UPDATE: IRS Withdraws Proposed Regulations on Substantiation of Donations in Response to Taxpayer Comments

Back in September of 2015, the Treasury and IRS issued proposed regulations related to section 170(f)(8)(D) providing an alternate framework for substantiating charitable donations. The proposal would require a donee organization to obtain the donor’s taxpayer identification number, along with other identifying information such as name and address. This information would then be forwarded to the IRS and, generally, remove the requirement for a donor to obtain a “contemporaneous written acknowledgment” (CWA) from the donee organization.

In response, there was significant public outcry to these proposed regulations. By the December deadline for comments, our firm and just fewer than 38,000[1] other organizations and individuals submitted remarks outlining serious concerns regarding how such regulations would affect donors and donees alike.[2] Most concerns were related to the potential risk of identity theft, however, many also noted the increased administrative burdens placed on charities and the potential for reduced contributions.

Fortunately, the Treasury and IRS have taken heed of the public sentiment which overwhelmingly disagreed with implementing the proposed regulations and we have just received the good news that Proposed Reg-138344-13 has been withdrawn. What this means for taxpayers is that the current CWA process continues as the method by which the recipient charitable organization will substantiate a taxpayer’s charitable donation.[3] Also, anonymous donations will still be possible. Finally, donee organizations will not be requesting taxpayer identification numbers from donors; if an organization makes such a request, beware of a potential scam.

Acknowledgement: With grateful appreciation to Attorneys Morris N. Robinson, CPA, LL.M. and Yechiel N. Robinson for their expert input and editing suggestions.

If you have questions or need assistance with regard to tax planning or modeling for charitable contributions or creating a philanthropic legacy, the attorneys at M. Robinson & Company may be able to assist you. Please feel free to contact us at 617-428-6900.

End of article

[1] http://www.regulations.gov/#!searchResults;rpp=25;po=0;s=reg-138344-13;fp=true;ns=true

[2] See The IRS’ Proposed Regulations to Provide a Substitute to the “Contemporaneous Written Acknowledgment” Requirement: A Data Security and Identity Theft Fiasco in the Making, Attorney Morris N. Robinson, CPA, LL.M., and Attorney Patricia Weisgerber, LL.M., December 15, 2015.

[3] IRC Section 170(f)(8)(A).

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