According to The New York Times, the Trump administration will no longer require nonprofit organizations to disclose the names of large donors to the IRS, affecting groups such as the National Rifle Association and the Koch brothers’ Americans for Prosperity.
Treasury officials reported Tuesday that the change “would protect privacy and reduce compliance costs for nonprofits.” The IRS, however, will still be able to request donor information in the event of tax scrutiny.
U.S. Secretary of Treasury Steve Mnuchin commented, “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.”
Critics of the change, however, claim that it might encourage political donation from donors who wish to go around the law or remain hidden.
Former director of the IRS division for tax-exempt organizations, Marcus S. Owens, said, “It’s a clear signal that the I.R.S. and now the Treasury Department are not interested in any significant oversight of nonprofits. 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.”
Owen went on to add that the timing of this decision is particularly notable because it occurred “on the same day that a Russian woman, Mariia Butina, was charged, accused of trying to infiltrate a pro-gun rights organization believed to be the N.R.A.”
Notre Dame law professor Lloyd Hitoshi Mayer claims this measure “will make so-called dark money a bit darker,” because the public will have no way of knowing whether or not any of these groups are funded by numerous large donors.
Prior to this measure, nonprofit organizations were required disclose the names of donors who made contributions of over $5,000 per fiscal year. Nonprofit organizations that exclusively fund political campaigns, however, will still need to provide the government with the names of large donors.
The IRS issued guidance on Monday, saying, “The requirement to report such information increases compliance costs for some private parties, consumes I.R.S. resources in connection with the redaction of such information, and poses a risk of inadvertent disclosure of information that is not open to public inspection.”
Steven M. Rosenthal, however, claims this measure takes away the agency’s authority and oversight. “The I.R.S. audits tax-exempt organizations once in a blue moon and only after many years,” Rosenthal said, adding that following the money trail would be “an impossible challenge.”
Meanwhile, Senate majority leader Mitch McConnell and Republicans alike praised the measure, referring to the new policy decision as common sense. McConnell noted that the change comes as “particularly welcome news to those of us who intently are focused on defending the First Amendment, for those of us who over the years have raised concerns during the last administration about activist regulators punishing free speech and free association.”
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