IRS Reporting Regulation on Charitable Donationsby Senator Pat Roberts
Posted on 2015-12-10
ROBERTS. Mr. President, I rise to alert the Senate and all of my
colleagues to yet another--yes, yet another--egregious action by the
Internal Revenue Service, one that will affect every charity, every
church, every nonprofit, and the communities they work so hard to
serve. I emphasize ``another'' because it seems that the IRS continues
a march toward regulations and practices that target and burden hard-
Let me just recap. First, we learned that the IRS had released confidential tax return information on companies the IRS believed opposed the administration. Then we uncovered that the IRS had illegally targeted groups whose views differed from the White House, followed by an extensive effort to hide information on these actions-- i.e., Lois Lerner, her so-called ``lost e-mails,'' which weren't ever really lost. It was true injustice to law-abiding organizations and American citizens, which is why I should not have been surprised--but I was--to learn of the IRS's latest scheme.
Hot off the press is a new IRS proposed regulation that needlessly targets charitable contributions. Right now, when you make a contribution of $250 or more, charities will send you a ``written acknowledgement'' confirming the details of the donation, including the amount of the donation. The taxpayer uses this acknowledgement to document his or her tax deductions should there be any question.
Most charities take the time to send out a written confirmation of the donation as part of their thank-you to the donor. It is simple, it is inexpensive, and it builds good will. In short, it works for the taxpayer and also for the charity. That is it--a straightforward, commonsense method to confirm a donation was made, and no one, not even the IRS, argues that it is not working well.
But now the IRS has proposed a new method to substantiate donations-- a method that could do great harm to the charitable sector and give the IRS more tools to go after taxpayers they may not like, as we know they have done before. The IRS wants to set up a new, more formal system where the charity would have to gather information about its donors, keep that information, and--here is the rub--report the information to the IRS.
What type of information are we talking about? The return would include the charity's name and address, the donor's name and address and--here is the scary piece--the donor's Social Security number. Again, all of this new information would have to be sent to the donor and the IRS and kept on file by the charity at considerable cost. Even more disturbing, the IRS would store, maintain, and use this information in case the donor is audited.
Although this is described as an option, given the IRS's recent track record, do we really trust the agency to store this information and not use it for other purposes? I, for one, do not. I don't think we can trust them with a new source of data on donors. We must do all we can to prevent the IRS from gaining access to this sensitive data.
I am also alarmed at the thought of whether the IRS can properly safeguard this information because the agency has demonstrated zero capacity to keep similar data out of the hands of people who commit fraud, and thieves. Charities and churches that routinely receive thousands of dollars from their supporters now become greater targets for people to commit fraud.
Earlier this year, the IRS admitted that it had been hacked and private taxpayer information had been compromised. If they can do it to the IRS, you had better believe they can do it to your local nonprofit. And while the IRS today says this rule as proposed would simply be voluntary, suffer no illusion: The IRS will eventually move to make this a mandatory requirement.
Charitable organizations are also speaking out against the IRS proposal. They understand the chilling--chilling--effect this would have on [[Page S8590]] their donors, but, more importantly, on the communities they serve.
Tim Delaney, president and CEO of the National Council of Nonprofits, recently wrote: The IRS proposal would open the door for scam artists. . . . Nonprofits have neither the financial resources nor sufficient staffing to combat hackers who will see an easy source for Social Security information. This also creates a liability nightmare for innocent nonprofits. . . . To be asked to share their address, their credit card number and their Social Security number all in the same place would be enough to scare even the most committed donor to decline to give.
Tim Delaney has aptly summarized this pending and serious problem. He poses very legitimate concerns, especially regarding how scam artists might operate, explaining: Imposters' phone scripts will go something like this: ``Hi . . . I'm working for several nonprofits here in Kansas to make sure that generous donors like you get full credit for your wonderful contributions. . . . The nonprofits asked me to thank you for your generosity and confirm your name and address. . . . Also, the IRS has a new regulation that nonprofits need your Social Security number so we can send you a form confirming your contribution in case you get audited. What's your Social Security number so we can send you the form?'' Sadly, many people who want to be sure to support their charity will give the scam artists exactly what they want.
To protect the mission of our nonprofit community and the taxpayers who share their hard-earned dollars with those in need, I have introduced legislation to block this regulation and to maintain current law. The Protecting Charitable Contributions Act would maintain current IRS rules governing the substantiation of charitable contributions, and prohibit the IRS from issuing, revising, or completing any new regulation that would alter the existing rules. This just makes sense. And I would think the IRS would agree when in their own description of the proposal they state that the present system works effectively.
I urge my colleagues to support this legislation and to join me in stopping this dangerous and unneeded proposal from moving forward.
I urge all those who play a role in supporting nonprofits to go to the IRS Web site before December 16 to provide written comments to the IRS about this proposal. Yep, the IRS would like to have your comments.
Let me repeat that. I would urge all those who play a role in supporting nonprofits to go to the IRS Web site before December 16 to provide written comments to the IRS about this proposal. The message should be simple: No.
This is one Christmas greeting you had better send.
Mr. President, I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The senior assistant legislative clerk proceeded to call the roll.