Does the IRS Need to Stop Collecting Information on Donors to Tax-Exempt Groups? (H.R. 4916)
Do you support or oppose this bill?
What is H.R. 4916?
(Updated August 9, 2019)
This bill would prohibit the Internal Revenue Service (IRS) from requiring that the identity of contributors to 501(c) organizations be included in Schedule B of those groups’ tax returns. The IRS has been considering eliminating Schedule B disclosures altogether since December 2015.
Current law requires 501(c) groups to submit Schedule B with a list of names, addresses, and donation amounts belonging to donors who gave more than $5,000 in a single tax year. Although the information is confidential under federal law, there have been instances of the IRS and state regulators making the disclosures publicly available.
Argument in favor
Requiring the submission of the names and addresses of donors to tax-exempt groups has a chilling effect on free speech. Besides, the IRS is already considering ending these disclosures because it and state regulators have inadvertently disclosed personal information to the public.
Argument opposed
Disclosures of donor names, addresses, and donation amounts don’t deter people from donating to causes they believe in. Even if there are accidental public releases of confidential information, these disclosures are needed to ensure that taxpayers aren’t being defrauded by these groups.
Impact
Individuals who make donations to tax-exempt organizations; 501(c) organizations; and the IRS.
Cost of H.R. 4916
A CBO cost estimate is unavailable.
Additional Info
In-Depth: Sponsoring Rep. Peter Roskam (R-IL) introduced this bill to protect donors to tax-exempt groups from having confidential information on Schedule B forms exposed through the negligence of the IRS or state regulators:
“The IRS targeting of certain groups is an egregious violation of privacy and of the First Amendment and the accessing of Schedule B forms by bad actors within the agency has been a key component of that targeting. The IRS has confirmed that they have no need for the Schedule B, so H.R. 4916 rectifies that and limits the IRS' ability to target organizations based on improper criteria or improperly released information, protecting the personal information of donors.”
In the past, Congressional Democrats took a dimmer view of this bill's predecessor with Rep. Sander Levin (D-MI) expressing concerns about foreign donations to such groups being illegally used in elections:
“Currently, foreign money cannot be legally given or spent in our elections. And the only real protection we have against the use of foreign money by politically active 501(c)(4) organizations is that they must disclose their donors to the IRS.”
This legislation has the support of 10 cosponsors in the House, all of whom are Republicans. During the last Congress this bill's predecessor passed the House on a party-line 240-182 vote.
Of Note: Three states — California, Florida, and New York — currently require the Schedule B form to be submitted without any redactions, so all donor information is visible. While she served as California attorney general, current U.S. Senator Kamala Harris (D) was involved in a publicized legal battle with Americans for Prosperity (AFP) over Schedule B forms, which Harris claimed are necessary to “protect taxpayers against fraud.”
Harris’ case suffered a setback following an April 2016 federal court ruling that the disclosures are unconstitutional. District Court Judge Manuel Real cited “ample evidence” that AFP’s donors faced death threats and intimidation once their support of the group became public. California published nearly 1,800 confidential Schedule B forms online through its registry of charitable groups, leading Judge Real to say:
“The pervasive, recurring pattern of uncontained Schedule B disclosures — a pattern that has persisted even during this trial — is irreconcilable with the Attorney General’s assurances and contentions as to the confidentiality of Schedule Bs collected by the Registry.”
Media:
- Cosponsoring Rep. Diane Black (R-TN) Press Release
- Accounting Today (Previous Version)
- CBS SF Bay Area (Previous Version)
- Free Beacon (Previous Version)
- Los Angeles Times (Previous Version)
- Philanthropy New York (Previous Version)
- Politico (Previous Version)
- Wall Street Journal (Previous Version)
- Center for Individual Freedom (In Favor)
- Huffington Post (Opposed)
(Photo Credit: Flickr user Hareshd5000)
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