The Trump administration will end a longstanding requirement that certain nonprofit organizations disclose the names of large donors to the Internal Revenue Service, 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 labor unions, social clubs and political groups as varied as arms of the AARP, the United States Chamber of Commerce, the National Rifle Association and Americans for Prosperity, which is funded partly by the billionaire brothers Charles and David Koch.
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“It’s a clear signal that the I.R.S. 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 I.R.S. division for tax-exempt organizations. “What they’re doing is excusing them from filing information that is of material importance for determining whether organizations are operating appropriately and within the boundaries of the rules.”
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.
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“Transparency is meant for the government, not for private individuals,” said Philip Ellender, the head lobbyist for Koch Industries, the international conglomerate owned by the Koch brothers. Koch Industries began lobbying the White House on the issue after President Trump’s election, according to lobbying filings.
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The I.R.S. will now be able to see those groups’ lists of big donors only if it specifically requests them. Those lists are not open to the public under existing rules.
Steven M. Rosenthal of the nonpartisan Tax Policy Center said the change effectively ends the agency’s oversight. “The I.R.S. audits tax-exempt organizations once in a blue moon and only after many years,” said Mr. Rosenthal, noting that the agency has been starved for resources and has had to cut back enforcement. “It’s an impossible challenge to follow the money trail at that point.”
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