IRS dereliction aids California AG's donor privacy violations
California's Democrat attorney general, Kamala Harris, was recently slapped down by a federal judge for violating the First Amendment in a donor privacy case brought by conservative nonprofit Americans for Prosperity Foundation. The Internal Revenue Service needs to shoulder a substantial part of the blame for that case, because the IRS could and should have prevented Harris's lawlessness.
AFPF was granted an injunction against Ms. Harris on April 21 prohibiting her from demanding the nonprofit organization's donor names and addresses listed on confidential federal tax return "Schedule B." At trial, AFPF presented "ample evidence" that its donors received "threats, harassment, intimidation, and retaliation" for their private association with the organization. The right of private association is constitutionally guaranteed as expressed in the 1958 landmark civil rights case NAACP v. Alabama.
General Harris is acquiring confidential Schedule B donor names using a dragnet registration method for charities that communicate with fundraising appeals to Californians. The injunction order noted that Harris's claims for needing Schedule B donor information for law enforcement purposes was not credible, given the lack of an enforcement track record and the availability of such information from other sources on a case-by-case basis.
The injunction, unfortunately, is limited to AFPF despite the fact that Harris's office was caught posting over 1,700 confidential Schedule Bs on its website. Harris is now ducking a Freedom of Information Act request to identify which organizations were affected by her unlawful public disclosure.
Judge Manuel Real's order was blunt, noting that "the amount of careless mistakes by the Attorney General's registry is shocking," and "[t]he pervasive, recurring pattern of uncontained Schedule B disclosures [is] irreconcilable with the Attorney General's assurances and contentions as to the confidentiality of Schedule Bs collected by the Registry."
In other words, California's lawlessness is compounded by its efforts to mislead the court, which raises serious questions about the ethics and professionalism under which Ms. Harris's office operates.
What hasn't been reported is how the IRS could have prevented this mess. The federal tax code gives the IRS control over the flow of confidential federal tax return to state officials, who may actually need it to enforce laws. By its own interpretations of the law, the IRS requires states to enter into confidentiality agreements and establish protocols to prevent precisely what California did in accessing and publicly disclosing Schedule Bs.
A letter to IRS Exempt Organizations director Tamera Ripperda explains these laws and protocols that the IRS failed to enforce on Ms. Harris. The letter cites a 1999 Government Accountability Office report to Congress about how the IRS "has overall responsibility for safeguard reviews to assess whether taxpayer information is properly protected from unauthorized use or access as required by the [Internal Revenue Code]."
Government agencies "are required to advise the IRS how they intend to use the information and to provide the IRS with a detailed safeguard plan that describes the procedures" to ensure confidentiality. These plans must be updated, and state agencies must submit annual reports to the IRS. The IRS is also supposed to conduct "on-site reviews to ensure that agencies' safeguard procedures fulfill IRS requirements for protecting taxpayer information," according to the GAO report.
It is dereliction by the IRS to even allow California to use the dragnet registration process to obtain Schedule B donor information. The tax code authorizes state officials to submit requests for such information to the IRS, which requests may be denied. The IRS has previously taken the correct position that unless expressly allowed under the tax code, inspection and disclosure by state officials is unauthorized, subjecting those officials to civil and even criminal penalties. In the California situation, the IRS was and remains asleep at the switch.
Officials in Harris's office have been active in the National Association of State Charity Officials (NASCO). NASCO once described itself as "partner in the regulation of charities" with the infamous Lois Lerner, who was a predecessor to Tamera Ripperda as director of exempt organizations at the IRS.
The IRS's failure to act to protect confidential donor information on Schedule Bs means it may be treated as an "indispensable party" in litigation brought by other charities. Also, Congress should investigate why the IRS was derelict in protecting the confidentiality of donors, and whether Ms. Harris is acting as an Obama IRS surrogate in hampering First Amendment rights of conservative organizations such as AFPF and others.