New York AG defends efforts on tax-exempt groups

Schneiderman’s letter marks the latest development in the debate over tax-exempt 501(c)(4) groups and their role in political campaigns, which has grown since the Supreme Court’s Citizens United decision in 2010. 

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The New York attorney general had, according to reports, sought tax information from a range of tax-exempt groups in recent months, including Crossroads Grassroots Policy Strategies on the right and Priorities USA Action on the left. 

The IRS did not immediately respond to a request for comment on Schneiderman’s letter, or about how state officials should seek tax records from nonprofit groups. 

Hatch and Camp’s offices also have yet to offer a comment, after the two said last week that states could only get tax return information about a 501(c)(4) from the IRS and only enough to administer state laws. 

In his Monday letter, Schneiderman noted that New York maintained a registry of charitable organizations, which includes some 501(c)(4) groups, as part of its oversight of nonprofit groups.

A source with knowledge of Schneiderman’s efforts noted that the attorney general had worked to ensure that nonprofit groups that raised or spent more than $25,000 in the state were on the registry. 

New York requests tax information for groups on the registry, but the source also did not say whether the state would disclose information on donors or other records from the groups. 

Many Democrats in general want the IRS to rein in 501(c)(4)s, which don’t have to reveal their contributors, but are supposed to focus on social welfare work. 

Democrats on Capitol Hill have also suggested implementing a “bright line test” to limit how much political work 501(c)(4)s do, and have said they will seek legislation on the issue if need be. 

Republicans, meanwhile, have urged the IRS to ensure that politics don’t play a role in updating any guidelines for 501(c)(4) groups.