August 1, 2019

Judge Overturns IRS Rule to Shield Political Donor Identities

Bloomberg -A federal judge in Montana overturned an Internal Revenue Service rule that would allow many political non-profit groups to keep their donor lists private.

The ruling upends a change the IRS made last year that permitted so-called Section 501(c)4 groups, known as “social-welfare” organizations, to keep their donor lists private. A federal judge said the IRS didn’t follow proper procedure in writing the rule and needs to allow the public to weigh in on the change before altering the tax code.

“Then, and only then, may the IRS act on a fully informed basis when making potentially significant changes to federal tax law,” U.S. District Judge Brian Morris said in the opinion Tuesday evening.

Montana Governor Steve Bullock, who is also a Democratic presidential candidate, sued the IRS, saying the change to what groups must report to the IRS limited information states received about political donors. The IRS rule required the groups to disclose their donors only if an auditor requested to see it.

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