The Chamber of Commerce and conservative groups on Tuesday praised the Trump administration’s rollback of donor reporting rules for trade associations, unions and other tax-exempt nonprofits that don’t qualify as charities, a change that means the IRS will no longer require those organizations to report the names and addresses of their donors in their annual filings.
“We applaud Treasury’s decision to rescind the donor disclosure requirements for some non-profit groups. This action will help ensure that sensitive donor information will not fall into the hands of those who wish to suppress the First Amendment right to free speech. The U.S. Chamber strongly supports the right of all organizations — no matter their ideological or political persuasion — to participate vigorously in our nation’s important policy conversations,” said Chamber spokeswoman Blair Holmes.
Freedom Partners, a conservative group partially funded by the Koch brothers, praised the policy change as a boost for privacy. “The Treasury Department and IRS took a positive step toward protecting the First Amendment rights of Americans. This was the right decision because citizens shouldn’t fear harassment or persecution over their beliefs,” said Executive Vice President Nathan Nascimento.
For decades, all tax-exempt organizations have been required to report the names and addresses of all of their donors to the IRS. Most such groups are organized under subsection 501(c)(3) of the tax code, which makes them charities where donations are tax deductible. However, there are other tax-exempt designations such as 501(c)(5), which covers labor groups, and 501(c)(6), which covers trade associations.
Treasury Secretary Steven Mnuchin said Monday that from now on, only the 501(c)(3) groups have to report the donor information each year. Others organized under the section 501(c) of the tax code are still required to gather the information, but only have to provide the information to the IRS upon request.
Groups organized under section 527 of the tax code, which covers political advocacy groups that attempt to influence elections, are unaffected by the change and must still report donor information to the IRS each year.
“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,” Mnuchin said.
The administration said there was simply no need to collect the information as it served no purpose in processing a tax exempt organization’s annual filing. Not requiring the the information to be filed will prevent any inadvertent disclosures or misuse of the information.
This would not affect transparency, Mnuchin argued. “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.”
