TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, March 10, 2016

The IRS Scandal, Day 1036

IRS Logo 2Press Release, California Violates Federal Donor Privacy Law; Kamala Harris Is the ‘Lois Lerner’ of State Attorneys General:

American Target Advertising, Inc., America’s largest and oldest conservative direct marketing and fundraising consulting agency, filed comments this week with California Attorney General Kamala Harris explaining that her dragnet demands for the names of donors to charities and other nonprofit organizations that ask Californians for donations violate post-Watergate reforms to the Internal Revenue Code. The tax code protects against unauthorized inspection of and intra-office access to confidential federal tax return information by government officials, and creates an exclusive and rigid regime for state charity regulators that Ms. Harris has bypassed in obtaining donor names on Schedule B of charities’ federal tax returns. The comments address a proposed confidentiality rule issued by Ms. Harris, and may be viewed here.

“We have seen the lawlessness directed at nonprofit organizations under ex-IRS official Lois Lerner, and her arrogance in acting ‘above the law.’ The very partisan Ms. Harris is carrying on that formula in her role as California’s top charity regulator,” said lawyer and fundraising executive Mark Fitzgibbons, who added, “The quantity of charities affected by California’s evasion of federal law far exceeds those affected by Lois Lerner’s lawlessness.”

Citing federal tax code section 6104(c) as “exclusively and rigidly” regulating the process for accessing and using confidential federal tax return information in administration of state charitable solicitation laws, interpretations by the IRS, and even a published article by the former head of California’s Registry of Charitable Trusts, the comments state: “[D]emands for Schedule B donor names and addresses are a bold, brash, and startling statement that the Attorney General believes she is not bound by or beholden to IRC 6104(c).”

Ms. Harris unilaterally decided to use the charitable solicitation registration process to acquire confidential donor names on Schedule B of charities’ federal tax returns. Those demands also violate the rights of association and privacy explained in the 1958 landmark case NAACP v. Alabama.

Another set of comments explaining the potential civil and criminal penalties for state officials who engage in unauthorized inspection of confidential federal tax return information, signed by five lawyers who specialize in tax and nonprofit law, were filed and may be viewed here. Both sets of comments were sent to Janet Kleinfelter, president of the National Association of State Charity Officials, which organization claimed Lois Lerner as its “partner in the regulation of charities.”

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Comments

So what is her reason for needing this information, how was her office able to perform their responsibilities in past years when they didn't have it, and how is she going to be held responsible for any misuse of this information by her or her proxies?

Until she can answer those questions to everyone's satisfaction, the answer should be a resounding denial of those records. The potential for abuse is too high.

Posted by: ruralcounsel | Mar 10, 2016 7:20:33 AM

Kamala "L'Etat C'est Moi" Harris overstepping the law? I am SHOCKED!

Posted by: mojo | Mar 10, 2016 7:59:03 AM

It's time to do away with the idea of anything tax free or exempt as no longer part of our system of government.

Posted by: Teapartydoc | Mar 10, 2016 8:41:12 AM

Customary conservative claptrap. Sec. 6104 applies to the IRS and how it may share information with states. Harris is not trying to obtain the information from the IRS. She is seeking it directly from applicants and third parties. That kind of access is not regulated by the IRC. It is similar to parties in litigation with each other who try to obtain each other's tax returns. The IRC does not apply to such situations. So keep calm and vote for Ted Cruz. It will make you feel better, but it probably won't do anything. Harris is neither breaking the law nor overreaching.

Posted by: Publius Novus | Mar 10, 2016 10:28:34 AM

Publius, you make procedural arguments about a substantive problem. Weak, very weak.

Posted by: ruralcounsel | Mar 11, 2016 4:56:46 AM