New York and New Jersey are suing the Internal Revenue Service and the Treasury Department over a policy change that veils the identities of so-called “dark money” contributors to certain tax-exempt groups, including many with political agendas.
The lawsuit, filed Monday in the U.S. District Court for the Southern District of New York, accuses the IRS and Treasury of stonewalling information requests about the rationale for and any lobbying around the new rule, which allows these groups to avoid a donor disclosure requirement.
The suit comes on the heels of Treasury Secretary Steven Mnuchin’s refusal Monday to turn over President Donald Trump’s tax returns as requested by the House Ways and Means Committee.
Treasury and the IRS released new guidelines last summer that eliminated a requirement for certain tax-exempt groups to provide the names and addresses of major donors on an annual tax form. Groups that no longer have to file this information, per CNN, include the National Rifle Association, the American Civil Liberties Union, the largely Koch brothers-funded Americans for Prosperity, multiple issue advocacy groups, chambers of commerce, labor unions and volunteer fire departments.
The Trump administration implemented the change without public notice or comment.
New York Attorney General Letitia James, who filed the lawsuit along with New Jersey Attorney General Gurbir Grewal, said in a statement that her office “depends on these critical donor disclosure forms to be able to adequately oversee non-profit organizations in New York.” James accused Treasury and the IRS of “refusing to comply with the law” to release information about the reason for this change.
“No one is above the law — not even the federal government,” James said.
The Trump administration has argued that the change protects the privacy of donors. But critics contend that the move shields the source of massive donations to tax-exempt organizations that work to influence U.S. policy debates and elections ― and effectively hides foreign contributors’ efforts to manipulate American politics.
Last October, James and Grewal, who are both Democrats, filed a Freedom of Information Act request demanding all background information on how and why the new policy was developed — but very few details were provided. Their lawsuit is asking the court to order Treasury and the IRS to promptly disclose all records related to the change.
Treasury and the IRS have declined to comment on the case because it involved pending litigation.