NAICU Washington Update

IRS Withdraws Unpopular Donation Substantiation Proposal

January 08, 2016

On January 7, the Internal Revenue Service announced that it withdrew its much-maligned proposal for an alternative way of substantiating charitable donations. Last September, the IRS proposed allowing organizations to collect donors’ Social Security numbers and report the contributions directly to the agency on a new form.

As previously reported, the September proposal would permit, but not require, nonprofits to collect taxpayer identification information – including Social Security numbers – from donors making gifts that exceed $250 annually.

NAICU joined many other higher education associations and nonprofits in signing comments drafted by the National Council of Nonprofits stating our concern with this proposal. NAICU members agreed that the gift substantiation proposal is inappropriate, could impose costs and administrative burdens on nonprofits, and confuse and concern current and future donors. The current reporting system works effectively, and a new reporting system could open the door to potential fraud and abuse, creating a disincentive for donors.

The withdrawal was published in the Federal Register today. 

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