Nonprofits Voice Opposition to IRS Proposal on Social Security Numbers

More than two hundred nonprofit organizations have called on the Internal Revenue Service to withdraw a proposed regulation that would allow charitable nonprofits to collect and report donors' Social Security numbers to the agency.

The proposed rule change would permit, though not require, charities to file an additional return with the IRS that would include detailed information about donors who contribute $250 or more, including their Social Security numbers. In a joint set of comments filed in response to the proposal, Independent Sector, the National Council of Nonprofits, the Council on Foundations, and others argued that the regulation would "expose the public to increased risk from identity theft, impose significant costs and burdens on nonprofit organizations, and create public confusion and disincentives for donors to support the work of nonprofits."

"A charitable nonprofit should never be asking a donor for her or his Social Security number when soliciting donations," the joint letter states, and the proposed regulation "is certain to confuse the public and result in fraud." The letter goes on to say that the "collection, storage, and reporting of Social Security numbers to the IRS is a costly additional endeavor," in that nonprofits would have to divert resources to purchase data security systems, and notes that the Government Accountability Office, in reviewing a similar proposal in 2009, found that "[t]axpayers may reduce giving because they are reluctant to provide Social Security numbers to charities given concerns over identity theft."

"This proposed IRS regulation will do more harm than good," said Candy Hill, interim co-CEO and vice president of communications and marketing for Independent Sector. "The collection and reporting of Social Security numbers by nonprofit organizations poses significant increased risk to taxpayer privacy while creating new liabilities and administrative burdens for charitable organizations. Combined with the anticipated impact on charitable giving, this proposal will result in fewer resources available to support communities across the country."

"Nonprofit Community Unites to Protect Donors from Fraud and Identity Theft." Independent Sector Press Release 12/15/2015. "Comments in Opposition to the Proposed Gift Substantiation Regulation." Joint Comments Submitted to IRS 12/15/2015.