Sens. Bob Casey Jr. (D-Pa.) and Ron Wyden (D-Ore.) are pressing the IRS about guidance it issued last year that reduces donor-disclosure requirements for certain tax-exempt groups, expressing concerns that the guidelines could hinder criminal investigations.
“Revoking the disclosure requirement to the IRS could make it much more difficult for authorities to discover fraudulent activity and track such activity across entities,” the senators wrote in a letter Thursday to IRS Commissioner Charles Rettig. “The change in this disclosure requirement seems to limit the tools available to investigators attempting to uncover illegal activity which can span from tax fraud, to illegal political contributions from foreign entities, to terrorist financing.”
Wyden and Casey both serve on the Senate Finance Committee, and Wyden is the panel’s top Democrat.
Under the IRS and Treasury Department guidance, certain tax-exempt groups are no longer required to disclose the names and addresses of major donors on annual tax forms. Groups will still have to keep that information for their records, and the IRS can request it from them if its needed for tax administration purposes.
The IRS has told Casey’s and Wyden’s staffs that the agency’s criminal investigation division wasn’t consulted in advance of the decision to rescind the donor list filing requirement, prompting questions from the senators.
“A core function of the IRS is to investigate potential criminal violations of the Tax Code and related financial crimes. In fact, the IRS is the only entity that can do so,” the senators wrote in Thursday’s letter. “Accordingly, in accordance with IRS practice, it would follow that IRS [criminal investigation] would have been consulted and apprised of this consequential change in disclosure requirements prior to its imposition. However, such a consultation did not take place.”
Casey and Wyden asked the IRS about the origination of the donor guidance and whether the guidelines were requested by Treasury or any nongovernmental entity. The senators also asked the IRS how it will investigate whether an incident of an illegal donation from a foreign entity is singular or widespread and how the IRS will maintain confidentiality in an investigation if it now needs to request a donor list from an organization.
The administration said the guidance will help protect people’s personal information. But Democrats have expressed concerns it could lead to foreign interference in U.S. elections through illegal donations to “dark money” tax-exempt groups.
The issue of foreign interference in elections has been a top concern, particularly among Democrats, following Russia’s interference in the 2016 presidential election. House and Senate members received separate classified briefings from senior administration officials on Wednesday, during which the plans for securing the 2020 elections were outlined in the wake of Russia’s extensive interference ahead of the 2016 vote.