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IRS Back-Door Enforcer of Shareholder Activists’ Agenda
IRS Back-Door Enforcer of Shareholder Activists’ Agenda
Sep 21, 2024 7:25 PM

I’m not entirely sure, but it seems a safe bet that Chicago bluesman Willie Dixon wasn’t referring to the Internal Revenue Service when he wrote his classic “Back Door Man.” But, as it turns out, the IRS is serving as a convenient back-door resource for the progressive movement to name and shame donors to causes and organizations opposed by leftist shareholder activists.

The IRS is proposing rules that will grant nonprofit organizations the option of disclosing donors of $250 or more.

Currently, charitable organizations are required to remit a “contemporaneous written acknowledgment” (CWA) to donors contributing $250 or more in cash, goods or services. Donors reference the CWA when filing an IRS 990 form for charitable contributions. The proposed rules would grant organizations the option of collecting donors’ Social Security numbers rather than remitting a CWA, and subsequently sending the donors’ information to the IRS.

Readers shouldn’t take your writer’s word on such an important manner. A more authoritative source is the National Association of Nonprofits, an prised of state associations as well as more than 25,000 individual members, and the U.S. Government Accountability Office.

NAN notes on its website a similar measure proposed by the IRS in May 2009 that didn’t pass after the GAO issued these points:

o Taxpayers may reduce giving because they are reluctant to provide Social Security numbers to charities given concerns over identity theft

o Social Security numbers are generally required on information returns and IRS uses Social Security numbers to match information returns to tax returns

o Donors may perceive that charities will not adequately safeguard their Social Security numbers

o Many charities rely on volunteers, to whom donors may not want to provide their Social Security numbers

o An alternative means to uniquely identify donors, that is, for IRS to provide separate, unique numbers for this purpose, could alleviate donor concerns about identity theft but could be burdensome to implement

o Concerns about identity theft are very real.

The NAN website continues:

The proposed regulations make several admissions that raise the question: why are Treasury and the IRS bothering to create a new, optional, parallel reporting regime that will require more administrative burdens on both nonprofits and government personnel? The background description of the status quo states that the present contemporaneous written acknowledgement (CWA) “system works effectively, with minimal burden on donors and donees, and the Treasury and the IRS have received few requests … to implement a donee reporting system.” Treasury and the IRS even repeat their key admission: “Given the effectiveness and minimal burden of the CWA process, it is expected that donee reporting will be used in an extremely low percentage of cases.” Since there is not an overriding need for an alternative system, the flawed proposal to adopt a confusing and potentially dangerous Donee Report Rule should be rejected.

Of course, this is simply the camel’s nose under the tent as one can rest assured if the rule passes it won’t remain “optional” for long. Regular readers of this space will recognize the IRS proposed rules as yet another attempt to circumvent the U.S. Supreme Court Citizens United ruling, which has sent progressives into apoplectic fits since January 2010. “Dark money” is the ridiculous moniker given private donations to such organizations as the American Legislative Exchange Council by a large, well-funded network of left-leaning groups, including unions and religious shareholders. For example, the Interfaith Center on Corporate Responsibility barely contains its outrage that their agenda might encounter corporate opposition:

Unchecked corporate cash in the form of political donations and lobbying expenditures has the power to exert undue influence over public policy and regulatory systems and threaten our democracy. Yet in spite of this power, most S&P panies lack a formal system of lobbying oversight and don’t fully disclose how monies are being spent, particularly through third-party organizations like trade associations. Investors are concerned that lobbying expenditures may inadvertently be diverted to groups advancing agendas contrary to the stated missions panies, setting up potential conflicts of interest and panies to reputational risk.

Followed by this:

Led by the American Federation of State, County and Municipal Employees (AFSCME) and Walden Asset Management, ICCR members and other responsible investors are attempting to shine a light on corporate lobbying and political spending policies. Faith-based investors have filed shareholder resolutions with panies. These proposals panies to disclose oversight policies and details around political donations and lobbying initiatives, including through trade associations such as the American Legislative Exchange Council and the Heartland Institute which spend heavily on ad campaigns designed to undercut regulations.

Oh, the ignominy! In other words, “Nice little exercise of the First Amendment you got there, Mr. and Ms. Corporation. An awful shame if something happened to it.” Your writer fully disclosed in prior posts his relationships with both ALEC and The Heartland Institute, and also noted the crusade against “dark money” nothing more than a bullying tactic to eliminate funding for groups pursuing agendas with which leftists disagree.

If readers remain skeptical, they need look back no further than 2014 when Mozilla CEO Brandon Eich resigned after it was disclosed he donated $1,000 to a campaign six years prior to defeat a state measure to legalize homosexual marriages in California. As it turns out, inventing Java Script wasn’t enough to exonerate the Catholic Eich from the secular inquisition – an inquisition passing all sorts of leftist causes from opposing genetically modified organisms to championing fossil-fuel divestment and overturning Citizens United – ironically joined wholeheartedly by the nuns, priests, clergy and other religious agitating under the ICCR umbrella with the proposed back-door assistance of the IRS. More’s the pity.

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