IRS withdraws controversial charitable donation information-reporting rules

After receiving tens of thousands of negative comment letters, the Service makes an about-face.
By Sally P. Schreiber, J.D.

The IRS withdrew regulations it proposed in September that would have allowed charities to file information returns with the IRS and donors instead of providing contemporaneous written acknowledgments of charitable donations (see "Tax Matters: IRS to Implement Donee Reporting for Charities," JofA, Dec. 2015, page 74). Charities that elected to use the new procedure would have been required to obtain donors' Social Security or other tax identification numbers (TINs) to complete the information return.

The government's portal for comment submissions shows it received more than 38,000 comments in response, the vast majority of which appear to strongly oppose the rules. Many commenters objected to the requirement to obtain and maintain donors' TINs, which they said posed a threat of identity theft. They also expressed concern that having to provide a Social Security number to the charity would discourage many potential donors from giving. One commenter said the requirement would be the "death knell of charitable giving as we know it today." Commenters also expressed their belief that, although donor reporting was proposed as voluntary, it would eventually become mandatory.

Under Sec. 170(f)(8), a donor claiming a charitable donation deduction must obtain from the charity a contemporaneous written acknowledgment—containing specific information—for any donation over $250. The acknowledgment must be received no later than when the taxpayer files his or her return for the year the contribution was made. An exception under Sec. 170(f)(8)(D) allows donors to avoid the contemporaneous written acknowledgment requirement if the donee organization files a return in a form provided by IRS regulations that includes the information required under Sec. 170(f)(8)(B). For many years, the IRS declined to issue regulations permitting information reporting by charitable organizations to substantiate donations under this statutory exception, and the withdrawn regulations were an attempt to implement this provision. With the withdrawal of the proposed regulations, the donee reporting exception will remain unavailable.

  • REG-138344-13, withdrawn, 81 Fed. Reg. 882 (Jan. 8, 2016)

—By Sally P. Schreiber, J.D., a JofA senior editor.

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