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IRS Proposes Changes to Substantiation Rules for Charitable Contributions
IRS Proposes Changes to Substantiation Rules for Charitable Contributions
Clarifying what the agency has proposed—and what it could mean for churches.

You may have seen recent accounts in the national media regarding a new IRS regulation that will require churches to obtain the Social Security numbers of donors and provide them to the IRS. I want to explain what has happened and address whether church leaders need to be concerned.

In October, the IRS issued a proposed regulation amending the substantiation rules for charitable contributions: Internal Revenue Bulletin 2015-41. Generally, proposed regulations are published for public comment, and then the IRS issues a final regulation based, in part, on the public input provided. The public comment period for this regulation ends on December 16, 2015, after which the IRS will consider all the public comments and issue a final regulation.

The proposed regulation is only a page long, and it makes a proposed change in the way charitable contributions are substantiated. There are five things for church leaders to note:

1. Under current law, any charitable contribution of $250 or more must be substantiated by a contemporaneous written acknowledgment from the charity that lists the name and address of both the charity and donor, the amount of the contribution, a statement of whether goods or services were provided by the charity in return for the contribution other than intangible religious benefits, and an estimate of the value of any goods or services the charity provided. This has been the law for many years.

The proposed regulation would provide an alternate way to substantiate contributions of $250 or more. Rather than the charity issuing the donor a contemporaneous written acknowledgment, it would file a form called a “donee information return” with the IRS by February 28 of the following year, listing the same information as a written acknowledgment, but, in addition, disclosing the Social Security numbers of donors making one or more contributions of $250 or more.

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Posted:
December 11, 2015
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