House panel approves Koch-backed bill to shield donors' names from the IRS

The House’s powerful tax-writing committee approved a bill Thursday that would ban the IRS from collecting the names of donors to tax-exempt groups, enraging campaign-finance watchdogs who say the move could open the door to secret, foreign money in U.S. elections.

The measure, however, has the support of the Koch brothers’ company and its main political arm, Freedom Partners. The group, which operates as a tax-exempt trade organization, has directed hundreds of millions of dollars to an array of groups that help support candidates and causes aligned with the Kochs’ libertarian views.

In an interview with USA TODAY, Freedom Partners chairman and Koch Industries executive Mark Holden said Americans have the right to “anonymous free speech.”

Information about donors “is not used for any real, legitimate purpose” he said, “but, by and large, seems to be used by people or activists groups to get lists together to target and intimidate people, and that’s completely inappropriate.”

The Ways and Means Committee’s approval of the bill, by a 23-15 party-line vote, comes a week after a federal judge in California shot down efforts by state officials to learn the identities of donors to another Koch-aligned group, Americans for Prosperity Foundation. The state’s Attorney General Kamala Harris, a Democrat, plans to appeal the ruling.

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Details on who donates to tax-exempt groups are not publicly disclosed, but the organizations must tell the IRS who provides their funding.

Rep. Peter Roskam, R-Ill., the bill’s sponsor, said the IRS doesn’t need donors’ identities to do its work. “Tax-exempt groups should not be forced to expend precious resources on unnecessary documentation and tax administration rather than focusing on their charitable missions,” he said.

The federal tax agency has faced intense criticism and congressional investigations following revelations in 2013 that it targeted conservative groups for extra scrutiny. Election watchdogs, however, say non-profit groups should be subject to more scrutiny, not less, as the 2016 presidential and congressional contests heat up.

Tax-exempt groups have become increasingly active in politics, pumping $500 million in federal elections since 2011, according to Fred Wertheimer, president of the watchdog group, Democracy 21.“What the House Republicans on the committee are doing is taking a major campaign-finance problem and making it worse,” he said.

Wertheimer’s group joined several others in publicly opposing the measure.

IRS review, he argued, helps ensure that foreign contributions, which are illegal in U.S. elections, don’t enter politics by secret means. “You are eliminating any ability to hold nonprofits accountable,” he said.