IRS Power Grab? Deadline Looming for Public Comment on New Rule to Gain Social Security Numbers of Certain Donors

Next week marks the deadline for public comment on a new Internal Revenue Service rule giving the tax agency access to the Social Security numbers of donors to certain nonprofit group.

For a tax-collecting agency still under a cloud for accusations of targeting of conservative and Tea Party organizations, the proposed rule has sparked immense concerns. The final deadline for public comment is Dec. 16.

“The IRS needs less information from nonprofits and less opportunity to go after donors for harassing them,” Cleta Mitchell, an attorney for Tea Party groups, told TheBlaze. “I wish they would stop looking for ways to harm people.”

Internal Revenue Service Commissioner John Koskinen testifies before the House Oversight Committee. (AP Photo/J. Scott Applewhite)

The proposed IRS rule would allow 501(c)(3) organizations to voluntarily provide the Social Security numbers of everyone who donates $250 or more to the organization. The agency is touting this as a means to process less paperwork and insists it would be easier for donors.

In addition to the targeting of conservative groups, in at least one case, an IRS employee leaked information about a conservative organization. The House Ways and Means Committee is investigating the IRS for leaking donor information from the pro-traditional marriage National Organization of Marriage to the gay advocacy group Human Rights Campaign.

In a statement, the IRS insisted there have been “major misimpressions” about the proposed rule.

“The proposed regulations would implement an alternative way of substantiating donations of $250 or more that is provided by the statute,” the IRS statement says.

“In recent years, some donors under exam have argued that their failure to obtain contemporaneous substantiation of their charitable contribution can be fixed by requesting that the charity amend its Form 990 as an alternative to satisfying the donor's substantiation requirements,” the statement continued. “The IRS has consistently maintained that an alternative substantiation method is not available until regulations are in place prescribing the method for charities to do this. The Treasury Department and the IRS have concluded that the Form 990 is an unsuitable reporting method for this purpose. The purpose of these regulations is to consider appropriate alternatives to amended Forms 990.”

Mitchell, with the Washington, D.C., firm of Foley & Lardner, doesn’t buy that it’s optional.

“In my experience, the questions on 990 Forms do not distinguish if they are voluntary or mandatory, and every nonprofit I’ve worked with assumes they are mandatory, “ Mitchell said.

Although the Obama administration’s Justice Department did not bring any charges in the political-targeting investigation, the House Oversight and Government Reform Committee has recommended articles of impeachment against IRS Commissioner John Koskinen.

The Tea Party Patriots and FreedomWorks are among the political groups that have stepped up to oppose the regulation.

But there's more than just the political realm where this is being fought. Tim Delaney, CEO of the National Council of Nonprofits, told Fox News, “Scam artists, of which there are many, will start preying on people. They'll say they can't take your tax deductible contribution unless you give them their Social Security number."

Moreover, Mitchell said this could prompt nonprofits to feel they need more information, which could depress charitable giving. “Suppose there is a hurricane and the Red Cross wants to raise funds, they need every donors Social Security number, somebody who wanted to give $500, or more than $250, would stop giving,” Mitchell said. “This rule would dramatically curtail charitable giving.”