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An IRS Advance for Speech Privacy

Wall Street Journal

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Washington, July 17, 2018 | comments
Republicans should take a cue and pass legislation to bar the IRS from such donor-detail collection while they still control the House and Senate.
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By The Editorial Board
 

Presidents swear an oath to “protect and defend the Constitution,” and that includes guarding against restrictions on political speech. So congratulations to Treasury Secretary Steven Mnuchin and Acting IRS Commissioner David Kautter for advancing that cause on the controversial issue of donor privacy.

Treasury announced Monday evening that the Internal Revenue Service will no longer require most 501(c) organizations to include donor names and addresses on their tax Form 990 Schedule B. Nonprofits have had to divulge those sensitive details for donations above $5,000. From now on, only 501(c)(3)s that receive a tax deductible benefit will have to provide such donor information. This new IRS revenue procedure will exempt some 45,000 nonprofits from the reporting rule, including unions and social-welfare groups.

Donor names are supposed to remain private, but the government has inadvertently revealed donor lists. IRS employees also used donor-information demands as part of their harassment of Tea Party organizations during the Obama Administration. State Attorneys General have even sought to require nonprofits to release Schedule B details to state regulators, with a goal of requiring public disclosure that could tee up donors for political harassment—a threat to free speech. The new IRS policy means states won’t be able to exploit this donor information as easily.

Congress required the IRS to collect 501(c)(3) information in the 1960s, but in 1971 the Nixon Administration extended the reporting requirement to other nonprofits. The Trump Treasury is simply rolling back that rule, and rightly so given that the IRS is not a campaign-finance regulator. The IRS’s job is to collect revenue for the government.

 

Under the new rule the IRS will continue to disclose the size of donations, and nonprofits are still required to retain donor information for their records in case of audits. But sparing nonprofits an onerous reporting requirement will leave more money for charitable purposes.

Under current law the IRS Commissioner can make this procedural change without a formal rule-making, though a future Administration could reverse it. Republicans should take a cue and pass legislation to bar the IRS from such donor-detail collection while they still control the House and Senate.

Appeared in the July 17, 2018, print edition.

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