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Senator Urges IRS to Rescind Donor Disclosure Rule

SEP. 14, 2018

Senator Urges IRS to Rescind Donor Disclosure Rule

DATED SEP. 14, 2018
DOCUMENT ATTRIBUTES
  • Authors
    Johnson, Sen. Ron
  • Institutional Authors
    U.S. Senate
  • Code Sections
  • Subject Area/Tax Topics
  • Jurisdictions
  • Tax Analysts Document Number
    2018-37307
  • Tax Analysts Electronic Citation
    2018 TNT 182-32
    2018 EOR 10-54
  • Magazine Citation
    The Exempt Organization Tax Review, Oct. 2018, p. 343
    82 Exempt Org. Tax Rev. 343 (2018)

September 14, 2018

The Honorable David Kautter
Acting Commissioner
Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224

Dear Acting Commissioner Kautter:

Thank you for your response to me dated July 17, 2018.1 I applaud the Internal Revenue Service (IRS) for issuing a revenue procedure that relieves some non-profits from the obligation of disclosing donors' names and addresses to the IRS. While this action was welcome news, the Administration should do more to protect free political speech and association.2

The compelled disclosure of donor information held by tax-exempt groups, including Section 501(c)(4) social welfare groups, could cause harm to American taxpayers. There have been fourteen breaches of donor information held by the IRS since 2010.3 Details of these breaches are protected by taxpayer confidentiality laws,4 but the IRS notified a total of 577 taxpayers potentially affected by just three of the breaches.5

Although the risk of harm is elevated, the IRS acknowledges that there is no benefit to the wholesale collection of donor information. The IRS does not need tax-exempt groups to report donor information to administer federal tax law.6 Tax-exempt groups are still required to retain donor information and make it available to the IRS upon request.7

Ending forced disclosure of donor information to the IRS through a revenue procedure does not fully alleviate the threat. The IRS already faces a legal challenge to its revenue procedure, putting the procedure in jeopardy.8 In addition, a future administration could reverse the revenue procedure and renew the obligation for tax-exempt groups to disclose donor information.9 The best course of action for the IRS to take is to end forced submission of donor information altogether through a rulemaking.10

Given these considerations, I urge the Administration to formally rescind the regulation that requires tax-exempt organizations other than Section 501(c)(3) groups to submit donor information.11 Thank you for your attention to this matter.

Sincerely,

Ron Johnson
Chairman

cc:
The Honorable Claire McCaskill
Ranking Member

The Honorable Steven Mnuchin
Secretary of the Treasury

FOOTNOTES

1Letter from the Hon. David Kautter, Acting Commissioner, Internal Revenue Service, to Sen. Ron Johnson, Chairman, S. Comm. on Homeland Sec. & Gov't Affairs (July 17, 2018).

2See generally Letter from Sen. Ron Johnson, Chairman, S. Comm. on Homeland Sec. & Gov't Affairs, to the Hon. David Kautter, Acting Commissioner, Internal Revenue Service, and the Hon. Steven Mnuchin, Secretary, Dep't of the Treasury (May 31, 2018).

3See Letter from Acting Commissioner Kautter to Chairman Johnson, supra note 1, at 3.

4See generally 26 U.S.C. § 6103.

5Email from Internal Revenue Service's Off. of Legis. Affairs to S. Comm. on Homeland Sec. & Gov't Affairs (Sept. 4, 2018).

6Rev. Proc. 2018-38, 2018-31 I.R.B. 279-80; Phone conference between Treasury, IRS, and S. Comm. on Homeland Sec. & Gov't Affairs staff (June 29, 2018).

7Id.

8Alexander Bums, Montana Governor Sues F.R.S., Warning of 'Foreign Money' in Elections, N.Y. TIMES, July 24, 2018; see also Andy Grewal, Can Montana Force the IRS to Break the law?, 36 YALE J. ON REG.: NOTICE & COMMENT (July 31, 2018), http://yalejreg.com/nc/can-montana-force-the-irs-to-break-the-law/.

9See 26 C.F.R. § l.6033-2(g)(6); id. § 1.6033-2(a)(2)(ii)(t).

10See generally 5 U.S.C. § 553.

11See 26 C.F.R. § 1.6033-2(a)(2)(ii)(t).

END FOOTNOTES

DOCUMENT ATTRIBUTES
  • Authors
    Johnson, Sen. Ron
  • Institutional Authors
    U.S. Senate
  • Code Sections
  • Subject Area/Tax Topics
  • Jurisdictions
  • Tax Analysts Document Number
    2018-37307
  • Tax Analysts Electronic Citation
    2018 TNT 182-32
    2018 EOR 10-54
  • Magazine Citation
    The Exempt Organization Tax Review, Oct. 2018, p. 343
    82 Exempt Org. Tax Rev. 343 (2018)
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