Accountants Oppose Proposed Regs on Substantiation of Donations
Accountants Oppose Proposed Regs on Substantiation of Donations
- AuthorsMcNee, MichaelLyons, Robert
- Institutional AuthorsMarks Paneth LLP
- Cross-Reference
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2015-26715
- Tax Analysts Electronic Citation2015 TNT 235-18
October 12, 2015
Internal Revenue Service
CC:PA:LPD:PR (REG-138344-13)
Room 5203
POB 7604
Ben Franklin Station
Washington D.C. 20044
To Whom It May Concern:
This letter is in regards to the request for comments concerning the proposed regulations (IRS REG-138344-13) concerning the time and manner for donee organizations to file information returns that report the required information about contributions (donee reporting).
The proposed regulations to meet the requirements of IRC § 170(f)(8)(D) are unnecessarily burdensome and impractical. Most not-for-profits are over burdened with limited accounting staff. For larger organizations, acknowledgments come from the development departments and not accounting. Development employees are not going to be familiar with standard 1099 type reporting issues. This would put the burden on the accounting department who has significant reporting to accomplish by February 28th on its "normal" reporting requirements.
Additionally, donors are going to be very reluctant to provide donee organizations with Social Security Numbers. Likewise, with recent breaches in IRS security, donors will be less likely to donate if they know that information is being forwarded to the IRS concerning donations. In some cases, charities may record receipts from 100s if not 1,000s of donors leaving substantial opportunity for errors.
In regard to most donors, the only way this could serve any benefit is if there were a cross referencing to the Form 1040. In most cases, the information, once received by the IRS, would be difficult if not impossible to associate with a tax payer. A tax payer would more likely than not list contribution acknowledgments from many organizations, some participating in the program and some not. The IRS would not be able to cross reference these donations without a change in the reporting system on the Form 1040.
Most charities, if not all, would be very reluctant to change their system of acknowledgment. For most organizations, contemporaneous written acknowledgement (CWA), serves far more than as a mere contribution acknowledgment. This is why these letters come from the development department. The CWA is not only used as an acknowledgment for donations received but normally is also used to make an appeal for further contributions/involvement on the part of the donor. Charities will continue with the CWA letters so the use of the proposed acknowledgment system would be burdensome and counter-productive for most organizations.
Michael McNee, CPA
Partner-in-Charge
Nonprofit and Government Group
Robert Lyons, CPA, MST
Director
Tax Exempt Organizations
Marks Paneth
Accountants & Advisors
New York, NY
- AuthorsMcNee, MichaelLyons, Robert
- Institutional AuthorsMarks Paneth LLP
- Cross-Reference
- Code Sections
- Subject Area/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2015-26715
- Tax Analysts Electronic Citation2015 TNT 235-18