protected from spambots. You need JavaScript enabled to view it. to describe how the proposed rules would affect your orchestra's recordkeeping, privacy, and other practices. The draft rules predict that, as the proposed new process would be voluntary, "it is expected that donee reporting will be used in an extremely limited number of cases." However, keeping in mind that what is currently proposed to be voluntary could – eventually – be proposed as a mandatory requirement, please share your thoughts on the following:

  • What might be the impact of collecting and reporting tax identification numbers for donors?
  • How would the February 28 filing timeframe impact your orchestra's financial and development operations?