Good news! IRS withdraws gift substantiation proposal!

January 8, 2016

In response to concerns raised by orchestras in partnership with the broader nonprofit community, the Internal Revenue Service (IRS) published an announcement today that it will withdraw proposed new gift substantiation rules.
Comments filed by the League to the IRS reflected the serious concerns of orchestras and contributors, asserting that proposed alternative procedures for documenting donations would result in decreases in charitable giving and increased administrative costs.
In October, the League informed orchestras that the IRS had published proposed regulations regarding the requirements for acknowledging charitable contributions. The regulations would have established 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 have required the nonprofit to collect donors' Social Security numbers or tax identification numbers, making nonprofits more vulnerable to data theft and placing a chilling effect on donations. In addition to the League's comments, dozens of orchestras filed comments directly to the IRS, and the League joined the broader nonprofit community in opposing the proposal. In all, the IRS received nearly 38,000 comments, which prompted the withdrawal of the proposal as announced today:

"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 Accordingly, the notice of proposed rulemaking is being withdrawn."

Thank you for raising your voice!  Today's good news demonstrates the effectiveness of participating in the public policy process, and the strength of nonprofit organizations when they partner to make the case for the essential difference charitable organizations make in their communities!