The IRS has proposed allowing charitable organizations to obtain the Social Security number for anyone who donates of $250 or more to them.
However, not only have members of the charitable community raised objections to the proposal, even the IRS and Department of Treasury have reservations about it.
The proposal is being floated as a way to make it easier for donors to claim tax deductions on their income tax, particularly if they have lost the receipts from the charities they donated to, and to safeguard against false claims.
The IRS made the proposal in September and the public comment period closes Wednesday.
Under the proposal, known as the Substantiation Requirement for Certain Contributions, the charitable organization would have the option of requiring donors of $250 or more provide their Social Security number, along with name and address. The information would then be reported to the IRS by the charitable organization. The new rule would apply to 501(c)(3) organizations.
“In order to minimize the burden on donees, the proposed regulations” for reporting is optional rather than mandatory, the IRS says.
According to the IRS notice on the proposed change, the Treasury Department and the IRS are concerned about the potential risk for identity theft and asked for comments on the potential problem.
The IRS also asked how the reporting system could be designed so that it is less burdensome on the charities.
Charities that have filed objections to the proposal say they fear an optional regulation now may lay the ground work for mandatory one in the future. They also say it will stifle contributions and force them to spend more money on administration.
The conservative organization, True the Vote, which describes itself as a voters’ rights and election integrity organization, is one of the leaders of the opposition to the proposal.