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Public Citizen to the IRS: Don’t Blind Yourself to Foreign Meddling in U.S. Elections

Proposed Rule Change Would End Requirement That Nonprofit Groups Confidentially Report Their Donors to the IRS

WASHINGTON, D.C. – The IRS should not enact a proposed rule change that would eliminate the long-standing requirement that nonprofit organizations report the names and addresses of major donors to the IRS for confidential review, Public Citizen urged today.

Currently, most nonprofit organizations must file the names and addresses of donors who’ve given $5,000 or more to the IRS on their annual financial reports. The names and addresses are not made public but are used by the IRS to guard against self-dealing, improper loans or other illegal business practices by tax-exempt organizations. The IRS has proposed rulemaking to eliminate this reporting requirement.

“Our elections are under attack by foreign governments trying to buy votes through social media and laundering of campaigns funds,” said Craig Holman, government affairs lobbyist for Public Citizen’s Congress Watch division. “If the IRS carries through with this rule change and puts on blinders as to who is funding electioneering nonprofits, the agency will have opened a whole new window for foreign interests to pay for campaign ads through front groups masquerading as nonprofits.”

The IRS claims the reporting change would protect privacy and reduce compliance costs for nonprofits, and that the IRS could still request the donor information in the event it was needed for tax scrutiny.

“That’s the irony of this proposal,” said Emily Peterson-Cassin, advocate for Public Citizen’s Congress Watch division. “Even with the rule change, nonprofits still will have to collect the names and addresses of major donors in the event of an audit, so there is very little reduction in compliance costs. And the reported names and addresses under the current system are not made public, so there is very little privacy risk. In other words, there is no meaningful justification for this rule change.”

Public Citizen’s comments to the IRS are available here.