The House passed Republican-backed legislation Tuesday that would prevent the Internal Revenue Service from requiring tax-exempt 501(c) organizations to disclose the names of donors on Form 990.
The bill, introduced by House Ways and Means Oversight Subcommittee chairman Peter Roskam, R-Ill., comes in response to the IRS targeting scandal, when the IRS’s Exempt Organizations unit asked groups seeking tax-exempt status under Section 501(c)4 of the Tax Code about their political activities and in some cases to provide lists of their donors.
House Ways and Means Committee chairman Kevin Brady, R-Texas, praised the legislation. “We fought hard to push forward a ban on IRS political targeting as part of the PATH Act,” he said, referring to last year’s tax extenders legislation. “And, last December, that ban was signed into law for the very first time. “But we still have work to do to clean up the IRS and hold it more accountable to the taxpayers it serves. The Preventing IRS Abuse and Protecting Free Speech Act continues that critical effort. This bill authored by Congressman Roskam would prohibit the IRS from collecting the identity of people who donate to tax-exempt organizations. During our committee’s IRS political targeting investigation, we learned that the IRS not only singled out certain organizations for heightened scrutiny, but in some cases it even demanded they turn over a list of all their donors. These invasions of privacy are completely unacceptable.”
In addition, the bill effectively eliminates the Schedule B from Form 990 that most 501(c) nonprofits are required to file reporting the names of anyone who contributes more than $5,000. The information is supposed to be kept confidential, although the IRS agreed to pay $50,000 in 2014 to a group called the National Organization for Marriage to settle a lawsuit over claims that the information was leaked ahead of the 2012 election.
Rep. Sander Levin, D-Mich., the ranking Democrat on the House Ways and Means Committee, objected to the bill, pointing out that it would encourage “dark money” contributions to elections in which donor names remain undisclosed.
“The Republican Majority believes the more hidden money in politics, the better,” he said Tuesday. “Freedom of speech, they say, requires more and more dark money, or that Democracy requires the ability of a few key people to write a $100 million check without anyone knowing who signed it. As a Koch brothers executive claimed: Americans have the right to ‘anonymous free speech.’ And this bill now would help extend that anonymity to foreign individuals who contribute in violation of our laws.”
The conservative activist group FreedomWorks hailed passage of the legislation in the House. “Passage of this bill by the House is an important step in opposing political intimidation from the IRS,” said FreedomWorks CEO Adam Brandon in a statement. “This powerful and corrupt tax agency should not be in a position to leak donor names to try to chill free speech. The Senate should take up this legislation immediately to help protect a healthy public policy discourse and rein in the IRS.”
Rep. Xavier Becerra, D-Calif., chairman of the Democratic Caucus, denounced the bill, however. “Secret money is hijacking our American democracy,” he said. “This bill would prohibit the disclosure of substantial contributions and promote special interests’ secrecy. What do I mean by that? Well this bill becomes a license to secretly influence our elections. How? Foreign government doesn’t like where American policy is going so guess what? They want to influence who gets elected. What do they do? They don’t make a contribution to a candidate because they can’t under the law. What can they do? They can now give to a ‘social welfare organization’ and let them use the money to politic in our campaign. And guess what? If this bill becomes law, you’ll never know the name of that foreign government or that foreign government official who makes that contribution. It could be a $5000 contribution, it could be a $5 billion contribution—you’ll never have to report it if you’re one of these ‘tax-exempt’ organizations.”