Last month we informed you about a proposed rule change published by the Treasury Department and the Internal Revenue Service that would have permitted, but not required, nonprofits to file a separate return that would include the social security numbers (and other information) of donors who contributed gifts worth more than $250 to the organization. This was a rule change we did not agree with.
After receiving more than 38,000 comments from the general public – including many voices in the nonprofit sector across the country and locally in our state – the Treasury and IRS withdrew the proposal on January 7, 2016. Bipartisan legislation was also introduced to prevent these rule changes from being implemented.
Congratulations on making your voices heard! Below is a statement published by Tim Delaney, President and CEO of the National Council of Nonprofits, regarding this success:
“Today is a good day for the public, for donors to the work of charitable nonprofits, and for the nonprofit community. The Treasury Department and the IRS wisely withdrew their proposed gift substantiation rules after hearing from almost 38,000 Americans who filed comments in opposition to the proposal.
This is a prime example of the power of nonprofit advocacy and what can be achieved when charitable nonprofits speak up to protect the public, our missions, and the communities we serve. Those speaking on behalf of nonprofits had the right answer to the question, ‘who can I talk to today to advance our mission,’ when they decided to share their views with the federal government.
In the future, we invite Treasury and the IRS to work with the nonprofit community to develop sound solutions before they issue proposals that will harm the public. If Treasury and the IRS had listened first instead of proposed first, they could have learned immediately how harmful their proposed rules were and avoided confusing the public. Even though it was withdrawn, this rulemaking wrongfully suggested that giving out Social Security numbers may be appropriate in some circumstances, thus opening the public up to scam artists who could hurt individuals through identity theft and sully the good name of charitable nonprofits. They also could have avoided the headaches they created for themselves, including legislation pending now in both the House and Senate limiting their power.
Consultation in advance would have prevented this flawed rulemaking, just as it would have prevented the significant problems with the relatively new Form 1023-EZ. The National Taxpayer Advocate just yesterday found that the IRS has granted tax-exempt status to thousands of new entities, many of which fail to meet the basic requirements necessary to earn 501(c)(3) status. We recognize that the IRS is overburdened and understaffed after multiple years of budget cuts. Therefore, we encourage the IRS to leverage its limited resources by working with charitable nonprofits in advance to develop solutions. After all, we are working in service to the same communities, and we can do more and do better by working together."