In September of 2015, the Internal Revenue Service (IRS) had released a highly controversial proposed rule on charitable gift substantiation. Charities choosing to participate in filing a new information return (in addition to the 990) would have filed an additional form with the IRS that included taxpayer identification numbers or social security numbers for donors who contribute $250 or more. Charities also would have been required to provide each donor a copy of their individual information that was included on the form. Hundreds of nonprofits and organizations joined together in expressing opposition to the proposed regulation and urging the Internal Revenue Service to withdraw the proposal.
While the regulation was designed to help the IRS verify the amount of charitable deductions claimed by taxpayers, nonprofits and other leaders in the philanthropic sector argued it would expose the public to increased risk from identity theft, impose significant costs and burdens on nonprofit organizations and create public confusion and disincentives for donors to support the work of nonprofits. After pushback from the charitable sector and a number of lawmakers who introduced legislation in both chambers of Congress to block the regulation, the Internal Revenue Service withdrew the proposed rule on January 8, 2016.
