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Columbus, OH — Can the federal government force charities to surrender their donors’ constitutional rights simply because those charities accept tax-deductible gifts?
That's a crucial question at the heart of the brief filed yesterday by the Institute for Free Speech in the U.S. Court of Appeals for the Sixth Circuit. The case defends the right of nonprofit organizations to protect their supporters’ privacy by preventing the IRS from unnecessarily collecting troves of confidential donor information each year. The Institute’s just-filed brief argues that the federal disclosure requirements are every bit as unconstitutional as the California scheme struck down by the Supreme Court four years ago. The Institute was the first to challenge California’s demand for such information and is proud to lead the fight against the root of the problem at the IRS.
The filing in The Buckeye Institute v. Internal Revenue Service asks the appeals court to uphold a lower court’s decision requiring the IRS to meet the demanding “exacting scrutiny” standard to justify the law. Under that law, the IRS annually collects the names and addresses of major donors from all 501(c)(3) nonprofits.
“The Supreme Court made crystal clear in Americans for Prosperity Foundation v. Bonta that governments cannot engage in dragnet collection of donor information without proving that doing so was necessary,” said Institute for Free Speech Senior Attorney Brett Nolan, the lead counsel in the case. “The Constitution applies to the IRS the same as any other government agency, and its demand for donor information creates a pervasive chilling effect on people exercising their First Amendment rights.”
The Buckeye case challenges a decades-old tax law forcing nearly all 501(c)(3) nonprofit organizations—such as schools, medical research institutions, relief groups, think tanks, and civil rights organizations—to annually disclose to the IRS the names and addresses of substantial contributors. This sweeping mandate affects hundreds of thousands of charitable organizations across the country.
The Institute’s brief notes that the IRS has failed to show any legitimate need for indiscriminately collecting sensitive donor information. Yet by doing so, the IRS increases the risk that confidential donor information becomes public or misused, threatening the existence of such groups.
“The IRS has a troubling track record when it comes to protecting taxpayer data,” Nolan continued. “Just a few years ago, the agency accidentally posted private taxpayer information online where it remained publicly accessible for an entire year. More recently, an IRS contractor leaked tax information of over 400,000 Americans to the media organization ProPublica, which published reports about it on its website. Forcing nonprofits to hand over donor lists to an agency that can’t secure this data creates real risks for Americans who worry about harassment and political violence from publicizing their support for controversial causes and organizations.”
The government argues that, because tax-exempt status is voluntary, it can impose whatever conditions it wants. However, as the Institute’s brief explains, the Supreme Court has long held that the government cannot condition benefits—even voluntary ones—on waiving constitutional rights, unless the condition directly limits how federal funds are used. The donor disclosure requirement does nothing to ensure tax-exempt organizations use their funds properly; it simply forces them to surrender their supporters’ First Amendment associational privacy rights.
“This case presents one of the most important First Amendment questions in the country today,” added Nolan. “If the government can force every charity in America to turn over its donor lists simply because those charities accept tax-exempt status, then the right to associate privately means nothing. The district court correctly recognized that the First Amendment requires more than the government’s say-so when fundamental rights are at stake.”
To read the Institute for Free Speech’s brief in The Buckeye Institute v. Internal Revenue Service, click here. To read more about the case and to access all filings, please see our case page here.
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