It was 1996. That was the last year that not-for-profit and faith-based organizations had no reporting obligation to the IRS. The onus was on the citizenry for reporting on contributions. If you were audited, you needed your cancelled checks and thank you letters.
1997 was when for gifts of $250 or more, taxpayers needed certification from the charitable organization that tax-deductible contributions were made. And the organizations also had to certify that no goods or services were provided, like dinners or swag. And if such goods and services were provided, the estimated costs needed to be noted.
Now the IRS is proposing some voluntary changes. It seems that some people who have been audited have expressed concern to the IRS that direct reporting of charitable gifts by the recipient organizations to the IRS would be more beneficial.
Most not-for-profits and synagogues have added the appropriate language to a thank you letter via snail mail or on an email response to an online gift. Or they have provided congregants with a year-end statement with suitable language. The proposed voluntary changes allows you to still continue such practices.
The IRS is proposing an alternative for you to choose. For contributions of $250 or greater, you can collect the social security numbers of contributors and provide “a return”, or statement, of such gifts to both the IRS and to donors. The statement to the IRS, other than social security numbers, requires the same information you have already been including on thank you letters and year end statements: the synagogue’s name and address, the donor’s name and address, amount of the contribution or value of a non-cash gift, date of the contribution, and whether any good or services were provided in lieu of the donor’s contribution. And you would have until February 28th to provide such information to the IRS with a copy also going to the donor.
There may be a concern about the issue of storing social security numbers. There has been an ongoing similar concern regarding people who make contributions and pay dues by credit cards. As fundraising and membership software vendors seem to have been able to reasonably deal with the security issues around storing credit card numbers appropriately, I am sure that, if the IRS implemented this proposed change, security concerns around maintaining social security numbers of congregants would be minimal.
I just became aware of this issue the other day so I apologize for the late notice. The IRS is asking for comments on these proposed changes. You have to do so by Wednesday, December 16th at 11:59 PM. As of this morning, 15,263 people had already shared their comments.
Go here if you want to share your thoughts with the IRS.
My advice: If you have already incorporated the prescribed language in your thank you letters, or you are providing accurate end of year statements with the right language by the January 31st each year, keep doing what you are doing. The proposed voluntary changes have a long way to go before ever becoming requirements.