The people over at the Internal Revenue Service are out of their minds. The latest idea floated to harass and otherwise jeopardize the security of American taxpayers’ privacy? Have entities with non-profit status collect social security numbers from donors making gifts of over $250. From Fox News:
The change would impact organizations that fall into the 501 (c)(3) category, which includes churches and other religious or charitable groups.
The Internal Revenue Service states the proposed change would be optional. But skeptics question whether it will eventually become the only option.
“It’s the No. 1 regulation that people are commenting upon,” attorney Cleta Mitchell recently told Fox News.
Well, yeah. Being a veteran of the fundraising in the non-profit world, this proposal opens cans of rattlesnakes, not just big nightcrawlers. There’s so many traps all the way around, motivation for this idea needs to be smoked out and exposed.
First off, $250, yes, is a tax-deductible amount worth a tax letter, but hardly a major gift. Those usually start at $1,000. Secondly, there are so much MORE $250s than there are higher amounts. People who work in non-profit would have to take the time to go chasing social security numbers, and honestly they DO NOT have hours to spare as this cannot be a volunteer activity. There’s always more to do than there is time to do it in non-profit even if a lot of that is self-inflicted. This would add to the chaos and the number of $249.99 gifts as most people actually want to get a tax deduction for their donations. There’s no mention here of this amount applying only to specific donations, or cumulative amounts over a year. As it is, this would force a change to the reporting requirements for the 501(c)(3)s themselves as the tax forms only require gifts of $5,000 or more to be included.
Before this writer left non-profit, one of the trends we were seeing was five to six figure cashier’s checks with no source identified. (That’s $10,000 to $100,000 gifts.) The best we could figure was that the donors not only did not need the tax deduction, but they did not want to be identified and bugged not just by the benefiting organization, but others that regularly scope out the donor levels of other non-profits. What would non-profits do with that? It’s not like the banks are going to cough up information on private transactions. How does this figure into the IRS’ scheme…or does that option for gift giving go away? For that matter, what about cash?
In addition, cyber security is a DEFINITE booby-trap for non-profit. With all the hacking that is going on out there in the world of the cloud and cyber wars let alone the federal government, collecting social security numbers would put all non-profits – particularly the national 501(c)(3)s – in definite jeopardy of being hacked for those magic nine digits coupled with credit card information. Just about all non-profits use the same ten software packages with the features built in for mass market fundraising events, mailings, keeping notes, and, even, privileged patient information in disease related non-profits. No where, in this writer’s memory having been an administrator on at least five systems, is there a place in the software for social security numbers. That would have to be fixed, and it would be massively expensive.
The IRS claims that social security numbers would better help them track gift giving in an effort to avoid excessive auditing, but really, would it? Would this information not help the IRS to make a quick database of who is donating to which charity? Would this not give the government a list of people who are interested in specific types of non-profits, and churches for that matter? Would the cap at $249.99 per donation without having to report a social security number do damage to the bottom lines of non-profits? After all, these organizations DO have expenses to cover even if they provide social goods that the government doesn’t…speaking of which, how much would the fed expand and require in taxes to take over the social functions provided by these non-profits?
Wait, I’m getting ahead of myself.
The public has until December 16 to publicly comment on this proposal of a non-mandatory change that would help the IRS avoid auditing people who lost all of their letters of donation acknowledgement.
“There’s a big caution here. There’s a big yellow light that should be flashing for a couple of reasons,” Illinois Republican Rep. Peter Roskam tells Fox News.
“Number one, the IRS has not demonstrated its capacity to hold this type of information from confidentiality and a security point of view.”