Last year, the Treasury Department changed the reporting requirements for donations to advocacy organizations that report under section 501(c)(4). The change was to allow donations to be kept secret. The organizations could now accept unlimited donations from donors anonymously — the very essence of dark money. And among such organizations: the NRA. In a shining example of conservative double-talk, the rule change was rationalized based on “free speech”:
The policy change, heralded by conservatives as an advance for free speech, maintains donor disclosure requirements for traditional charity groups organized to receive tax-exempt donations under a section of the Internal Revenue code known as 501(c)(3), the Treasury said.
But the move frees labor unions, issue advocacy organizations, veterans groups and other nonprofits that do not receive tax-exempt money from meeting confidential disclosure requirements set in place decades ago.
[…] The change protects the privacy of wealthy donors of “dark money” donations to politically active groups. Conservatives have complained that the disclosures to the IRS, though not public, were susceptible to media leaks.
As Joan McCarter pointed out:
That's going to make it even easier for Russian money to find its way to the NRA! Which would be just fine with Trump's new Supreme Court nominee, who has no problem at all with foreign money flowing into dark money groups.
The new rules aren’t sitting well with the Attorney General of New York, Letitia James, and the AG of New Jersey, Gurbir Grewal, who filed suit today to demand information they’ve requested but not received about why the changes were necessary, given their impact on state tax returns:
The revised reporting standard, announced in July 2018, scraps from federal and state filings a category of information the states rely on to "identify potential control risks, self-dealing transactions, private inurement, and criminal conduct within the New York non-profit sector," New York Attorney General Letitia James said Monday in a statement.
James, alongside New Jersey Attorney General Gurbir Grewal, sued the IRS and the Treasury for failing to respond to a Freedom of Information Act (FOIA) request filed last October. Through the FOIA, James and Grewal sought to learn about the decision to implement the policy, which James claimed was made without public notice or comment. James said the Treasury and IRS failed to respond to the request within the prescribed time limit, adding that the revised reporting standard hinders the attorney general's ability to "effectively regulate affected organizations operating in New York."
"My office depends on these critical donor disclosure forms to be able to adequately oversee non-profit organizations in New York," James said Monday in a statement. "Not only was this policy change made without notice, the Treasury and the IRS are now refusing to comply with the law to release information about the rationale for these changes. No one is above the law — not even the federal government — and we will use every tool to ensure they comply with these regulations to provide transparency and accountability."
IANAL but I’m guessing this means that the states have “standing” to sue, perhaps giving their suit a better chance than one filed by Citizens for Responsibility and Ethics in Washington (CREW) on behalf of a failed Congressional candidate.
You can read the text of the lawsuit here (PDF).
In case you’re wondering whether this is related to other known investigations:
James’s office has a lawsuit pending against Trump’s personal charity over alleged self-dealing. She is also investigating the nonprofit status of the National Rifle Association. Monday’s lawsuit is unrelated.
I love this statement from Attorney General James, so I’ll repeat it: No one is above the law — not even the federal government