Bullock: IRS shouldn't reduce donor reporting requirements

Bullock: IRS shouldn't reduce donor reporting requirements
© Greg Nash

Montana Gov. Steve BullockSteve BullockSuper PAC seeks to spend more than million supporting Yang The Hill's Campaign Report: Biden camp faces new challenges Private flight spending soars in Democratic presidential race MORE (D), a 2020 presidential candidate, on Monday urged the IRS not to adopt proposed rules that would reduce donor reporting requirements for certain tax-exempt groups.

"I am deeply concerned that the proposed rule will further degrade transparency for so-called 'dark money' groups that spend money to influence elections," Bullock wrote in formal comments to the IRS, which come after he successfully challenged a previous version of IRS guidance on this topic.

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"Most concerning, the proposed rule threatens to invite foreign election influence and thwart the enforcement of state and federal prohibitions on foreign election spending," he added. "Finally, the proposed rule will create additional hurdles for state revenue agencies and charity regulators charged with making state tax and compliance determinations."

Bullock sent the comments in his official capacity as governor.

The IRS last month issued proposed rules that would do away with a requirement for certain tax-exempt groups to report to the agency the names and addresses of major donors on annual tax forms. Groups that would be affected by the proposed rules include social welfare organizations such as the National Rifle Association and American Civil Liberties Union, labor unions and business leagues.

The IRS had previously issued guidance on this topic last year. But Montana and New Jersey filed a lawsuit challenging the guidance, and a federal judge in Montana sided with the two states in July and ordered that the initial version of the guidance be set aside.

The judge ruled that the initial version was unlawful because it did not go through a notice and comment period. The new IRS guidance is going through the formal rulemaking process and is subject to a comment period.

The IRS has said that it doesn't need the names and addresses of the donors to carry out tax laws, and has also noted that the donor information, which is supposed to be kept private, has inadvertently been made public in the past.

But Bullock argues that the IRS's proposed rules would make it harder for states to determine whether organizations are following tax and consumer-protection laws. He also argued that the proposed rules would hinder the ability for the IRS and states to audit tax-exempt groups, and that the risks of the names and addresses of donors being made public are slim.

"The need for the IRS and the states to be able to review the donor identifying information outweighs the minimal risks of inadvertent disclosure," Bullock wrote.

Comments on the IRS's proposed rules are due by Dec. 9.