Democrats press Trump Treasury picks on donor disclosure guidelines

Democrats press Trump Treasury picks on donor disclosure guidelines
© Greg Nash

Democratic senators at a hearing on Wednesday pressed Treasury Department nominees on guidance the department issued last year reducing donor disclosure requirement for certain tax-exempt groups.

“This makes it easier for dark-money groups to be able to do their business in secret,” Senate Finance Committee ranking member Ron WydenRonald (Ron) Lee WydenOVERNIGHT ENERGY: Watchdog report raises new questions for top Interior lawyer | Senate Democrats ask Trump to withdraw controversial public lands nominee | Border wall water use threatens endangered species, environmentalists say Watchdog report raises new questions for top Interior lawyer Trump signs executive orders after coronavirus relief talks falter MORE (D-Ore.) said.

The Finance Committee held a hearing on four nominations to Treasury and tax court positions. These included the nominations of Brent McIntosh, the current Treasury general counsel, to be a Treasury undersecretary, and Brian Callanan, the current Treasury deputy general counsel, to succeed McIntosh as general counsel.

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Democrats focused many of their questions to McIntosh and Callanan on the process Treasury undertook before issuing the donor disclosure guidance. 

Under the guidance, which Treasury issued with the IRS, certain tax-exempt groups — including social-welfare organizations such as the National Rifle Association and the American Civil Liberties Union — will no longer be required to report the names and addresses of major donors on annual forms.

Republicans have said the guidance is important in order to protect taxpayers’ privacy and First Amendment rights. But Democrats have long taken issue with the guidance, which they say could make it easier for foreign government and “dark money” groups to influence U.S. elections. Last year, the Senate approved a resolution to overturn the guidance, though the House did not take it up.

Wyden and Sen. Maggie HassanMargaret (Maggie) HassanSenate Democrats demand answers on migrant child trafficking during pandemic Hillicon Valley: Feds warn hackers targeting critical infrastructure | Twitter exploring subscription service | Bill would give DHS cyber agency subpoena power Senate-passed defense spending bill includes clause giving DHS cyber agency subpoena power MORE (D-N.H.) asked the Treasury nominees about the decision to not provide a comment period before issuing the donor guidance.

Hassan noted that two states, Montana and New Jersey, have challenged the guidance in court because there wasn’t a public notice and comment period. She argued that the guidance could make it harder for the government to go after pharmaceutical companies who funded nonprofits that provided fraudulent information about drug addiction.

“In effect, the Treasury has hamstrung law enforcement’s ability to follow the money and hold pharma accountable for fraud,” she said.

McIntosh said the IRS made the decision to issue the guidance without a notice and comment period. He said he was aware that the guidance was going to be issued but he didn’t decide that the guidance wouldn’t come in the form of a regulation.

McIntosh also said he thinks there is a “long tradition” of the IRS relieving reporting requirements without notice and comment.

Callanan said that other units at Treasury and the IRS first analyzed the guidance action, and that he reviewed their analysis and “was comfortable with the substantive and procedural legal considerations, that it was within the statutory authority.”

Sen. Bob CaseyRobert (Bob) Patrick CaseySenate Democrats demand answers on migrant child trafficking during pandemic The Hill's Coronavirus Report: Rep. Fred Upton says it is 'tragic' to see Americans reject masks, social distancing; Russia claims it will approve COVID-19 vaccine by mid-August People with disabilities see huge job losses; will pandemic roll back ADA gains? MORE Jr. (D-Pa.) asked the nominees if Treasury’s Financial Crimes Enforcement Network (FinCEN) was consulted before the guidance was issued.

Callanan said that FinCEN generally doesn’t make use of tax-return information, and that the legal path for FinCEN to access such information is “exceedingly narrow.” He said that he didn’t know if FinCEN was consulted but would look into it. 

Callanan also said, in response to a letter Wyden and Casey sent to the IRS earlier this month, that lawyers for the IRS’s criminal tax function were consulted.

Sen. Catherine Cortez MastoCatherine Marie Cortez MastoSenate Democrats demand answers on migrant child trafficking during pandemic OVERNIGHT ENERGY: Trump signs major conservation bill into law | Senate votes to confirm Energy's No. 2 official | Trump Jr. expresses opposition to Pebble Mine project Senate votes to confirm Energy's No. 2 official MORE (D-Nev.) asked if Treasury was lobbied to reduce tax-exempt groups’ donor disclosure requirements.

Callanan said he was aware of a public letter from a number of tax-exempt groups, and that there were a number of lawmakers who had asked about the issue, including Sen. Ron JohnsonRonald (Ron) Harold JohnsonHillicon Valley: Facebook removed over 22 million posts for hate speech in second quarter | Republicans introduce bill to defend universities against hackers targeting COVID-19 research | Facebook's Sandberg backs Harris as VP pick Republicans set sights on FBI chief as Russia probe investigations ramp up Davis: The Hall of Shame for GOP senators who remain silent on Donald Trump MORE (R-Wis.).

Wyden said he has “deep concerns” about McIntosh and Callanan’s nominations because of their roles at Treasury when the donor guidance was issued and because of their involvement in Treasury’s rejection of House Democrats’ request for President TrumpDonald John TrumpDemocrat calls on White House to withdraw ambassador to Belarus nominee TikTok collected data from mobile devices to track Android users: report Peterson wins Minnesota House primary in crucial swing district MORE’s tax returns.

Wyden had put a hold on the nominations in June, because he found Treasury’s responses to his questions about the handling of the tax return request unsatisfactory. Last week, Wyden announced that he would let the nominations move forward, after Treasury provided information that the senator said confirmed that the department’s actions are “unprecedented.” 

“Mr. McIntosh and Mr. Callanan are currently the top lawyers at the Treasury Department,” Wyden said. “It has appeared that Treasury’s leadership is more interested in protecting Donald Trump and party interests than guaranteeing the department follows the law. So in my judgment, that’s not the kind of conduct that gets you a promotion.”