Treasury officials announced last week that the IRS will no longer require tax-exempt organizations other than charities to disclose information about their donors as part of their annual returns.

In the 1960s, Congress directed the IRS to collect donor information from 501(c)(3) charities that accept tax-deductible contributions. The policy provided the IRS information that could be used to confirm contributions. By regulation, however, the IRS had—since the Nixon administration—extended the donor reporting requirement to all other tax-exempt organizations, including 501(c)(6) trade associations and 501(c)(4) political groups. Names and addresses of donors of $5,000 or more have previously been listed on Schedule B of tax-exempt Form 990 returns.

Charities and section 527 political organizations, including political action committees, will continue to disclose names and addresses of donors, but the new rule will apply for other types of tax-exempt organizations beginning with Form 990 filings for the years after 2018.

In announcing the change this week, Treasury Secretary Steven Mnuchin said the IRS has no administrative need for continuing the routine collection of donor names and addresses. If the information is needed for purposes of an examination, the IRS will simply ask the organization for it directly, Mnuchin said.

“It’s important to emphasize that this change will in no way limit transparency,” he said. “The same information about tax-exempt organizations that was previously available to the public will continue to be available, while private taxpayer information will be better protected. The IRS’s new policy for certain tax-exempt organizations will make our tax system simpler and less susceptible to abuse.”

Democratic lawmakers disagreed, arguing that being able to see who donates to certain tax-exempt organizations—particularly those engaged in political activities—helps taxpayers and lawmakers understand who is trying to influence elections.

Senate Finance Committee Ranking Member Ron Wyden (D-OR) said this move by the Treasury Department “made it easier for anonymous foreign donors to funnel dark money into nonprofits.”

“It’s the latest attempt by Secretary Mnuchin and Donald Trump to eliminate transparency and keep officials and lawmakers from following the money,” Wyden said.

(biffspandex/E+/Getty Images Plus)