H.R. 5053, Preventing IRS Abuse and Protecting Free Speech Act

H.R. 5053

Preventing IRS Abuse and Protecting Free Speech Act

Committee
Ways and Means

Date
June 14, 2016 (114th Congress, 2nd Session)

Staff Contact
John Huston

Floor Situation

On Tuesday, June 14, 2016, the House will begin consideration of H.R. 5053, Preventing IRS Abuse and Protecting Free Speech Act, under a closed rule. The bill was introduced on April 26, 2016, by Rep. Peter Roskam (R-IL) and was referred to the Committee on Ways and Means, which ordered the bill reported on April 28, 2016 by a vote of 23 to 15.

 

Bill Summary

H.R. 5053 would amend the Internal Revenue Code to limit the information that a tax-exempt organization must report about its donors on its annual information return. Under current law, some organizations that are tax-exempt under section 501(c) of the Internal Revenue Code must report to the Internal Revenue Service (IRS) the names and addresses or other identifying information of contributors of $5,000 or more on Schedule B of the organization’s Form 990. The bill would limit the Secretary of the Treasury from requiring the name, address, or other identifying information of any contributor regardless of the nature or size of the contribution with two exceptions. The Secretary may still require the information relating to prohibited tax shelter transactions and for contributions of $5,000 or more by officers, directors, or certain highly-paid employees of the organization.

 

Background

Certain tax-exempt organizations, organized under Section 501(c) of the tax code, with annual gross receipts over $50,000 must file a Form 990 with the IRS annually to disclose revenue and expenses.[1] In addition to reporting revenue and expenses to the IRS (among other information), organizations must identify significant donors (generally those who have given at least $5,000 during the year) on Schedule B.[2] However, any identifying information about those donors is generally not subject to public disclosure and can be redacted by the organization when making the 990 Form publicly available.[3] Courts have found that states do not have the right to have access to unredacted Schedule B forms.[4]

According to the bill sponsor, “This bill prohibits the IRS from collecting donor information on the schedule B form … The Schedule B is not needed for taxpayer administration. In fact, the IRS has indicated they were considering eliminating the requirement themselves. Tax exempt groups should not be forced to expend precious resources on unnecessary documentation and tax administration rather than focusing on their charitable missions. The IRS has not demonstrated the capacity to safeguard confidential information in the past. There is no reason we should send them any more sensitive information than they need to do their job.”[5]

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[1] See IRS Website, Which forms do exempt organizations file?
[2] See CRS Report, “Can States Require 501(c)(3)s to Disclose Their Donors?” April 23, 2015.
[3] See CRS Report, “Tax-Exempt Organizations: Political Activity Restrictions and Disclosure Requirements,” September 24, 2010.[4] See CRS Report, “Can States Require 501(c)(3)s to Disclose Their Donors?” April 23, 2015.
[5] See Ways and Means Committee Press Release, “W&M Takes More Action to Improve IRS,” April 28, 2016.

Cost

The Congressional Budget Office (CBO) estimates that enacting the legislation would reduce revenues by $16 million over the 2016-2026 period.

Additional Information

For questions about amendments or further information on the bill, contact John Huston with the House Republican Policy Committee by email or at 6-5539.