House Democrats urge IRS to reverse Trump-era rule reducing donor disclosure

House Democrats urge IRS to reverse Trump-era rule reducing donor disclosure
© Greg Nash

A group of House Democrats on Wednesday sent a letter to the Treasury Department and IRS urging them to reverse a Trump-era rule that limits donor disclosure requirements for politically active nonprofits.

The letter from the House Democrats comes after Senate Democrats sent a version of the letter to Treasury and the IRS last month.

"As it stands, this policy weakens federal tax laws, campaign finance laws, and longstanding efforts to prevent foreign interference in U.S. elections," the lawmakers wrote in a letter to Treasury Secretary Janet YellenJanet Louise YellenOn The Money: Yellen to Congress: Raise the debt ceiling or risk 'irreparable harm' | Frustration builds as infrastructure talks drag Yellen to Congress: Raise the debt ceiling or risk 'irreparable harm' Africa doesn't deserve last place in the vaccine race MORE and IRS Commissioner Charles Rettig.

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More than 30 House Democrats signed the letter, including Reps. Ted DeutchTheodore (Ted) Eliot DeutchIncorporating mental health support into global assistance programs Ethics panel upholds 0 mask fines against Greene, other GOP lawmakers Sanders reaffirms support for Turner in Ohio amid Democratic rift MORE (Fla.), Peter WelchPeter Francis WelchShakespeare gets a congressional hearing in this year's 'Will on the Hill' Democrats debate shape of new Jan. 6 probe On the Money: Tech giants face rising pressure from shareholder activists | House Democrats urge IRS to reverse Trump-era rule reducing donor disclosure | Sen. Warren, Jamie Dimon spar over overdraft fees at Senate hearing MORE (Vt.), David CicillineDavid CicillineLobbying world Progressive fighting turns personal on internal call over antitrust bills Top Democrat leads bipartisan trip to Middle East MORE (R.I.), and Jason CrowJason CrowOvernight Defense: Senate panel adds B to Biden's defense budget | House passes bill to streamline visa process for Afghans who helped US | Pentagon confirms 7 Colombians arrested in Haiti leader's killing had US training House passes bill to streamline visa process for Afghans who helped US Equilibrium/ Sustainability — Presented by NextEra Energy — West Coast wildfires drive East Coast air quality alerts MORE (Colo.).

Treasury and the IRS last year finalized regulations under which certain tax-exempt groups no longer have to disclose to the IRS on annual forms the names and addresses of major donors. The guidance applies to social-welfare organizations, business leagues and labor unions. Charities and certain political organizations still have to report the names and addresses of donors.

Treasury and the IRS said when they finalized the rule that the donor information isn't needed for tax administration purposes and that it was removing the reporting requirements because of the burdens and risks related to the requirement. The agencies also said that Congress hasn't directed the IRS to enforce campaign finance laws.

But the House Democrats expressed concerns that removing the donor reporting requirements would make it harder for the federal government to enforce the ban on foreign spending in U.S. elections and to police "dark money."

Reinstating the reporting requirements "is a critical step in preventing special interests and foreign actors from exploiting loopholes at the expense of the American people," the lawmakers wrote.  

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Republicans are strongly supportive of the Trump-era regulations, arguing that the guidance helps to prevent donor information from improperly becoming public and helps to prevent the IRS from targeting tax-exempt groups and their donors for their political beliefs. While the donor information was supposed to be kept private, there have been past instances where information was made public.

Senate Republicans, led by Minority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellGrassley pressured to run as Democrats set sights on Iowa House Democrats grow frustrated as they feel ignored by Senate Democrats question GOP shift on vaccines MORE (R-Ky.) and Sen. Mike BraunMichael BraunGOP senators invite Yellen to brief them on debt ceiling expiration, inflation Rand Paul introducing measure to repeal public transportation mask mandates Senate plants a seed for bipartisan climate solutions MORE (R-Ind.), introduced legislation last week aimed at codifying the rules the remove the reporting requirements.

“Americans would remain free from a federal dragnet collecting private information that it neither needs nor uses for legitimate law enforcement purposes," McConnell said in a Senate floor speech. "Information that can be mishandled — or worse, used to target and harass Americans based on their views."