The IRS and Department of the Treasury withdrew a highly-criticized proposed rule requiring nonprofit organizations to report the Social Security numbers of those donating $250 or more.
The announcement, posted on the Federal Register Thursday, cited backlash from the public inquiring why it was necessary for them to provide their personal information and expressing concern nonprofits collecting and maintaining taxpayer identification numbers would increase their risk for identity theft as their reason for pulling the regulation.
Between Sept. 17, when the rule was posted, and Dec. 16, the agencies received 37,977 public comments on the regulation.
“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 done reporting. Accordingly, the notice of proposed rulemaking is being withdrawn,” the agencies wrote.
Critics of the regulation said it would place an unnecessary financial burden on charities and sway people against making donations in fear of having their personal information breached and putting them at risk of potential political retribution.
While the rule was intended to prevent fraud, Republican lawmakers said it would have done nothing to add to the problem.
Sen. [crscore]Pat Roberts[/crscore] applauded the agencies’ decision to do away with the regulation.
The Kansas Republican had introduced legislation in December aimed at keeping current law in tact, leaving the responsibility to provide information about a contribution to the donor.
Roberts said since the IRS wasn’t able to address existing issues related to taxpayer information breaches, it had “no compelling reason” to move forward with the proposal.
“I am pleased the IRS has listened to reason and has scrapped this plan. The rule would have had a chilling effect on charitable giving and would have added a costly burden to charitable organizations.” Roberts said in a statement Thursday.
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