On Monday, in a major victory for conservative groups, the Treasury Department announced that some tax-exempt groups that participate in politics will no longer have to disclose their donors to the Internal Revenue Service. Those groups include Section 501(c)4 groups; conservative Section 501(c)4 groups were targeted by the IRS during the Obama Administration.
In October 2017, after a four-year-long struggle by conservative groups to prove that the IRS during the Obama Administration had targeted them, the IRS finally admitted in court that the charges were true. The consent order acknowledged, “The IRS admits that its treatment of Plaintiffs during the tax-exempt determinations process, including screening their applications based on their names or policy positions, subjecting those applications to heightened scrutiny and inordinate delays, and demanding of some Plaintiffs’ information that TIGTA determined was unnecessary to the agency’s determination of their tax-exempt status, was wrong. For such treatment, the IRS expresses its sincere apology.”
In 2013, the Obama Administration had issued proposed guidance targeting 501(c)(4) social welfare organizations. Newsmax reported:
The proposed guidance, issued by the Treasury Department and the IRS, seeks to provide more definitive rules regarding the types of activities that may qualify as political activity by creating a new term — “candidate-related political activity.” Under the proposed regulations, such “candidate-related political activity” would not promote an organization’s social welfare purpose, and as a result, the organization would be limited in the amount of time and money it could spend on such activities.
Now, with the Treasury Department’s announcement, although charities and political groups will still be required to provide the names and addresses of donors, some tax-exempt groups will not have to provide the donors’ names and addresses. Among those groups are an arm of the National Rifle Association and the U.S. Chamber of Commerce.
Treasury Secretary Steven Mnuchin stated, “Americans shouldn’t be required to send the IRS information that it doesn’t need to effectively enforce our tax laws, and the IRS simply does not need tax returns with donor names and addresses to do its job in this area. This change will in no way limit transparency. The same information about tax-exempt organizations that was previously available to the public will continue to be available, while private taxpayer information will be better protected.”
Senate Majority Leader Mitch McConnell added, “The IRS’s decision is a move in the right direction to end activist regulators’ culture of intimidation to silence political speech.”
The GOP House passed a bill to eliminate the requirement for revealing names and addresses in 2016, but the Obama administration blocked it. That same year, as The Wall Street Journal notes:
In 2016, a federal judge blocked then-California Attorney General Kamala Harris’s demand for Americans for Prosperity’s donor list, saying she needed it for investigative purposes. In his ruling, the judge pointed out that the state’s “pervasive, recurring pattern” of accidental Schedule B disclosures to the public made it impossible to believe the attorney general would keep Americans for Prosperity’s donor list confidential.