RGF continues to fight for donor privacy (this time alongside Goldwater Institute and National Federation of Independent Businesses)

With help from our friends at the Arizona-based Goldwater Institute the Rio Grande Foundation and the National Federation of Independent Business filed a friend of the court (amicus) 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 Ohio-based 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.

The IRS has admitted that it doesn’t need the information in question.

Supposedly, the IRS wants the information to 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.”

As we all know, especially those in “blue” states like New Mexico, 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.

You can read our brief in the IRS lawsuit here.