We Looked Into Why One Of Our Favorite Senators Today Will Probably Vote Against Trump’s Surprisingly Non-Controversial Nominee To Lead The I.R.S.
Ron Wyden Says He Won’t Back Trump’s Choice Unless He Reverses The Administration’s New Policy Making It Easier For Political Groups To Hide The Identities Of Their Donors…
The Oregon Democrat says the new policy, announced by the Treasury Department earlier this week, makes it too easy for foreign money to anonymously make its way into politics. And he won’t support Charles Rettig to lead the I.R.S. in today’s Finance Committee vote, unless Rettig promises to put things back the way they were.
The Treasury Department’s reversal of a rule that’s been in place for years happened a couple of days ago, under cover of Trump’s meeting with Putin. It’s one of those things that seems to make at least a little sense on the face of it. But when you look at it in the context of current events, and what the Administration says it’s trying to do, makes no sense at all.
So, what the Trump Administration did was end requirements that organizations covered by section 501(c)(4) of the tax code report names and addresses of their donors. Donations to these types of groups are not tax-deductible.
The reason they’re not tax deductible, according to the I.R.S., is because these groups participate in one or more of the following:
- Influencing legislation;
- Participating or intervening in any political campaign on behalf of (or in opposition to) any candidate for public office;
- Attempting to influence the general public with respect to elections, legislative matters, or referendums; and
- Any direct communication with a covered executive branch official in an attempt to influence the person’s official actions or positions.
Both the NRA and ACLU, for instance, are these types of organizations.
They are different than the more familiar 501(c)(3) groups, which can accept tax deductible donations because their primary mission is charitable, not political (although there is some blurring of the lines). Charitable groups will still be required to disclose donor information to the I.R.S., because the I.R.S. needs to verify whether people actually did make the charitable donations they claim on their tax returns.
But why does the I.R.S. need to go to the trouble of collecting information it doesn’t use? Since 501(c)(4) donations are not tax deductible, for filing purposes, the I.R.S. does not need to know about them, nor track the donors. And the I.R.S. keeps the 501(c)(4) donor info it collects secret anyway. That’s why donations to these groups are known as “dark money”. Treasury Secretary Mnuchin argues that eliminating the reporting requirements better protects the rights of private donors. So the change kind of makes sense, right?
Assuming those donors are legit. And that’s why context and the current political climate matters.
There are a couple of other reasons the Trump Administration and Republicans who support it give for the change:
- The new rules make it harder for the I.R.S. to target organizations based on their political beliefs.
- It would reduce the risk of leaks of that sensitive information from the I.R.S.
The first reason hearkens back to false (or as we’d now say “fake”) allegations the I.R.S. unfairly (which we still say) audited right-wing political groups. That’s back when Republicans were the ones getting hysterical about everything.
The second reason comes from the Trump Administration paranoia factory, and really makes no sense considering one of the only things we know for sure hasn’t leaked in all this time is Trump’s tax returns. The I.R.S. is very serious about its secrecy.
And there’s another, even bigger reason Wyden and others believe it’s bad policy. There’s mounting evidence Russia channeled funds through the NRA (a 501(c)(4)!) to Republican politicians (because it’s illegal for foreigners to donate to candidates directly). If fact, that’s a big part of the indictment handed down by the Justice Department against an alleged Russian spy on exactly the same day the Treasury Department decided to loosen its reporting requirements. The New York Times has a lot more details about her this morning. And with Trump vowing to do everything in his power to block foreign interference in U.S. elections, why would his Administration make these types of donations that much harder to trace?
So even though the Treasury doesn’t really use the 501(c)(4) information when it collects taxes, and the I.R.S. keeps the donor data secret anyway, it’s still there. Why is that important? Because without it, the Trump Administration is leaving behind a system where the only people responsible for making sure donations are legit are the same people who are soliciting and collecting those donations.
Look, it could break Democrats’ way too: perhaps some Conservatives decide they want to oppose Trump but it’s too risky to do so publicly. They now have a clearer path to donating to organizations that oppose him. Right.
And the beat goes on…
One footnote: just because would-be I.R.S. Commissioner Chuck Rettig isn’t another obvious powder keg, doesn’t mean he isn’t colorful. The Beverly Hills tax attorney has switched parties over the past decade seemingly entirely based on which was holding the Presidency. When it was Obama, he switched from Republican to Democrat. When Trump was elected, he switched back. He wrote an article for Forbes defending Trump not releasing his tax returns (which Trump must’ve liked) but in that same article opined that Trump “may be worth far less than the approximately $10 billion he wants us to believe”.
Update: Wyden did vote against the nominee, but Rettig was approved by the Committee on a strictly party-line vote.