In Victory for Free Speech, Trump Admin Rolls Back Schedule B Disclosure Requirements


Posted by Alexander Hendrie on Wednesday, July 18th, 2018, 1:00 PM PERMALINK

The IRS will no longer require that certain non-profits submit Schedule B forms containing the personal taxpayer data of their donors, according to a release by the Treasury Department.

By ending this requirement, the Trump administration has delivered a major victory to advocates of free speech and for efforts to hold the IRS accountable to taxpayers.

As noted by Treasury Secretary Steven Mnuchin, the decision in no way limits transparency in the political process:

“…It is important to emphasize that this change will in no way limit transparency. The same information about tax-exempt organizations that was previously available to the public will continue to be available, while private taxpayer information will be better protected.  The IRS’s new policy for certain tax-exempt organizations will make our tax system simpler and less susceptible to abuse.”

Fifty years ago, Congress required the IRS to collect personal information from donors that give to non-profits such as section 501(c)(3) organizations. This information, which includes the names and addresses of donors, is submitted to the IRS on the Schedule B form. The agency later extended this requirement to all other tax-exempt organizations including 501(c)(4)s and 501(c)(6)s.

Bizarrely, schedule B forms are not used for any official purpose – the IRS is actually prohibited from sharing this sensitive information. Instead of serving a legitimate purpose, the disclosure requirement creates needlessly compliance costs on both non-profits and the IRS.

More alarmingly, the form has given unelected bureaucrats a tool to chill political speech in recent years.

For instance, under the Obama administration there were several cases where agency officials leaked the sensitive information contained on Schedule B forms for political purposes, like when the schedule B of the National Organization for Marriage was leaked.

In fact, a 2016 report by the Government Accountability Office warned that the IRS may still be unfairly targeting Americans based on political beliefs. As the report noted, serious internal control flaws mean the IRS may still be unfairly selecting Americans for an audit “based on an organization’s religious, educational, political, or other views.”

While ending the collection of Schedule B forms for some non-profits is a strong step in the right direction, Congress should follow the lead of the Trump administration by removing this disclosure requirement for ALL non-profits.

They can accomplish this goal immediately by passing H.R. 4916, the Preventing IRS Abuse and Protecting Free Speech Act, introduced by Congressman Peter Roskam (R-Ill.), which would ensure that government bureaucrats could no longer use the Schedule B disclosure requirements to target political free speech ever again.

To be sure, the IRS decision to end the collection of sensitive taxpayer data for some non-profits is a huge victory for free speech and will stop future administrations from targeting these organizations.

Now, it is now incumbent on Congress to follow the lead of the administration and ensure that the prohibition on collecting Schedule B forms is expanded to all non-profits and codified in law.

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