The Free Speech Coalition (FSC), a tax-exempt 501(c)4 organization established in 1993, claims that state officials in California and New York are illegally requiring non-profit groups to provide the names and addresses of their largest donors before they’re allowed to register with the state to solicit contributions.
“The illegal demands for donor information reported by FSC should be treated as a knowing and willful infringement of the law and of rights clearly protected by the Constitution and articulated repeatedly by the United States Supreme Court,” an August 1st letter to House Oversight and Government Reform Committee Chairman Darrell Issa and House Ways and Means Committee Chairman David Camp signed by tax attorney and FSC spokesman Mark Fitzgibbons stated. (See Free Speech Coalition letter.pdf)
A similar letter was sent to Senate Finance Committee Chairman Max Baucus (D-Mont.), ranking member Sen. Orrin Hatch (R-Utah), and Sen. Charles Grassley (R-Iowa).
“Section 6103 of the Internal Revenue Code prohibits the release of confidential tax-related information,” Fitzgibbons told CNSNews.com. “We contend that collecting this information, even if it’s locked away in a dark room, constitutes disclosure. The states have no right to have this information.”
“Section 6104 specifically excludes non-profit organizations’ list of donors (Schedule B) from information that must be made public from their [IRS Form] 990s,” he continued. “For years, when charities registered with the states, they would file a 990 but not include Schedule B; or if they did, they would block out the names and addresses of their major donors.” (See IRS Form 990.pdf)
“These states are now denying charitable organizations their First Amendment right to solicit contributions if they fail to file Schedule B, which itself is a violation of their First Amendment rights,” he pointed out.
The Supreme Court has already ruled on the matter. “Four times since 1980, the United States Supreme Court has declared certain regulatory actions of state charitable officials illegal under the First Amendment,” the letter noted.
“I [also] wish to bring your attention to the collaboration between IRS official Lois Lerner and state charitable officials” who are members of the National Association of State Charity Officials (NASCO), an umbrella group for state charity regulators, Fitzgibbons told House and Senate committee members.
“In her Exempt Organizations 2011 Annual Report, Ms. Lerner touts a proposed rulemaking… to reduce barriers to states’ participation in the [IRS’] information-sharing program,” he notes in the letter. “Lerner explained that the IRS expected to have regular interaction with NASCO about the new filing and monitor trends that arise with the new Form 990 and hoped the feedback would help shape future adjustments.”
NASCO was already collaborating with the IRS, Fitzgibbons told CNSNews.com, since federal law allows the states to request Schedule B information from the federal tax collecting agency under certain proscribed circumstances, “but it really ramped up when Lois Lerner took over.”
“Within the last year, New York and California started demanding this information from every tax-exempt organization that raises money. Although they never had to file their Schedule Bs before, now they’ve been ordered to file in order to register,” Fitzgibbons explained.
“I won a case in 2000 in the 10th Circuit that found that no state statute expressly authorizes attorneys general to demand this donor information. These violations of law are in fact having a chilling effect on First Amendment rights because certain nonprofit organizations are deciding to not register to solicit contributions in those states in order to protect the confidentiality of their donors.
“They know that this will make people squirm, which is exactly the effect intended. Some organizations are not going to register at all, while others will be very careful about how they criticize” government officials, Fitzgibbons told CNSNews.com.
Disclosure: CNSNews.com is a division of The Media Research Center, a nonproft research and education organization operating under Section 501(c)(3) of the Internal Revenue Code.