January 23, 2017

Can a state Attorney General unilaterally violate federal tax privacy laws?

More action needed in case where LBJ-appointed judge compared Cal AG’s actions to segregationists.

We need to file two amicus briefs opposing illegal actions by the state Attorney General of both California and New York. These officials have forbidden nonprofits from raising money in their states unless they first provide a complete, unredacted, IRS Form 990 Schedule B. This requirement…

Attorneys General

  • Is illegal under federal tax law
  • Exposes confidential donor information
  • Could potentially lead to retaliation against donors to unpopular or non-establishment causes

Federal law requires that nonprofit organizations provide their Form 990 upon request. 990-Schedule B is a list of donor’s names and addresses. When fulfilling these requests, groups can redact the Schedule B to protect the donors listed. But in the case of California…

In order to obtain a permit to fundraise in the state, AG’s office insisted that organizations start filing 990s, including their Schedule B forms containing confidential donor information. When groups complained that this would violate the privacy of their donors and open them to intimidation, they were given a promise of confidentiality.

Americans for Prosperity went to court. During their case, it was revealed in discovery that…

  • Hundreds of Schedule B forms had been published on the web
  • The confidentiality promise was empty, as no employee had been tasked with actually preventing such breaches

In his ruling, Judge Manuel Real noted the “ample evidence establishing that AFP, its employees, supporters and donors face public threats, harassment, intimidation, and retaliation.” Then, he made a harsh comparison…

“[A]lthough the Attorney General correctly points out that such abuses are not as violent or pervasive as those encountered in NAACP v. Alabama or other cases from that era, this Court is not prepared to wait until an AFP opponent carries out one of the numerous death threats made against its members.”

Our next steps…

  • As we reported last year, we’ve won an injunction against the California Attorney General. But the fight continues on appeal (Americans for Prosperity Foundation v Harris). We want to file an amicus brief in that appeal and create a valuable precedent.
  • In New York, Citizens United was denied an injunction against the AG and has now appealed to the Second Circuit. This case (Citizens United v Schneiderman) is so closely related, that we want to file an amicus brief in that case, as well.

That’s two amicus briefs (making it three, for us, so far in 2017).

Our briefs will address the following issues:

  • The Supreme Court ruled that state charitable solicitation laws are invalid unless they’re narrowly aimed at preventing fraud. Exposing confidential donor information does not serve that purpose.
  • Past court rulings involving campaign finance laws are inapplicable because charitable nonprofits cannot and do not participate in political campaigns.
  • The Supreme Court’s Talley ruling (1980) to protect anonymous speech does apply. That case dealt with a requirement that the printer of anonymous handbills be publicly disclosed. The Court ruled that such a requirement had nothing to do with preventing fraud.
  • The New York and California AGs may be committing a federal crime by “soliciting” confidential IRS taxpayer information. This is an argument Downsize DC has made to Congress when we called for the impeachment of the IRS Commissioner.

NOTE: We, at DownsizeDC.org, are partnering with the Downsize DC Foundation (and others) to file both of these briefs. We use the contribution form of the Foundation’s initiative, the Zero Aggression Project, so that your contributions can be TAX-DEDUCTIBLE if you itemize.

Please makes these briefs possible. Make a donation, or please start or increase a monthly pledge.

Thanks in advance for your support,

Jim Babka
Downsize DC Foundation
& DownsizeDC.org, Inc.

P.S. We get invited to participate in these cases because of our longtime affiliation with the Free Speech Legal Defense Fund and the Free Speech Coalition.

  • We utilize the expertise and experience of their legal counsel to fight First Amendment violations for non-profit organizations.
  • I, Jim Babka, sit on the committee that determines legal and legislative strategy in those groups.
  • Also, thanks to your support, Downsize DC Foundation and DownsizeDC.org were each able to issue modest grants to these groups, respectively.

P.P.S. The key issue we’ll argue in this case is the right of anonymity in political expression, which has a long, rich, and very American history. We argued for this right in our Supreme Court case, Paul v FEC. And this is will be the fourth and fifth amicus briefs where anonymity has been our key argument. We hope you’ll join us.

If your comment is off-topic for this post, please email us at feedback@downsizedc.org

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