Bullock v IRS - Montana federal district court reverses IRS decision to keep "dark money" donors hidden

A Montana Federal District Court ruling sets aside IRS Revenue Procedure 2018-38 exempting “dark money” 501(c) nonprofits from filing donor disclosure forms with their federal tax returns (Form 990). The IRS must follow the proper notice-and-comment procedures pursuant to the Administrative Procedure Act if it seeks to adopt such a rule.

 This is a significant setback to the IRS plan to keep “dark money” donors hidden from disclosure to the states. Donors to most exempt 501(c) entities were required to report on Schedule B of Form 990 the “names and addresses of all persons who contributed . . . $5,000 or more” during their taxable year.

 These donors were not publicly disclosed, however, states such as New Jersey and Montana require filing unredacted Form 990’s Schedule B donor lists with the state as well. California and New York also require 501(c)(4) social welfare organizations to register as charitable organizations and file their unredacted versions of Form 990’s donor list. IRS Rev. Proc. 2018-38 ended the filing Schedule B donor lists, so this represented a significant data loss of donor name, address, and contribution amounts to the states. Particularly in the regulatory area of “dark money” issue advocacy or political expenditures.

 Expect this Montana District Court ruling to be immediately appealed and a stay requested while the matter is on appeal.

 Court’s opinion here: https://www.scribd.com/document/420307600/Bullock-v-IRS


Michael Weisel