Petition Seeks to Stop Bill to Limit Donor Identity Disclosures to IRS

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By Aaron E. Lorenzo

May 12 — Campaign finance concerns should outweigh disclosure worries, according to a petition seeking to block a bill to hide most identifying information on donors to tax-exempt, nonprofit groups.

The legislation (H.R. 5053), which would stop the Internal Revenue Service from collecting such material on those who give donations worth $5,000 or more, was advanced by the House Way and Means Committee on April 28.

The bill shouldn't go any farther, said the petition, which was organized by an online advocacy group called Care2.

“The Koch Brothers and other corrupt organizations are backing this bill strongly because it would allow them to become the middle man for dirty campaign money without anyone knowing,” the petition's author, Kelsey Bourgeois, wrote on Care2's website.

The legislation would hide contributions from drug lords, foreign governments and terrorists, she said.

Court Support

Supporters of the bill outside of Congress include the billionaire brothers Charles and David Koch, whose Americans for Prosperity Foundation recently won a U.S. District Court decision that ruled that the state of California couldn't force the IRS to disclose the conservative advocacy group's backers.

The IRS currently collects donor identities from groups organized under tax code Section 501(c) on Schedule B of Form 990 (Return of Organization Exempt From Income Tax), Form 990-EZ (Short Form Return of Organization Exempt From Income Tax) or Form 990-PF (Return of Private Foundation). The Schedule B information isn't supposed to get distributed publicly, unlike other Form 990 material.

But supporters of the bill, introduced by Rep. Peter Roskam (R-Ill.), have argued that the IRS has wrongly used the confidential identity information. Schedule B reporting would remain in effect under Roskam’s bill only for limited donors, including those who give $5,000 or more in a year and serve as an officer or director of the organization or work as one of its five highest-paid employees.

Transparency Concerns

Nevertheless, opponents don't think that goes far enough.

“While foreign money cannot be legally given or spent in our elections, the only real protection we currently have against the use of 501(c)(4) groups to launder foreign money into federal elections is that 501(c)(4) groups must disclose their donors, including foreign donors, to the IRS,” eight campaign transparency advocacy groups said in a letter to Ways and Means members ahead of their markup.

The committee advanced H.R. 5053 on a 23-15, party-line vote (83 DTR G-6, 4/29/16).

To contact the reporter on this story: Aaron E. Lorenzo in Washington at aaron@bna.com

To contact the editor responsible for this story: Brett Ferguson at bferguson@bna.com