The Trump administration will end a long-standing requirement that certain nonprofit organizations disclose the names of large donors to the IRS, a move that will allow some political groups to shield their sources of funding from government scrutiny.
The change, which has long been sought by conservatives and Republicans in Congress, will affect thousands of labour unions, social clubs and political groups as varied as arms of the AARP, the U.S. Chamber of Commerce, the National Rifle Association and Americans for Prosperity, which is funded partly by the billionaire brothers Charles and David Koch.
Such groups have played an increasingly prominent role in American politics in the wake of the Supreme Court’s 2010 ruling in a case brought by the nonprofit group Citizens United, which empowered them to spend unlimited money on campaign ads.
Treasury officials said the reporting change — which affects contributions known as dark money because their source is hidden — would protect privacy and reduce compliance costs for nonprofits. The IRS could still request donor information from groups in the rare event that it was needed for tax scrutiny.
“Americans shouldn’t be required to send the IRS information that it doesn’t need to effectively enforce our tax laws, and the IRS simply does not need tax returns with donor names and addresses to do its job in this area,” Treasury Secretary Steven Mnuchin said in a statement Monday evening.
But critics denounced the measure, saying it would encourage political donations from both domestic and foreign contributors who want to skirt the law or keep their influence secret.
“It’s a clear signal that the IRS and now the Treasury Department are not interested in any significant oversight of nonprofits,” said Marcus S. Owens, a Washington lawyer and former director of the IRS division for tax-exempt organizations.
Lloyd Hitoshi Mayer, a law professor at Notre Dame Law School, said the public will no longer be able to see if these groups are funded by just a handful of large donors. “This will make so-called dark money a bit darker,” he said.