Should California AG Harris Be Investigated for Tax Code Violations?

Following revelations that Richard Nixon used the IRS to target his “enemies” for tax audits, Congress amended the Internal Revenue Code to restrict access by federal and state government officials to federal tax return information. The post-Watergate reforms include civil and criminal penalties for inspection and disclosure of federal tax returns not expressly authorized for legitimate and expressly identified law enforcement purposes.

The tax code requires that an annual tax return be filed by charities and other nonprofit organizations -- IRS Form 990. Under Section 6104 of the tax code, those returns of charities and other nonprofits must be made available for public inspection. Now, many Forms 990 are even made available on public websites such as The tax code, however, treats the names and addresses of donors listed on those Form 990 Schedule B’s quite differently than any of the other information on that form. Information about donors remain subject to the Code’s strict confidentially provisions.

California attorney general Kamala Harris is the state’s top charity regulator, overseeing California’s Registry of Charitable Trusts. Ms. Harris has decided to bypass federal law expressly requiring her to obtain Schedule B information directly from the IRS on a case-by-case basis if she has a legitimate need for donor information to enforce her state’s charitable solicitation laws. Instead of abiding by federal law, she’s employing a dragnet method, demanding that all charities registering with her office submit their Schedule B donor lists to the Registry in order to solicit contributions from Californians.

Charities even outside the state that wish to communicate with potential supporters in California are first required to register with Harris’ office before they may ask Californians for contributions, giving Ms. Harris tremendous power over “national” nonprofit organizations. By demanding the d33waonor lists of not only California-based charities, but all charities seeking support from Californians, she has extended her reach to violate the right of private association of donors and charities throughout the entire country.

People may wonder why federal confidentiality laws should apply to names and addresses of donors filed with the IRS on Schedule B of charities’ tax returns. In the 1950s, the Alabama attorney general wanted to disrupt the civil rights movement in his state by obtaining the names of financial supporters of the NAACP. The Supreme Court shut down his demands in the landmark case NAACP v. Alabama. The court said that forced disclosure to government officials of the NAACP’s financial backers and members would seriously harm the right of private association protected by the First Amendment.

These principles were the law of the land when Congress enacted the donor confidentiality provisions, and are reflected in the federal confidentiality laws helping to protect charities and their donors from abuse and intimidation by government officials.

Lois Lerner’s IRS was caught violating the tax code confidentiality laws when it disclosed donor names and addresses of the National Organization for Marriage to opponents of that nonprofit organization. In addition, IRS emails obtained under the Freedom of Information Act show Lerner’s IRS gave the Federal Election Commission “detailed, confidential information concerning the tax exempt application status and returns of conservative groups” in violation of the tax code’s confidentiality laws. The tax code’s penalties applicable to acquisition, inspection, and disclosure of charities’ confidential federal tax return information applies to state officials.

The confidentiality rules, however, are applicable to more than leaks to third parties. For nonprofit organizations, Congress legislated one method -- and only one method -- under which state officials such as Kamala Harris may acquire confidential Schedule B information for inspection or intra-office disclosure in the administration of state charitable solicitation laws. State AGs and other charity regulators are required to request it on a case-by-case basis from the IRS before they may acquire, inspect, and further disclose it to employees in their offices.

The IRS may deny those requests, and has authority to create protocols and supervisory review of how that information is maintained when state officials are granted access to it. Indeed, the IRS has created agreements that state authorities must sign assuring they will abide by the federal confidentiality laws and protocols. Comments recently filed with Ms. Harris’ office explain those exclusive and rigid rules, how the IRS has interpreted them, and even how a former top official for Ms. Harris interpreted them before Harris decided to break bad by end-running them.

Ms. Harris’ decision to unilaterally bypass the exclusive and rigid regime for inspection and disclosure of donor names on Schedule B created by Congress looks to be a pretty clear violation of federal law. Another set of comments filed with her office explain the applicable criminal penalties for unauthorized inspection and intra-office disclosure. These penalties apply to not only top state officials, but lower level employees, too. By her actions, Ms. Harris has put not just herself, but also employees in her office in legal jeopardy.

The California Registry of Charitable Trusts has threatened denial of permits to solicit contributions and even fines for failure to comply with the Ms. Harris’ dragnet demands for Schedule B information. California-based charities even face loss of their statewide tax-exempt status. This is not only extortionate, it flagrantly contravenes the U.S. Supreme Court’s long-accepted unconstitutional conditions doctrine, which bars the use of quid pro quo as a method for government officials to restrict the exercise of First Amendment and other rights (i.e., government may not condition the issuance permit or license -- here a permit to solicit contributions -- on the surrender of a constitutional right -- here the right to private association.)

A hyperpartisan who routinely opposes the public policy positions of conservative organizations on significant issues -- marriage, abortion, Second Amendment rights, and more -- Ms. Harris gives conservatives good reason to fear that she will abuse this confidential tax return information for nefarious purposes. Compounding her ideological threat to conservatives, she is a trained prosecutor who has a strongly imperious bent. As was widely reported, she is investigating the speech of Exxon, which disagrees with her position on climate change.

Ms. Harris’ actions make a statement that she believes she is above the rule of law, and she’s willing to use the heavy hand of her office to abuse Americans’ right to private association. The Obama Justice Department has given many passes to lawbreaking by government officials who are political allies, and the ambitious candidate for U.S. Senate Kamala Harris could also escape investigation by this administration for violating federal law. However, Congress and the next administration do appear to have grounds to question Ms. Harris about these matters, and take a hard look into whether she and her office are engaged in criminal violations of the federal tax code.

Mr. Boos is an attorney in private practice in Virginia who for over twenty years has assisted nonprofit organizations and fundraising professionals with state charitable solicitation compliance matters. Mark Fitzgibbons is a regular contributor to American Thinker.