We’ve received the following note from Theatre Communications Group, and we want to pass the information along to our members so they can weigh in on the proposal. Please add your comments here.
The Internal Revenue Service (IRS) is proposing new regulations that would establish a voluntary process for nonprofits to substantiate gifts of $250 or more from individual donors.
Under this new process, nonprofits could file a voluntary, alternative information return that would require collecting donors’ Social Security numbers (SSN) or taxpayer identification numbers (TIN) to substantiate gifts. This form would have to be filed with the IRS in addition to the organization’s 990 and sent to the donor by February 28 of each year.
Currently, the IRS requires nonprofits to substantiate gifts of $250 or more by providing donors with written documentation, typically an acknowledgement letter stating the amount of the gift or value of any non-cash item that is donated. Many arts organizations already have a sufficient practice in place to send donors acknowledgement letters for contributions and feel that this additional proposed process—though voluntary—would be unnecessary and cause additional administrative burdens. Here are a few other concerns about this proposal:
- Donors will be less likely to give—or will give less than $250—if they may have to give their SSN or TIN. (The IRS currently advises protecting these numbers from fraud by only providing them when “absolutely necessary.”)
- Collecting SSNs and TINs would impose other legal requirements on nonprofits to retain and protect those numbers from identity theft.
The costs associated with implementing the proposed procedures could otherwise be spent on mission-related activities.
- This process is unnecessary. In its proposal, the IRS states that the current substantiation process “works effectively, with the minimal burden on donors and donees.” It also predicts this proposed “donee reporting will be used in an extremely limited number of cases.”
TCG plans to submit comments on behalf of our Member Theatres and we encourage you to submit comments on behalf of your theatre, as well. Please submit your comments via the Performing Arts Alliance’s website directly to the IRS about how this new proposal would affect your theatre. The deadline to file is next Wednesday, December 16.
Please keep in mind the following tips:
- Your comments will be available to the public.
- Brief, direct comments are most effective.
- Be sure to provide a specific example of how this proposal would impact your theatre.
- View these tips and resources from the National Council of Nonprofits for submitting comments on the issue.
After the comment period closes, the IRS must consider public responses before considering issuing final regulations. TCG and the Performing Arts Alliance will keep you posted on further developments.
Director of Research, Policy & Collective Action