81 FR 882 - Substantiation Requirement for Certain Contributions; Withdrawal

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 81, Issue 5 (January 8, 2016)

This document withdraws proposed regulations that would implement the statutory exception to the ``contemporaneous written acknowledgement'' requirement for substantiating charitable contribution deductions of $250 or more. The withdrawal affects persons that make charitable contributions and organizations that receive charitable contributions.

[Federal Register Volume 81, Number 5 (Friday, January 8, 2016)]
[Proposed Rules]
[Pages 882-883]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-00189]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-138344-13]
RIN 1545-BL94


Substantiation Requirement for Certain Contributions; Withdrawal

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Withdrawal of notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: This document withdraws proposed regulations that would 
implement the statutory exception to the ``contemporaneous written 
acknowledgement'' requirement for substantiating charitable 
contribution deductions of $250 or more. The withdrawal affects persons 
that make charitable contributions and organizations that receive 
charitable contributions.

DATES: As of January 8, 2016 the notice of proposed rulemaking 
published on September 17, 2015 (80 FR 55802), is withdrawn.

FOR FURTHER INFORMATION CONTACT: Robert Basso at (202) 317-7011 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    Section 170(f)(8)(A) of the Internal Revenue Code provides the 
statutory requirement that a taxpayer who claims a charitable 
contribution deduction for any contribution of $250 or more obtain 
substantiation in the form of a contemporaneous written acknowledgment 
(CWA) from the donee organization. However, in section 170(f)(8)(D), 
Congress provided an exception to the CWA requirement. Under the 
exception, a CWA is not required if the donee organization files a 
return on such form and in accordance with such regulations as the 
Treasury Department may prescribe (donee reporting).
    Section 1.170A-13(f) of the Income Tax Regulations provides the 
rules issued by the Treasury Department and the IRS for substantiating 
charitable contributions of $250 or more. See TD 8690 (1997-1 CB 68). 
When issuing TD 8690 in 1997, the Treasury Department and the IRS 
specifically declined to issue regulations to implement donee reporting 
under section 170(f)(8)(D). The IRS has consistently maintained that 
the section 170(f)(8)(D) exception is not available unless and until 
the Treasury Department and the IRS issue final regulations prescribing 
the method for donee reporting. Nevertheless, some taxpayers under 
examination for their claimed charitable contribution deductions have 
recently argued that a failure to comply with the CWA requirements of 
section 170(f)(8)(A) may be cured if the donee organization files an 
amended Form 990, ``Return of Organization Exempt From Income Tax,'' 
that includes the donor's contribution information. These taxpayers 
argue that an amended Form 990 constitutes permissible donee reporting 
under section 170(f)(8)(D), even if the amended Form 990 is submitted 
to the IRS many years after the purported charitable contribution was 
made. In response to some donors' requests, some donee organizations 
have filed amended Forms 990 attempting to effectuate donee reporting. 
The Treasury Department and the IRS have concluded that the Form 990 is 
an unsuitable reporting method for this purpose and may not be used to 
effectuate donee reporting.
    However, in response to the interest by some taxpayers in donee 
reporting under the statutory exception, the Treasury Department and 
the IRS proposed regulations to implement a framework addressing the 
manner and timing for donee reporting under section 170(f)(8)(D). On 
September 17, 2015, a notice of proposed rulemaking (REG-138344-13) was 
published in the Federal Register (80 FR 55802). The proposed framework 
for donee reporting was based on a specific-use information return that 
would include, among other things, the donor's name, address, and 
taxpayer identification number. Similar to other specific-use 
information returns filed with the IRS, the donor's taxpayer 
identification number was required in order to properly associate the 
donation information with the correct taxpayer. Unlike a CWA, which is 
not sent to the IRS, the donee reporting information return would be 
sent to the IRS, which must have a means to store, maintain, and 
readily retrieve the return information for a specific taxpayer if and 
when substantiation is required in the course of an examination.
    The proposed framework for donee reporting was intended to minimize 
the reporting burden on donee organizations by making it voluntary, and 
to protect donor privacy by not using the Form 990 series. In the 
preamble to the proposed regulations, the Treasury Department and the 
IRS expressed concern about the potential risk for identity theft with 
a donee reporting system based on a specific-use information return 
because donee organizations would be collecting donors' taxpayer 
identification numbers and maintaining those numbers for some period of 
time. The Treasury Department and the IRS requested comments, including 
specifically on whether additional guidance was necessary regarding the 
procedures a donee organization should use to mitigate the risk of 
identity theft of donor information.
    The Treasury Department and the IRS received a substantial number 
of public comments in response to the notice of proposed rulemaking. 
Many of these public comments questioned the need for donee reporting, 
and many comments expressed significant concerns about donee 
organizations collecting and maintaining taxpayer identification 
numbers for purposes of the specific-use information return. In 
response to those comments, the Treasury Department and the IRS have 
decided against implementing the statutory exception to the CWA 
requirement, and therefore that exception remains unavailable unless 
and until final regulations are issued prescribing the method for donee 
reporting. Accordingly, the notice of proposed rulemaking is being 
withdrawn.

[[Page 883]]

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Withdrawal of Notice of Proposed Rulemaking

    Under the authority of 26 U.S.C. 7805, the notice of proposed 
rulemaking (REG-138344-13) that was published in the Federal Register 
on September 17, 2015 (80 FR 55802) is withdrawn.

Karen M. Schiller,
Acting Deputy Commissioner for Services and Enforcement.
[FR Doc. 2016-00189 Filed 1-7-16; 8:45 am]
BILLING CODE 4830-01-P