VI. Solicitation of Contributions
- Are solicitations for contributions made on the Internet (either on an
organization’s website or by email) in “written or printed form” for
purposes of Section 6113? If so, what facts and circumstances are relevant in determining
whether a disclosure is in a “conspicuous and easily recognizable format”?
The
Need for Guidance
The initial question whether a webpage or email solicitation for contributions is in
"written or printed form" is a Category Two (2) item.
The IRS can and should provide guidance at this time regarding the manner in which current
law applies in the Internet context.
The further question as to what facts and circumstances are relevant in determining
whether a disclosure is in a "conspicuous and easily recognizable format" is a
Category Three (3) item. Some guidance would be helpful, such as through the development
of safe harbors, but definitive guidance is not currently possible or advisable given the
rapidly changing technology and uses of the Internet.
Existing Authority
Section 6113(a) requires organizations that are ineligible to receive
tax-deductible charitable contributions under Section 170 to disclose to potential
donors that their contributions are not deductible. The organization must make the
disclosure in the course of any "fundraising solicitation," as defined in
Section 6113(c), "in an express statement (in a conspicuous and easily
recognizable format)." A "fundraising solicitation" includes any
solicitation of contributions or gifts that is made "in written or printed
form."
IRS Notice 88-120, 1988-2 C.B. 454, provides guidance on how to comply with
Section 6113. A fundraising solicitation will be considered to include "an
express statement (in a conspicuous and easily recognizable format)" that
contributions are not deductible if it satisfies certain safe harbor requirements. The
Notice sets out the required elements of safe harbors for solicitations made through print
medium, telephone, television and radio. The print medium safe harbor is a helpful
starting point for the Internet context.
The safe harbor requirements for a solicitation by "mail, leaflet, or
advertisement in a newspaper, magazine or other print medium" are as follows:
The solicitation must include one of the following statements: "Contributions to
[name of organization] are not deductible as charitable contributions for Federal income
tax purposes," "Contributions or gifts to [name of organization] are not tax
deductible," or "Contributions or gifts to [name of organization] are not tax
deductible as charitable contributions."
The statement must be in at least the same type as the primary message stated in the
body of the letter, leaflet or ad.
The statement must be included on the message side of any card or tear-off section that
the contributor returns with the contribution; and
The statement must be either the first sentence in a paragraph or itself constitute a
paragraph.
Recommendations
The IRS should provide guidance regarding the application of Section 6113 in the
Internet context, adopting the following principles. An Internet text (as opposed to audio
or video) communication, whether in the form of a webpage, an email or wireless message,
constitutes a communication in "written or printed form" in the same manner as a
facsimile or a computer-generated letter sent through the conventional mail. An
organization to which Section 6113 applies therefore solicits contributions in
written or printed form when it does so through text communications on its website or by
email or wireless.
The IRS should in addition develop a safe harbor for complying with Section 6113,
based on its print medium safe harbor in IRS Notice 88-120. The first element of the
safe harbor, i.e., the content of the disclosure statement, can be directly applied in the
Internet context. Similarly, the second element, the type size of the disclosure, can be
directly applied. It may be appropriate to add a requirement in the Internet context that
the disclosure statement remain in the viewer’s screen for the same duration as the
solicitation message.
The third element of the print medium safe harbor, i.e., that the disclosure statement
must be included on the message side of any card or tear-off section that the contributor
returns with the contribution, is not directly applicable in the Internet context. The
safe harbor rules in the telephone, television and radio context provide a better guide.
In all three media, the required statement must be made "in close proximity" to
the request for contributions. Specifically, in the Internet context, it should be
positioned on the website or the email in a manner reasonably calculated to ensure that
the viewer will see the statement prior to making a contribution. By way of example, a
website solicitation that requires the viewer to link from the solicitation message to
view the required statement would not satisfy the safe harbor. Any rule that provides
greater detail regarding the required position of the statement likely would quickly
become obsolete.
The fourth element of the print medium safe harbor, i.e., that the statement must be
either the first sentence in a paragraph or itself constitute a paragraph, is directly
applicable in the Internet text context.
- Does an organization meet the requirements of Section 6115 for
“quid pro quo” contributions with a webpage confirmation that may be printed out
by the contributor or by sending a confirmation email to the donor?
The Need for
Guidance
This is a Category Two (2) item. The IRS can and should provide
guidance at this time regarding the manner in which current law applies in the Internet
context.
Recommendations
Section 6115 requires organizations described in Section 170(c) (other than paragraph
1) to provide written disclosures to donors who make quid pro quo contributions in excess
of $75. The organization must, in connection with the solicitation or receipt of the
contribution, provide a "written statement" that (1) informs the donor that the
amount of the contribution that is deductible for federal income tax purposes is limited
to the excess of the amount of any money and the value of any property contributed by the
donor over the value of the goods and services provided by the organization, and (2)
provides the donor with a good faith estimate of the value of such goods or services.
A text communication that is printed from the Internet, whether a printed webpage or a
printed email message, constitutes a written statement in the same manner as a facsimile
or a computer-generated letter sent through the conventional mail. The IRS should provide
guidance clarifying that if the recipient organization provides such a statement that
contains the information required under Section 6115, then the organization has met the
requirements of Section 6115.
A further issue is whether an Internet communication that the donor does not print out,
but retains in digital form may satisfy the requirements of Section 6115, assuming that it
contains all required information and is in a form that can be printed by the recipient.
Consistent with the analysis above regarding Section 6113, an Internet communication need
not be in printed, as opposed to digital form in order to constitute a written statement.
It is the textual nature of the communication, combined with the ability to store and
produce the communication in text form on demand, that determines whether it is
"written," not whether it appears on a piece of paper or a screen. This analysis
is consistent with the recent public disclosure regulations under Section 6104, which
define a "written request" for an organization’s exemption application or
annual information return to include electronic mail, without reference to whether the
message is printed. Treas. Reg. § 301.6104(d)-1(d)(2)(A). Any guidance that the IRS
provides in this area should not limit the range of Internet text communications that
constitute a "written statement" for Section 6115 purposes solely to those
communications that are stored in printed form.
IRS officials have informally expressed concern with the potential for fraudulent
preparation of electronic statements. This potential is no different from that which
exists outside the Internet context, however. It is as easy to create a false printed
statement as it is to create a false electronic one. This concern should not be a bar to
organizations that wish to provide statements to their donors in a cost-effective manner
through the Internet.
- Does a donor satisfy the requirement under Section 170(f)(8) for a
written acknowledgment of a contribution of $250 or more with a printed page confirmation
or copy of a confirmation email from the donee organization?
The Need for Guidance
This is a Category Two (2) item. The IRS can and should provide
guidance at this time regarding the manner in which current law applies in the Internet
context.
Recommendations
Section 170(f)(8) provides that no deduction is allowed under Section 170(a) for any
contribution of $250 or more unless the donor substantiates the contribution by a
contemporaneous "written acknowledgment" of the contribution by the donee
organization. The written acknowledgment must include (1) the amount of any cash and a
description (but not the value) of any property other than cash contributed; (2) whether
the donee organization provided any goods or services in consideration for the property
contributed; and (3) a description and good faith estimate of the value of any such goods
or services provided, or, if such goods or services consist solely of intangible religious
benefits, a statement to that effect. There is no requirement that a representative of the
donee sign the acknowledgment.
The question is whether a webpage confirmation that may be printed out or an email
confirmation constitutes a "written acknowledgment" for purposes of Section
170(f)(8).
Just as in the Section 6115 context discussed above, a communication that is printed
from the Internet, whether a printed webpage or a printed email or wireless message,
constitutes a written statement in the same manner as a facsimile or a computer-generated
letter or postcard sent through the conventional mail. The IRS should provide guidance
clarifying that if the donee organization provides such an acknowledgment that includes
the information required under Section 170(f)(8), and such acknowledgment is
contemporaneous within the meaning of Section 170(f)(8) and the regulations thereunder,
then the donor has met the requirements of Section 170(f)(8).
Also as in the Section 6115 context, a further issue is whether an Internet
communication that the donor does not print out, but retains in digital form may satisfy
the requirements of Section 170(f)(8), assuming that it contains all required information
and is in a form that can be printed by the recipient. Consistent with the analysis above
regarding Section 6113, an Internet communication need not be in printed, as opposed to
digital form in order to constitute a written statement. It is the textual nature of the
communication, combined with the ability to store and produce the communication in text
form on demand, that determines whether it is "written," not whether it appears
on a piece of paper or a screen. This analysis is consistent with the recent public
disclosure regulations under Section 6104, which define a "written request"
for an organization’s exemption application or annual information return to include
electronic mail, without regard to whether the message is printed. Treas. Reg.
§ 301.6104(d)-1(d)(2)(A). Any guidance that the IRS provides in this area should not
limit the range of Internet communications that constitute a "written
acknowledgment" for Section 170(f)(8) purposes solely to those communications that
are stored in printed form.
IRS officials have informally expressed concern with the potential for fraudulent
preparation of electronic statements. This potential is no different from that which
exists outside the Internet context, however. It is as easy to create a false printed
statement as it is to create a false electronic one. This concern should not be a bar to
organizations that wish to provide statements to their donors in a cost-effective manner
through the Internet.