On February 3, U.S. Senators Jon Tester and Ron Wyden reintroduced a bill to reverse a U.S. Treasury Department’s decision limiting IRS disclosure requirement of certain tax-exempt organizations engaging in political activities.

Senate Bill 215, the Spotlight Act, requires non-profit organizations engaging in political activity, such as donating to candidates and purchasing political ads, provide the IRS with the names and basic information of donors who contribute more than $5,000.

The bill repeals an IRS revenue procedure exempting certain tax-exempt organizations that are not 501(c)(3) organizations from the requirement to report the names and addresses of substantial contributors (persons who contribute more than $5,000 per year) on information returns that are filed with the IRS. The proposed legislation requires tax-exempt organizations falling under sections 501(c)(4), 501(c)(5), and 501(c)(6) of the Internal Revenue Code (e.g., social welfare organizations, labor organizations, business leagues) to disclose the names and addresses of all substantial contributors on their returns. The bill also eliminates the authority of the IRS to provide exceptions to the disclosure requirements for tax-exempt organizations.

A version of the Spotlight Act was first introduced by the Senators in 2018

On September 24, U.S. Senators Jon Tester and Ron Wyden introduced a resolution to reverse a U.S. Treasury Department’s decision limiting IRS disclosure requirements of certain tax-exempt organizations engaging in political activities.

On July 16, the U.S. Treasury Department and the IRS announced certain tax-exempt organizations are no longer required to report the names and addresses of contributors on their annual reports.

This exemption from reporting applies to tax-exempt organizations generally not receiving tax-deductible contributions, such as the National Rifle Association, labor unions, volunteer fire departments, issue-advocacy groups, local chambers of commerce, veterans’ groups, and community service clubs. These organizations are still required to continue to collect and keep the donor information and to make it available to the IRS upon its request.

This exemption does not affect the information required to be reported by charities primarily receiving tax-deductible contributions, such as 501(c)(3) organizations, certain nonexempt private foundations, or 527 political organizations.

Senate Joint Resolution 64, The Spotlight Act, would overturn the exemption and require disclosure to the IRS of the names and information of donors who contribute more than $5,000.