The constitutional rights to free speech and free association are bedrock American values and empower manufacturers to fight for policies that will make America more competitive and improve the lives of manufacturing workers.
The Supreme Court has upheld these rights, ruling that manufacturers and others are free to advocate through voluntary association and to do so anonymously, so as to be free from retaliation from those who might disagree with their views.
Nevertheless, political opponents and activists have long tried to undermine these rights. And recently, those attacks have gained some traction through recent efforts of state attorneys general in California and New York. The attorneys general have attempted to identity donors to nonprofit organizations through a portion of tax filings only available to the IRS.
The Internal Revenue Code requires that nonprofit organizations report the name and contribution amount of any donor who gives $5,000 or more. They report this on Schedule B of their tax returns, but under current law, only the IRS may see the full content of Schedule B to protect donors from retaliation.
In a recent disturbing development, though, a federal appeals court in New York has ruled that the New York attorney general may have access to the donor lists of certain nonprofits and that such disclosure does not chill the First Amendment rights of donors. This holding is in direct contravention of U.S. Supreme Court precedent and will likely be appealed there.
Unfortunately, even the collection of donor information can create a chilling effect on speech, especially when the IRS has demonstrated a willingness to politicize nonprofit filings. In 2014, the IRS paid $50,000 to settle a case in which it leaked a nonprofit’s unredacted donor list to the press. And subsequently, IRS officials have even argued that collecting donor information is unnecessary. In 2015, then-IRS Commissioner John Koskinen told the Senate Judiciary Committee that “who gives to you should not matter.”
Indeed, the value of these disclosures is so limited that when one nonprofit refused to submit Schedule B forms to California’s attorney general, the organization’s noncompliance went unnoticed for more than 10 years. In a subsequent court case including trial testimony about state and federal use of Schedule B forms, the court ruled that “the only logical explanation for why … ‘lack of compliance’ went unnoticed for over a decade is that the attorney general does not use the Schedule B in its day-to-day business.”
A new bill introduced by Rep. Peter Roskam (R-IL)—the Preventing IRS Abuse and Protecting Free Speech Act (H.R. 4916)—would help put an end to this legal wrangling and ensure Americans can express their views without fear of political retribution. Specifically, the bill would prohibit the IRS from collecting information on donors to tax-exempt organizations.
The National Association of Manufacturers believes our nation remains strong when job creators, like all Americans, exercise their constitutional rights and speak out about public policies that impact growth and U.S. job creation. We hope Congress considers the importance of free speech when debating the Preventing IRS Abuse and Protecting Free Speech Act.
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