TaxProf Blog

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

Wednesday, July 18, 2018

Treasury Department Restricts Donor Disclosure Requirement To § 501(c)(3) Groups

Treasury Department Logo (2017)Press Release, Treasury Department and IRS Announce Significant Reform to Protect Personal Donor Information to Certain Tax-Exempt Organizations:

The Treasury Department and IRS announced today that the IRS will no longer require certain tax-exempt organizations to file personally-identifiable information about their donors as part of their annual return.  The revenue procedure released today does not affect the statutory reporting requirements that apply to tax-exempt groups organized under section 501(c)(3) or section 527, but it relieves other tax-exempt organizations of an unnecessary reporting requirement that was previously added by the IRS.  

Nearly fifty years ago, Congress directed the IRS to collect donor information from charities that accept tax-deductible contributions.  That statutory requirement applies to the majority of tax-exempt organizations, known as section 501(c)(3) organizations, receiving contributions that can be claimed by donors as charitable deductions.  This policy provided the IRS information that could be used to confirm contributions to those organizations.

By regulation, however, the IRS extended the donor reporting requirement to all other tax-exempt organizations—labor unions and volunteer fire departments, issue-advocacy groups and local chambers of commerce, veterans groups and community service clubs.  These groups do not generally receive tax deductible contributions, yet they have been required to list the names and addresses of their donors on Schedule B of their annual returns (Form 990).

“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,” said U.S. Treasury Secretary Steven T. Mnuchin.  “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.”

https://taxprof.typepad.com/taxprof_blog/2018/07/treasury-department-restricts-donor-disclosure-requirement-to-501c3-groups.html

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Comments

It has been clear for some time that donor disclosure laws are a tool to enable crowdsourced suppression of unwelcome political speech. This change was overdue.

Posted by: AMTbuff | Jul 20, 2018 2:57:55 PM

AMTbuff, reporting of this by the NYT (in above links) and CNN reinforces your point. They used their headlines to blame organizations that they consider politically unpopular.

"NRA and some other nonprofits will no longer need to identify their donors to the IRS"

Huh? Why the headline focus on the NRA, then? The headline could have just as easily read "NAACP and some other nonprofits" or "Planned Parenthood and some other nonprofits." There's no justification given in the article for the focus on the NRA in particular when we're talking about a rule that affects literally every 501(c)(4).

Posted by: Woody | Jul 22, 2018 11:02:45 AM