Posts tagged ‘data security’

December 11, 2015

Warning: The IRS Wants You to Do Something Dangerous

The US Internal Revenue Service wants you to do something foolish.

The IRS has proposed that charities acquire, record, and report the Social Security numbers of all donors who give $250 or more in any given calendar year. The IRS justifies the proposal by stating that “the collection of information is necessary to properly substantiate charitable contribution deductions under the exception to the general requirements for substantiating charitable contribution deductions of $250 or more.”

IRS logoHowever, the proposed regulation is particularly stupid because it is completely unnecessary while being dangerous — to nonprofits and their donors — and costly to implement properly.

You can read the proposed regulation by clicking here. In addition, the website will allow you to share your comments with the IRS by December 16, 2015.

If adopted, compliance with the regulation would be voluntary, for now. Nevertheless, there are several reasons you should be very wary, including:

Voluntary Compliance Could be Made a Requirement.

If the IRS truly believes the measure is necessary, why wouldn’t it seek to change voluntary compliance to a requirement? The collection of Social Security numbers from donors is either essential or not. The IRS can’t have it both ways. Therefore, there is a strong possibility that the IRS is cynically hoping to gain acceptance for the proposal in stages, first seeking voluntary compliance before making it a requirement.

“Any proposed regulations that would create this has the potential for being a slippery slope,” David Heinen, spokesman for the North Carolina Center for Nonprofits, told Fox News.

The IRS Lacks the Capacity to Safeguard Data.

“Number one, the IRS has not demonstrated its capacity to hold this type of information from confidentiality and a security point of view,” US Rep. Peter Roskam (R-IL), a member of the House Ways and Means Committee, told Fox News.

Mark Fitzgibbons, President of Corporate Affairs at American Target Advertising, echoed Roskam’s concerns when he told Fox News, “The IRS can’t keep its information confidential, they’ve been hacked.” ATA offers direct-response fundraising services.

There are two major security problems with providing the IRS with donor Social Security numbers: 1) The very real risk that the data would not be safe in the hands of the IRS, and 2) the public’s perception that the data would be at risk at the IRS.

Most Charities Lack the Ability to Safeguard Data.

The data security concern also applies to charities themselves. Few nonprofit organizations are capable of truly protecting donor data. Giving hackers and nefarious insiders easy access to donor Social Security numbers and other information puts donors at significant risk of identity theft. To mitigate that risk would cost charities an enormous amount of money.

“Charities are not well equipped to deal with this,” Roskam said. “We’ve had for-profit companies — some of the biggest companies in the world — that have spent millions and millions and millions of dollars trying to protect their confidential data. And it’s been hacked, and it’s been breached.”

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