The Goldwater Institute today joined forces with our friends at the Rio Grande Foundation and the National Federation of Independent Business to file a friend of the court brief in a lawsuit that challenges the IRS’s requirement that nonprofit organizations turn over their supporters’ private information as part of their annual paperwork.
The lawsuit, brought by our friends at the Buckeye Institute, builds on the U.S. Supreme Court’s 2021 decision, Americans for Prosperity v. Bonta. In that case, the Court declared that California officials violated the Constitution when they forced nonprofits to turn over their IRS paperwork as a condition of operating in the state, which made donors targets for harassment, intimidation, and even violence. This new lawsuit argues that not only should organizations not have to sacrifice their supporters’ privacy to the state, but they also shouldn’t be required to turn it over to the IRS in the first place.
Remarkably enough, the IRS has admitted that it doesn’t need the information in question.
Supposedly, the reason nonprofits are required to turn over this data—which includes the names, addresses, phone numbers, and other information about an organization’s largest donors—is so the IRS can ensure that nobody is defrauding the tax-deduction system. But the reality, as the IRS itself has conceded, is that it doesn’t actually use this information in that way. After all, if someone is cheating on his taxes by claiming to have donated to a nonprofit when he hasn’t, the IRS will probably discover this by looking at the taxpayer’s return, not the organization’s.
And the IRS itself says as much. Five years ago, it said it “can obtain sufficient information from other sources” and therefore doesn’t actually need nonprofits to give up this data. And in 2018, it admitted that it “does not need [this information] to be reported.”
The problem with giving this information to the government, of course, is that donors to nonprofits and political organizations are often targeted for ostracism, intimidation, and even physical attacks. We offer many examples in our brief, but perhaps the most infamous are the attacks on donors to California’s anti-same-sex-marriage ballot initiative, Prop. 8. After that initiative was adopted, donors’ information was posted on an online map so they could be tracked down and targeted—which indeed, many were. Their homes, cars, and even churches were vandalized, and some were subjected to physical attacks.
In our brief, we argue that not only does the disclosure mandate violate the rights of free speech and privacy, but it fails even the most basic requirement of law: that it be rational. Since the IRS admits it doesn’t need the information and that it must spend time and money trying to keep this information under lock and key, the requirement is positively irrational.
This case follows on the heels of our lawsuit, currently pending before the Arizona Supreme Court, challenging the constitutionality of Prop. 211, a state law that strips people of their privacy rights when they donate to a nonprofit that supports or opposes ballot initiatives. We argue that this requirement violates the state Constitution’s protections for free speech and privacy.
In still another case, we represented the Rio Grande Foundation to defend the privacy rights of its donors when the city of Santa Fe, New Mexico, forced the Foundation to turn over its information simply because the Foundation opposed a city-wide tax on large sodas. Unfortunately, the Tenth Circuit Court of Appeals turned away our privacy arguments.
Donor disclosure mandates sometimes sound like a good thing. They’re often sold as “transparency” or as being “good for democracy.” But the reality is that by taking away people’s privacy whenever they support an organization they agree with, such laws actually frighten people away from expressing themselves—which is bad for democracy, as well as for liberty. Transparency is for government—privacy is for people.
You can read our brief in the IRS lawsuit here, and learn more about our work defending donor privacy here.
