Protecting Taxpayers from Unnecessary Proposed IRS Reporting Rules

The Internal Revenue Service (IRS) has proposed new regulations threatening taxpayers who support charities. On Wednesday, the American Legislative Exchange Council (ALEC) submitted comments to the IRS in an effort to protect those donors.

Under current IRS rules, taxpayers who donate $250 or more must receive a receipt, called a Contemporaneous Written Acknowledgement, from the charity. Instead of providing a receipt, a charity may decide to file a return listing the donation, the amount and a description of the donation. If the donor does not receive a receipt and if the charity does not list the donation, the taxpayer may lose the deduction.

According to the proposed regulations, the IRS would require charities filing the report in lieu of providing receipts to collect and include in their filings the Social Security Numbers (SSNs) of taxpayers donating over $250.

By its own admission, the IRS believes the current receipt system works. Because of this admission, the proposed changes are wholly unnecessary.

The proposed changes represent significant threats to charities and their donors. Given recent examples of the IRS mishandling taxpayer data, charities cannot be adequately assured that the IRS will treat the donors’ personal information properly. In the past couple of years, the IRS has improperly shared taxpayer data with the Department of Justice and has not properly safeguarded taxpayer data from hackers.

These recent scandals, plus the IRS’s targeting of conservatively-named organizations and progressive states’ efforts to obtain donor information, raise the specter that it wants donor SSNs for more than simply donation verification purposes. It is reasonable to conclude that the IRS wants the donor information in a continued effort to gain the necessary data to silence taxpayers who support organizations educating the public as to the virtues of limited government, federalism and individual responsibility.

The proposed regulations ignore America’s rich history of encouraging anonymous speech. As stated in the ALEC Comment:

The United States has a long history of private expression. For example, Thomas Paine wrote Common Sense anonymously, and his publisher, Benjamin Rush, also remained anonymous.

In the context of anonymous political speech, donor privacy is fundamental to the American experiment. Anonymous speech was enshrined in the fabric of America as early as the Federalist Papers when Alexander Hamilton, James Madison and John Jay wrote under the name Publius. Today, activists on all sides of any given issue seek to target individuals as a means to chill speech and silence debate in the marketplace of ideas.

The IRS’s proposed regulations threaten both charities and taxpayers who support those charities. ALEC Comments seek to protect the First Amendment rights of taxpayers from improper government intrusion.