On Thursday, the Internal Revenue Service and the Treasury Department withdrew a proposal that would give nonprofits the option of collecting personal information, including the Social Security numbers, from its donors.
A critic called the government’s decision to abandon the proposed rule “a huge victory for American democracy.”
“This is a huge victory for American democracy, the First Amendment and our grassroots supporters,” Jenny Beth Martin, co-founder of Tea Party Patriots, said in a statement. “President Obama’s IRS is abandoning its blatantly heavy-handed regulation to ask charities to disclose the Social Security numbers of donors giving $250 or more annually.”
The rule, proposed in September 2014, would give nonprofits the option to collect the Social Security numbers of donors who contribute $250 or more to an organization. Many feared that the regulation would eventually become mandatory and be used to target politically unpopular nonprofits.
The framework was intended to “minimize the reporting burden” for nonprofits and to “protect donor privacy by not using the Form 990 series,” the IRS and the Treasury explained. But after receiving nearly 38,000 public comments, many of them critical, the government decided to walk back its effort.
“The Treasury Department and the IRS received a substantial number of public comments in response to the notice of proposed rulemaking,” Karen Schiller, acting deputy commissioner for Services and Enforcement, said in documents withdrawing the proposal. “Accordingly, the notice of proposed rulemaking is being withdrawn.”
Critics, including the Tea Party Patriots, worried that collecting donors’ Social Security numbers could lead to widespread abuse.
“We’ve seen that the IRS has successfully targeted organizations, and employees of the IRS have abused the power of the agency against people they perceive as political opponents,” Martin, co-founder of Tea Party Patriots, told The Daily Signal in an earlier interview. “Having more information about who supports those organizations would give them the potential to continue the abuse of power and hurt the individuals, not just the groups. That’s the danger of it.”
Tim Delaney, president and CEO of the National Council of Nonprofits, also rallied against the effort, arguing the rule could have a chilling effect on donors.
“Nonprofits have neither the financial resources nor sufficient staffing to combat hackers who will see an easy source for Social Security information,” he said. “This also creates a liability nightmare for innocent nonprofits. … To be asked to share their address, their credit card number and their Social Security number all in the same place would be enough to scare even the most committed donor to decline to give.”
Today, Delaney said, is a “good day” for the American public.
“Today is a good day for the public, for donors to the work of charitable nonprofits, and for the nonprofit community,” he said. “The Treasury Department and the IRS wisely withdrew their proposed gift substantiation rules after hearing from almost 38,000 Americans who filed comments in opposition to the proposal.”