The Internal Revenue Service and the Treasury Department released proposed regulations in September that would permit, but not require, charitable organizations to file a separate return that would require nonprofits to collect social security numbers (among other information) from their donors.
The IRS accepted public comments on the proposed rule change until December 16, 2015, and Chorus America, believing it would have a harmful effect on choral music and philanthropy after consulting nonprofit sector resources on the issue, submitted a comment to oppose the new measure.
Below is president and CEO Catherine Dehoney's comment to the IRS in full:
On behalf of Chorus America, the education, research, and leadership organization for nonprofit, independent choral music organizations, I submit this opposition to IRS REG 138344-13 . This regulation would create an undue burden on small nonprofits such as those comprising the choral music field. This burden would be not only in terms of staff time and requirements, but also in terms of the great risk in collecting social security numbers. There are an estimated 12,000 independent choruses in the United States, the vast majority of which have budgets of less than $200,000 and only part-time staff. It is unrealistic to think that small nonprofits will have the means to safely manage social security information.
This substantiation regulation would certainly have an impact on the choral music field. Choruses on average receive about 60% of their incomes from contributed revenue.Gifts of $250 are not uncommon - in fact that is close to the average gift size for many of our members.
There is also a real risk of reducing charitable behavior in the U.S. Today, more than ever, guarding social security information is key to preventing identity theft - consumers are leery of providing their social security information in any situation. And it is commonly understood that donors should never be asked for her or his social security number when soliciting donations; and if that DOES happen, it is a sign of a of a scam or fraudulent solicitation.
Making it "optional" is not the solution: As we've seen with charity watchdog groups, deciding what percentage of overhead expenses is acceptable, outside forces creating a blanket definition, or one-size-fits-all of "good" and "bad" behavior for a nonprofit has been detrimental. If the IRS recommends substantiation in this way, and a charity doesn't follow that recommendation, donors could take that as irresponsible behavior on the part of the nonprofit, no matter how unrealistic it is for that charity to implement the policy.
Please consider these unintended consequences and do not pass regulation IRS REG 138344-13.
President and CEO