IRS is getting strict with every passing year. Throwing new compliances, acts, and forms in the way of citizens, companies, organizations and even non-citizens or oversea organizations is its new found hobby.
When everyone was hoping that 2015 is about to go without any new compliance, IRS has gone ahead and done it again! The end of year has brought Nonprofits under the IRS radar.
On September 16, 2015, the IRS has issued a proposed set of regulations, called “Donee Report”. These proposed regulations involve NGOs and NPOs and will allow these charitable organizations to file separate information return, in addition to the Form 990, with IRS by February 28 every year. In the next few sections, we explore how donee reporting and TIN Matching API go well together.
What is Donee Report?
The nonprofits are required to collect a donor’s, who have made a contribution of $250 or more, name, address, and Social Security number or other taxpayer identification number. The donor’s taxpayer identification number is required by IRS to properly associate a donor with the correct donation information.
Why does IRS need Donee Report?
IRS has stated the reason behind donee reporting is that some donors aren’t getting contemporaneous substantiation written acknowledgement of their charitable contribution by some Nonprofits. The IRS has concluded that the Form 990 unsuitable and insuficient for reporting donations. The donee report is supposed to be considered as the appropriate alternatives to amended Forms 990. It will provide IRS the required information related to the charitable contributions made by an individual.
The problem with Donee Reporting Nonprofits are also required to provide a copy of the information to each donor listed. This has left many Nonprofits concerned about the new regulations. The process would impose significant costs and burdens on these organizations. Further, it could create confusion in public and discourage the donors to support the non-profits. The donee reporting has also raised concerns about the potential risk for identity theft and fraud involved in it.
How TIN matching API can help?
If IRS implements these new regulations, the above mentioned potential risks can turn in big-time risks. Fraud and identity theft were always a major concern for many agencies and IRS itself. Problem of stolen identities isn’t just limited to individuals. They can cost businesses of all type, including non-profits time and money. Not just this, frauds can also lead to non-compliance by the organisation, false exception claims, and can make you lose the associate people.
Nonprofits are advised to use technology involving data to overcome these issues. One such technical rescuer can be a TIN matching API. (Also read – 3 benefits that will make TIN matching API irresistible) By simply integrating a TIN matching API like ours, you can check for identity theft. TIN matching can help non-profits make sure that the people they are accepting funds from are genuine and are operating with original identities.
It will also help them in detecting if a donor’s tax id is in records of Uncle Sam or not. This will help in finding out the fraudulent and if the so called donor is using someone else’s id or not.