Open Letter to U.S. Senate: Protect Donor Rights
Dear Senator:
On behalf of National Taxpayers Union (NTU), I write in opposition to S.J. Res. 64, which would use the Congressional Review Act to overturn a decision by the U.S. Department of Treasury to end the unnecessary collection of Schedule B donor information from certain not for profit organizations.
In July, the Treasury announced that 501(c) tax-exempt nonprofit organizations whose donors do NOT receive a tax benefit by contributing, would no longer be required to share private, personally identifying donor information with the Internal Revenue Service (IRS) via Schedule B, an addendum to annual 990 reports, which will continue to be in force and publicly available. This does not change the requirement that these organizations maintain records of their donors, which can be made available to the IRS on request in order to adjudicate an investigation or other tax administration issue. And for the purposes of S.J. Res. 64, donor information to 501(c)3 organizations, whose contributors are eligible for tax deductions based on their giving, would continue to be available to the IRS for purposes of substantiation -- though this, too, should be reconsidered by Treasury.
Still, this was a commonsense decision. Outside of an active case, in which records would be accessible to the IRS, there is no justification for the IRS to require and maintain this private information. Eliminating the Schedule B requirement for most nonprofits reduces burdensome paperwork and is an important privacy safeguard.
By eliminating this requirement and avoiding duplication, transmission, and storage of otherwise accessible information, the IRS can reduce the risk of donor privacy violation and misuse, particularly for discriminatory purposes. The IRS has a poor track record for protecting confidential information. IRS employees have filed fraudulent Federal income tax returns, accidentally leaked personal information of taxpayers, unlawfully accessed personal information, and even purposefully leaked the donor list of a nonprofit organization, along with nonprofit status applications.
The persistent threat of unauthorized disclosures, volitional or not, could create a significant barrier to donating and have a chilling effect on the free speech of both individuals and nonprofit organizations, disrupting our robust charitable sector that serves such an essential role in our society. The Treasury is right to take steps to reduce opportunities to exploit private data, particularly when doing so will not negatively impact its administrative role. To that end, NTU strongly urges all Senators to oppose S. J. Res. 64.
Sincerely,
Nan Swift, Director of Federal Affairs