Ohio Nonprofit Takes IRS to Court for Violating Citizen Privacy

December 15, 2022 | Luke Wachob

The Bill of Rights stands as one of the greatest accomplishments in American history. The first ten amendments to the United States Constitution enshrined in federal law protections for our fundamental rights and liberties that endure to this day. Yet as we celebrate the 231st anniversary of their ratification on Bill of Rights Day, these rights are still in need of defending.

The nonprofit Buckeye Institute in Ohio is the latest group of Americans to go to court to protect their privacy and free speech rights from government overreach. In a federal lawsuit filed earlier this month, the Institute is challenging a longstanding mandate that nonprofits turn over their donor lists to the IRS on an annual basis regardless of whether the information is needed to enforce tax laws. Citing last year’s landmark Supreme Court ruling, Americans for Prosperity Foundation v. Bonta, the lawsuit notes that the government must consider potential First Amendment harms before requiring nonprofits to reveal sensitive information about their supporters.

“The Buckeye Institute has experienced firsthand the chilling effect that forced donor disclosure has on the freedom of association,” said Robert Alt, President and Chief Executive Officer of The Buckeye Institute, who represents the group in the case along with attorneys from the Institute for Free Speech.

“In 2013, very shortly after The Buckeye Institute publicly urged Ohio’s Governor and General Assembly to reject the federal efforts at Medicaid expansion, our organization was selected for audit by the IRS,” Alt continued in a statement announcing the lawsuit. “Some Buckeye donors feared that this conspicuous audit was likely instigated as retaliation for Buckeye’s prominent role as the leading voice opposing the administration’s proposed Medicaid expansion, and those same donors expressed serious concern that if their names appeared on Buckeye’s audited records, they too could be potentially subjected to retaliatory individual audits or other such government antagonism. As a result, many Buckeye donors stopped giving entirely and others made smaller, anonymous, cash donations…”

Buckeye’s experience illustrates one of the fundamental truths about privacy rights and free speech: they are interdependent. The ability to join or support a cause privately ensures that critics of government do not suffer harassment and intimidation at the hands of the very political leaders they are trying to hold accountable. Private giving protects freedom of speech from being stamped out by those with the power to bully their critics into silence.

In Americans for Prosperity Foundation v. Bonta, the Supreme Court ruled that California’s similar dragnet of nonprofit donor information was unconstitutional under the First Amendment. Critical to the outcome of that case was the state’s failure to prove that the donor lists were needed for any legitimate law enforcement purpose. Another key factor was the state’s failure to keep these sensitive records secure. In a display of utter carelessness towards its citizens’ privacy, California had published the confidential donor lists of nearly 2,000 nonprofit organizations on a public website.

The IRS’s collection of charity donor lists presents the same basic problems. Just this week, the agency was hit with a separate lawsuit over apparent leaks of individual Americans’ tax records to the news outlet ProPublica. The case adds to a long line of controversies involving the IRS’s misuse of taxpayer information and targeting of Americans and social movements for their beliefs. And, like California, the IRS has no need for the donor lists it collects from nonprofits. In fact, the IRS admitted so publicly on multiple occasions, including as recently as last summer.

In 2020, when the IRS ended a similar donor reporting rule for certain types of nonprofits – those whose supporters do not receive a tax deduction – it revealed that IRS agents did not use the donor information they collected and that accumulating and securing it only created unnecessary burdens for the agency. The IRS does not have any purpose for warehousing donor lists to charitable organizations either, but federal law stipulates that they be collected.

That’s where The Buckeye Institute v. IRS comes in. In challenging the unnecessary, speech-chilling mandate that nonprofits let the IRS track their members’ giving, Buckeye and the Institute for Free Speech are doing their part to honor our Bill of Rights – and keep it intact. All Americans who believe in protecting the privacy of nonprofits and their supporters are behind them, including People United for Privacy Foundation.