The Trump administration will end a longstanding requirement that certain nonprofit organizations disclose the names of large donors to the Internal Revenue Service, which will allow some political groups to ensure the government doesn’t know the sources of the donations funding the groups.
Republicans have fought decades for this change, which will affect thousands of labor unions, social clubs and political groups ranging from the AARP, the United States Chamber of Commerce, the National Rifle Association and Koch-funded groups like Americans for Prosperity.
The Supreme Court’s 2010 ruling in a case brought by the nonprofit group Citizens United, which empowered them to spend unlimited money on campaign ads, has paved the way for this decision, which is partially predicated on the idea that money is the same thing as speech and therefore can’t be limited, with some caveats meant to rid the appearance of illegal coordination.
Treasury officials said the reporting change, which affects contributions known as dark money usually from 501(c)(4) nonprofits because their source is hidden, would protect the privacy of the donors, even if the sources were foreign and therefore illegal. The I.R.S. could still request donor information from groups in the rare event that it was needed for tax scrutiny, The New York Times reports.
“Americans shouldn’t be required to send the I.R.S. information that it doesn’t need to effectively enforce our tax laws, and the I.R.S. simply does not need tax returns with donor names and addresses to do its job in this area,” Steven Mnuchin, the Treasury secretary, said in a statement on Monday evening.
Critics denounced the measure, which curiously came almost right after a suspected Russian spy, Maria Butina, was arrested and suspected of trying to influence conservative groups like the N.R.A. including potential money laundering from Russia, saying it would encourage political donations from both domestic and foreign contributors who want to skirt the law or keep their influence secret, according to The New York Times.
“It’s a clear signal that the I.R.S. and now the Treasury Department are not interested in any significant oversight of nonprofits,” Marcus S. Owens, a Washington lawyer and former director of the I.R.S. division for tax-exempt organizations said. “What they’re doing is excusing them from filing information that is of material importance for determining whether organizations are operating appropriately and within the boundaries of the rules.”
Lloyd Hitoshi Mayer, a law professor at Notre Dame Law School, said it would even further loosen reporting requirements for the groups. “This will make so-called dark money a bit darker,” he said.
Previously, nonprofit organizations like unions and organizations registered under section 501(c)(4) of the tax code were required to report to the government the names of donors who contributed more than $5,000 in the span of a year, but that information was redacted on the publicly viewable forms the groups file annually, though amounts of donations remain visible, according to The New York Times.
Some nonprofit groups, like 527 organizations, that exist primarily to influence political campaigns, including so-called 527 organizations, will still have to report donors.
By: Corey Hostettler