IRS Withdraws Controversial Proposed Regulations
The people have spoken.
After receiving widespread criticism, the Internal Revenue Service (“IRS”) has withdrawn proposed regulations regarding the substantiation of charitable contributions. As we previously reported, the IRS issued proposed regulations in September which would have expanded the ways in which charitable organizations can acknowledge donations by giving them the option of reporting charitable contributions directly to the IRS under Section 170(f)(8)(D) of the Internal Revenue Code. While certain donors had encouraged the IRS to issue the regulations, critics of the proposed regulations questioned, among other things, whether there was a need for a donee reporting system and whether, in the age of cybersecurity threats and weaknesses, donee organizations and the IRS could be trusted to maintain the confidentiality of taxpayer identification information, such as social security numbers.
In light of the strength and volume of the outcry elicited by the proposed regulations, it is unlikely that there will be any new donee reporting proposals in the near future, and charitable organizations will need to continue providing donors with contemporary written acknowledgement of contributions of $250 or more.