Want Your Charitable Deduction? Give Us Your Social Security Number.

The Internal Revenue Service (IRS), which has come under fire in recent years for its treatment of conservative nonprofits, proposed a rule last year that would ask nonprofits to collect the social security numbers of its donors. The NCLL and many of its supporters vehemently opposed this regulation and became an integral part of the tremendous public outcry against it. The result? The IRS backed down and withdrew the proposal a few days ago—and for good reason.

Currently, donors who give over a specified amount to a nonprofit organization are required to have their donation substantiated by the charity in order to deduct the donation amount on their tax returns. In many cases, all that is necessary for charities to “substantiate” these donations is for the charity to provide the donor with a letter or form listing the donated items and/or monetary amount along with statutorily required language to the effect that no goods or services were received in exchange for the donation. This new regulation would go way beyond the current requirement for donors to provide their name and address and would allow nonprofits to require social security numbers from donors as part of this substantiation process. 

So what was wrong with this proposed regulation?

The answer, in short: a lot! 

The IRS and Treasury Department received over 38,000 public comments on the gift substantiation proposal—the vast majority of them strongly opposed to it. Many of the comments questioned why this would be necessary when the current system in place for substantiating donations is working and doesn’t require donors to provide such private and important information. Others worried about the confusion of creating a dual reporting system for nonprofits. Still others focused on the financial and legal burdens this would place on nonprofits to secure donors’ social security numbers. With identity theft so rapidly on the rise, identity thieves and hackers would have access to potentially countless new social security numbers and, hence, vast numbers of new identity theft victims.

Furthermore, despite the fact that the regulation, as proposed, would have been “optional” for nonprofits, it is more than reasonable to surmise that before long, the “optional” aspect would become a mere technicality. In other words, there’s a good possibility that this regulation would eventually be optional in name only. After all, Common Core is “optional,” too. But states that refuse to implement Common Core pay a very high price: they lose out on millions of dollars in federal funding. Moreover, in many cases, once a regulation becomes optional, it’s only one step away from becoming mandatory. The people get used to having “optional” regulations around, so it’s not nearly as big a deal when they become law and thus, mandatory. It’s the whole “how to boil a frog” analogy: turn up the heat a little at a time and before long, well, you know what happens.

Thankfully, the NCLL’s opposition along with public criticism was so great against this proposal that the IRS has decided not to pursue it . . . for now.

This is a great example of the kind of work the NCLL is doing every day to help ministries and Christians across the country. We regularly meet with leaders in Congress and appear in cases and matters before the IRS and other agencies in Washington, DC, as your voice in the nation's capital. We work with hundreds of ministries and religious nonprofits in an effort to help them effectively serve their communities as free from unnecessary governmental intervention as possible. Our mission is to preserve and protect God-given natural rights and our constitutional liberties and to be an advocate for churches and other ministries. To find out more about how the NCLL can assist your ministry, go to http://ncll.org/get-involved or call 888.233.NCLL (6255).