New regulations have been proposed by the IRS that would require a social security number be recorded by a nonprofit that receives a donation of $250 or more. The IRS justified the proposal by stating that it would make it easier to keep track of donations and assist in auditing nonprofits that often have gaps in their records. However, an army of critics have mustered to hammer the service for the proposed change. One concern is that requiring a SSN will deter would be donors who do not want to reveal personal information and result in a rash of $249.99 donations from those that would otherwise have given more. However the biggest worry comes from the ability to protect the personal data of the donors. Many nonprofits are small operations that use standard consumer electronics for record keeping which would be vulnerable to data thieves. Critics like to point out that even the IRS has been prey to electronic theft with smaller operations, presumably having less security than the IRS, being at tremendous risk. Even the National Council of Nonprofits has come out against the proposal stating that, in addition to the other problems, the proposal would add at least 10 weeks of work to every organization in order to stay in compliance. No word yet on when, or if, the new rules will be promulgated.
See Alex Hider, Proposed IRS change could require a social security number with large donations, ABC 10 News, December 15, 2015.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
