SAN FRANCISCO (CBS SF) -- The billionaire Koch brothers are pushing ahead in their efforts on both the state and federal level to hide the identity of donors to nonprofit groups.
A week after a conservative advocacy group, backed by the Koch brothers, convinced a federal judge in California that it shouldn't have to reveal the identities of its donors to California officials, a U.S. House panel approved a bill on Thursday that would shield the Internal Revenue Service from the names of donors to nonprofit organizations.
Critics say review by the IRS is key to ensuring that foreign funds don't covertly enter U.S. election politics.
On April 21, Americans For Prosperity Foundation, a nonprofit group backed by billionaire brothers David and Charles Koch, claimed victory when a federal judge in California issued a ruling that California Attorney General Kamala Harris did not have a right to know the identities of that group's donors.
Harris plans to appeal that ruling.
Under California law, charitable organizations are required to register with the state and submit copies of its public IRS filings. The donor list remains confidential and separate from publicly available documents.
U.S. District Judge Manuel Real, who presided over the civil suit in Los Angeles, ruled that the foundation and its sister organization Americans For Prosperity, have a First Amendment right to resist Harris' demand for its donor list.
The Attorney General's Office maintains that the donor list allows investigators to protect taxpayers against fraud, while the Americans For Prosperity Foundation persuaded Judge Real that donors' privacy was at stake.
Then, on Thursday, a bill titled Preventing IRS Abuse and Protecting Free Speech Act, went to the U.S. House of Representative's Ways and Means Committee where the committee approved the bill 23-15, with all members of the committee voting along party lines. All those in favor of the legislation were Republican.
The legislation aims to eliminate what the Republican-led Ways and Means Committee dubbed a "superfluous IRS form, known as the Schedule B, that the IRS has used to improperly target tax-exempt organizations."
The legislation would ban the IRS from collecting the identity of nonprofit organizations' donors.
A letter from Koch Companies Public Sector president Phillip Ellender on Thursday argues in favor of the bill, saying:
"The targeting of non-profit organizations by the Internal Revenue Service (IRS) to limit free speech under this Administration is well documented. From the IRS subjecting donors of nonprofit organizations to the gift tax, to the direct targeting of conservative non-profit organizations based solely on their beliefs, this legislation could not be more pertinent. Considering the pair of reports released earlier this year by the Government Accountability Office (GAO), it's even more pressing. The GAO found serious internal control flaws within the IRS that could allow the agency to continue its targeting of certain Americans for audit 'based on an organization's religious, educational, political, or other views.'"
Prior to the committee's Thursday vote, groups critical of the legislation, including the nonprofit organizations Democracy 21, Brennan Center for Justice, Campaign Legal Center, Public Citizen, and the Sunlight Foundation, among others, penned a letter to the members of the House Ways and Means Committee warning that the bill "would open the door wide for secret, unaccountable money from foreign governments, foreign corporations and foreign individuals to be illegally laundered into federal elections through 501(c)(4) groups."
The opposition letter further states:
"...the only real protection we currently have against the use of 501(c)(4) groups to launder foreign money into federal elections is that 501(c)(4) groups must disclose their donors, including foreign donors, to the IRS...However if donor disclosure to the IRS is eliminated, no one will know whether a 501(c)(4) group has received foreign funds and is illegally spending them in our elections, other than the foreign donors and 501(c)(4) groups involved. There will be no way to hold them accountable for illegally spending foreign money in federal elections."
House Ways and Means Committee Chairman Kevin Brady (R-TX) released a statement Thursday regarding the bill stating that "by eliminating invasive reporting requirements in current law, this legislation will protect taxpayers' identities and prevent the IRS from improperly targeting particular organizations."
Rep. Peter Roskam (R-Illinois), the bill's sponsor said he believes the IRS hasn't shown that it's able to safeguard confidential information.
Freedom Partners, a nonprofit group promoting a free market and limited government, which is also linked to the Koch brothers -- although Koch Industries maintains that it "operates independently" from the company -- released a statement Wednesday from Freedom Partners Chairman Mark Holden regarding the bill and the California ruling:
"One week after a federal court ruled correctly to preserve this right to privacy, Congress should ensure Americans don't have to live in fear that their political speech could make them a target for the federal government...Keeping this First Amendment right intact is an ongoing and increasingly difficult struggle amid attacks from politicians like California Attorney General Kamala Harris and the leading Democratic candidates for president who favor restricting and potentially criminalizing free speech."
Among the Republicans on the committee who voted in favor of the bill was California's Rep. Devin Nunes, while the California Democrats who opposed the bill were Rep. Linda Sanchez and Rep. Xavier Becerra.
By Hannah Albarazi - Follow her on Twitter: @hannahalbarazi.
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