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Dark Money Groups Drove Support for IRS Rule Eliminating Donor Disclosure

A proposed rule could hinder government efforts to identify the illegal use of foreign money in U.S. elections.

A proposed rule could hinder government efforts to identify the illegal use of foreign money in U.S. elections.

A proposed Trump administration rule to exempt some “dark money” groups from disclosing their donors to the Internal Revenue Service is making progress after experiencing roadblocks earlier this year.

A federal judge in Montana overturned the rule in late July, ruling that the IRS must go through a notice-and-comment procedure before publishing a similar rule. By the end of the comment period on Monday, the rule received 8,319 public comments, most of which were in favor of the proposed change.

That’s because at least two 501(c)(4) nonprofits that don’t disclose their donors, FreedomWorks and People United for Privacy, directed followers to support the new rule. Through its website, FreedomWorks sent comments from its supporters directly to the IRS. People United for Privacy ran Facebook ads directing users to the public comment page in the name of “privacy” and submitted a comment in favor of the rule.

Politically active 501(c)(4) groups are already not required to disclose their donors to the public. But election experts say the proposed rule could hinder government investigators’ efforts to identify the illegal use of foreign money in U.S. elections. Under the rule, politically active nonprofits would no longer need to disclose the identity of their donors to any federal agency.

Several pro-transparency organizations opposed the rule, writing in comments that mandated reporting of donors serves as a deterrent to foreign funding of politically active nonprofits.

Issue One, a cross-partisan organization fighting for increased transparency, wrote that “proper donor disclosure techniques are fundamental to the capability of state governments to track suspicious activity, thereby ensuring that our democratic republic functions properly.”

Ceasing to collect that information “would give foreign interests seeking to interfere secretly in our elections a bright green light,” the Campaign Legal Center wrote in its comment.

The widespread support for the rule on the public docket clashes with a November poll from the Campaign Legal Center that found that 83 percent of voters support the disclosure of contributions to organizations involved in elections.

The National Institute on Money in Politics, which tracks state-level campaign finance data, wrote that the change “goes against the will of the vast majority of citizens who are calling for more – not less – disclosure of information on those trying to influence our elections.”

Dark money groups have spent more than $1 billion to influence politics since Citizens United v. FEC, the infamous Supreme Court case that helped open up an influx of political spending from nonprofits.

One of the most influential dark money groups, the National Rifle Association, was reportedly investigated by the FBI over its ties to Russian actors. The NRA later admitted to taking money from Russian nationals.

The Trump administration has said nonprofits must continue to keep donor information in their own records in the case of an investigation. Two states that sued over the new rule have argued that it is much more difficult to enforce campaign finance laws if the IRS doesn’t have the information on hand.

The Treasury Department justified the rule by arguing it will prevent confidential donor information from leaking — as it did in 2013 when the IRS posted unredacted tax forms revealing donors to the Republican Governors Association Public Policy Committee.

A number of groups are pushing for less transparency in the world of money-in-politics, attempting to capitalize on recent instances of internet harassment of publicly-disclosed donors. FreedomWorks specifically referenced a mysterious website originally called Racist.Watch and now renamed, which lists publicly-available names of donors to President Donald Trump, as a reason to support the Trump administration rule. The obscure corporation behind the website was incorporated in Delaware in September with a registered agent, leaving behind no paper trail.

FreedomWorks has also urged Congress to pass legislation that prevents a future administration from overturning the IRS rule.

The new rule circumvents several unsuccessful attempts in the courts to eliminate nonprofit donor reporting to the IRS. Courts have held in multiple instances that government requests for the names of donors to a nonprofit are not a violation of the First Amendment.

The Trump administration must review comments before publishing its final rule.

Researcher Anna Massoglia contributed to this report.

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