This bill — the Spotlight Act — would reverse a recent Treasury Department decision exempting 501(c)4 organizations from disclosing their donors’ names. It would amend the tax code to require 501(c) charitable organizations, including 501(c)4, (c)5, and (c)6 organizations, to include the names and addresses of donors who contribute $5,000 or more on their annual tax returns with the Internal Revenue Service (IRS). It’d also require these organizations to make their donors’ information available to the public.
What is House Bill H.R. 6900?
Cost of House Bill H.R. 6900
In-Depth: Rep. David Price (D-NC) introduced this bill to reverse the Treasury Department’s recent decision allowing politically active non-profit organizations to avoid disclosing certain donor information to the IRS, and to compel these organizations to disclose major donors’ names to the public:
“The Trump administration’s decision to allow politically active organizations to obscure millions in dark campaign money further weakens our already failing campaign finance system. At a time when our elections are plagued by unlimited corporate spending, anonymous donors, and illegal foreign meddling, this action provides a mask to special interests and bad actors while diminishing the power of voters.”
In September 2018, the Ninth Circuit Court ruled that the state of California could collect information about major donors to 501(c)4 charitable organizations, including PACs. However, the Ninth Circuit’s ruling did not make this information public, and California Attorney General Xavier Becerra’s office would only make it public in “very limited circumstances.”
However, the Supreme Court has said that forcing charitable groups, even those involved in politics, to disclose their donors’ names could chill free speech. Ray Cordato, a resident scholar at the John Locke Foundation who has defended anonymous speech and anonymous donations as essential to avoiding harassment and retaliation and preserving free speech and political dialogue, concurs, arguing:
“It’s clear what the purpose of this [bill] is. It’s a way of scaring people into not giving money to certain kinds of organizations. The fact of the matter is this is the kind of thing that was used against Martin Luther King and civil rights organizations [by racists seeking the names of their contributors]. Now it is [by] the Left, and everyone knows now they are all about intimidation.”
When announcing the Treasury Department’s July 2018 decision to exempt 501(c)4 organizations from disclosing their donor information to the IRS, Treasury Secretary Steve Mnuchin argued that the IRS doesn’t need these organizations’ donor information to do its job:
“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. It is important to emphasize that 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. The IRS’s new policy for certain tax-exempt organizations will make our tax system simpler and less susceptible to abuse.”
Of Note: In July 2018, the Treasury Department that it would begin allowing politically active 501(c)4 charitable organizations to shield some donor information from the IRS. 501(c)3 charitable organizations, whose donors can claim tax deductions from their contributions, are still required to disclose information about their donors to the IRS. 501(c)4 groups, whose donors generally can’t claim tax deductions, are exempted from sending donor information to the IRS.
Those who favor requiring nonprofits that engage in political activity to disclose their donor information argue that a lack of disclosure allows anonymous donors to spend huge sums of unchecked money to rig the system in their own favor.
- Sponsoring Rep. David Price (N-NC) Press Release
- End Citizens United Press Release (In Favor of Senate Version)
- Treasury Department Decision on 501(c)3 Organizations
- Carolina Journal
Summary by Lorelei Yang(Photo Credit: iStock.com / D-Keine)
To amend the Internal Revenue Code of 1986 to require certain tax-exempt organizations to include on annual returns the names and addresses of substantial contributors, and for other purposes.
- Not enactedThe President has not signed this bill
- The senate has not voted
- The house has not voted
Committee on Ways and MeansIntroducedSeptember 26th, 2018
- house Committees