Republicans Want to Remove Donor Information From Nonprofit Tax Returns

House Republicans seek to prevent the IRS from collecting information about nonprofits' donors, calling for change in the federal requirement for nonprofits to list donors of $5,000 or more on their tax returns.

The House Ways and Means Committee on April 28 approved the measure—titled "Preventing IRS Abuse and Protecting Free Speech Act"—which would only require nonprofits to report information tied to certain tax shelters and donations from certain employees, according to The Wall Street Journal. A week earlier, the House added more reductions to the IRS budget by passing bills that limited its ability to pay bonuses and hire workers.

The reason for the effort stemmed from the IRS accidentally releasing donor information about the National Organization for Marriage, which has ties to the Republican Governors Association, The Wall Street Journal reported. The donor lists are supposed to be redacted from the publicly released tax forms.

"The IRS has demonstrated inability to hold confidential information close, and if it’s not necessary for tax administration, then let’s mitigate this problem and not require organizations to submit it," U.S. Rep. Peter Roskam, (R, Ill.) told The Wall Street Journal.

IRS officials have considered making the move to no longer require donor information in the past, but have never implemented the change, according to The Wall Street Journal.

But the bill also has the support of the Koch brothers’ Freedom Partners, a tax-exempt trade organization that provides millions of dollars to groups that support candidates and causes that align with the Kochs’ libertarian views, according to USA Today. This is not a new fight for the brothers, who were able to fend off California state officials who tried to learn the identities of donors to their other group, Americans for Prosperity Foundation. A federal judge ruled in the brothers’ favor last month, but the state’s attorney general plans to appeal.

"[Information about donors] is not used for any real, legitimate purpose, but, by and large, seems to be used by people or activists groups to get lists together to target and intimidate people, and that’s completely inappropriate," Mark Holden, Freedom Partners chairman and Koch Industries executive, told USA Today.

Tax-exempt groups have contributed $500 million to federal elections since 2011, Fred Wertheimer, president of watchdog group Democracy 21, told USA Today.

"What the House Republicans on the committee are doing is taking a major campaign-finance problem and making it worse," he said.

Democracy 21 opposes the measure, which Wertheimer believes removes the ability to prevent illegal foreign contributions to politics.

"You are eliminating any ability to hold nonprofits accountable," he said.

Late last year, the IRS proposed a new rule that would allow nonprofits to self-report donations of less than $250, but would require them to collect sensitive donor information, including Social Security numbers. Nonprofits fiercely opposed the change, citing privacy concerns, and in January the IRS withdrew the proposal.