National Council of Nonprofits Statement on IRS Withdrawal of Proposed Nonprofit Gift Substantiation Rulemaking

National Council of Nonprofits Statement on IRS Withdrawal of Proposed Nonprofit Gift Substantiation Rulemaking

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Tim Delaney, President and CEO of the National Council of Nonprofits (Council of Nonprofits), made the following statement on the withdrawal of proposed rulemaking regarding nonprofit gift substantiation:

“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,” said Tim Delaney, President and CEO of the National Council of Nonprofits.

“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 Even though it was withdrawn, this rulemaking wrongfully suggested that giving out Social Security numbers may be appropriate in some circumstances, thus opening the public up to scam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.”


The U.S. Treasury Department and the Internal Revenue Service published proposed regulations in September that would have permitted, but not required, charitable nonprofits to file a new, separate information return with the IRS (in addition to the Form 990) by February 28 every year to substantiate contributions of more than $250 in value. The new informational tax return (“Donee Report”) would have required nonprofits using the approach to collect the donor’s name, address, and Social Security number or other taxpayer identification number. Nonprofits taking this option also would have been required by that date to provide a copy to each donor listed (but only the portion that contains “information related to that donor”). The nonprofit community responded in multiple ways, including through almost 38,000 comments in opposition to the proposal and a joint letter from 215 organizations. Bipartisan legislation was also introduced to prevent the rules from being implemented. Treasury and the IRS withdrew the proposal on January 7, 2016.

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