11 December 2015

The End-of-Year Push, Donor Privacy Threat Emerges

>> Federal: Proposed Regulation Threatens Donor Privacy
>> Federal: Outreach Campaign
>> Federal: Legislative Update
>> Top Reads: Congressional Leaders Expect Funding Deal to be Unveiled Monday

Proposed Regulation Threatens Donor Privacy

The U.S. Treasury Department and the Internal Revenue Service published proposed regulations in September that would permit, but not require, charities to file a new information return with the IRS (in addition to Form 990) by February 28 every year to substantiate contributions of more than $250 in value. The new return would require the charity to collect the donor’s name, address, and Social Security number or other taxpayer identification number. The stated purpose of this regulation is to “simplify” current law requiring individuals and organizations claiming a charitable deduction for contributions of $250 or more to obtain a written acknowledgement from the charitable nonprofit receiving the donation, while providing the IRS with an alternative means to substantiate charitable contribution deductions.
The Philanthropy Roundtable is joining colleagues in the charitable sector in filing comments in response to this proposal which make the following points:
  • Current law is working. Neither charities nor donors are seeking change.
  • The proposed change increases the administrative burden on charities that will continue to acknowledge gifts of all sizes from donors as a function of good stewardship while additionally completing an unnecessary return for the government.
  • The IRS is violating its own advice to taxpayers about never giving out their Social Security numbers unless “absolutely necessary.”
  • Given the danger of identity theft, charities themselves are understandably reluctant to collect and store donors’ Social Security numbers, and are justifiably concerned that the suggestion of such disclosure will significantly reduce charitable donations.
  • The fact that the proposed rule is voluntary at the moment provides little assurance that it will not become mandatory in the future.
As attacks on donor privacy increase, we urge you to exercise your right to submit a comment by December 16 explaining why the proposed rule is a very bad idea before a final decision is made. Your comment can be short or lengthy. The goal is to make sure that Treasury and the IRS hear from as many taxpayers as possible about the potentially devastating consequences of the proposal on charitable giving and on the very real threat of identity theft.
You can learn more about the proposed regulation and “click to comment” at http://www.regulations.gov/#!documentDetail;D=IRS-2015-0049-0001.

Outreach Campaign

ACR has partnered with the Council on Foundations and Independent Sector on a phone, email, and Twitter campaign urging federal lawmakers to permanently expand the IRA charitable rollover to include distributions to donor advised funds, simplify the private foundation excise tax to a flat one percent, and permanently renew certain charitable “extenders.” These include the IRA charitable rollover, the enhanced deduction for conservation easements, and the enhanced deduction for food donations. We’ve contacted nearly every Member of the Ways and Means and Senate Finance Committees and our tweets have been viewed more than two million times, but there is still more to be done! We are continuing to work with regional and national associations to send letters of support to lawmakers. To bolster our message, we also encourage you to contact your Senators and Representatives to urge them to include these two charitable provisions in a final tax bill. Directions for taking action can be found here.

Legislative Update

The Senate and House of Representatives continued their race against the clock this week, struggling to work through several “must-pass” bills before the end of the year. On Thursday, December 3, lawmakers passed a five-year, $305 billion highway bill that also renewed the Export-Import Bank. President Obama signed it into law on December 4, and it is the first time in nearly a decade Congress was able to pass transportation spending legislation longer than two years.

Earlier this week, Speaker Paul Ryan (R-WI) and Minority Leader Nancy Pelosi (D-CA) began negotiating funding legislation, but hit several roadblocks and have still not come to an agreement. Yesterday, the Senate passed a five-day extension of current government funding to avert a shutdown at midnight tonight, when current funding expires. The House will vote on the measure later today and it is expected to pass.  Senate Majority Whip John Cornyn (R-TX) said yesterday he expects the long-term spending bill to come out Monday.

The year-end tax deal is also still in the works, which, as mentioned above, could permanently renew several expired tax provisions known as extenders. It’s expected that once lawmakers have a government funding measure ready, they’ll know whether they can pull off a permanent tax package.  In case a permanent deal cannot be reached, Ways and Means Chairman Kevin Brady (R-TX) released a two-year backup plan (retroactive to 2015) on Monday evening. This bill includes the three charitable extenders mentioned above, but neither a streamlined private foundation excise tax nor IRA rollover expansion to include donor advised funds. Senate Finance Committee Chairman Orrin Hatch (R-UT) has yet to release a plan and has said he is still working to finalize a long-term package. We will have more updates in a special edition newsletter next week after Congress has adjourned for the year.

Top Reads

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