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New York Attorney General Sues Treasury and IRS Over Requirement for Tax-Exempt Groups

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New York Attorney General Sues Treasury and IRS Over Requirement for Tax-Exempt Groups

2019-05-08 16:10:50

By Laura Tucker, Staff writer; Image: Letitia James (Image source: Screenshot)



The pressure is mounting for Donald Trump. His financial records and tax returns are in demand while he also deals with pressure from the House for the Justice Department to release the full, unredacted report from Special Counsel Robert Mueller, as well as testimony dealing with the information in the report from former and present White House officials. 

The latest hammer to come down is from New York Attorney General Letitia James. She announced that her office, along with that of New Jersey Attorney General Gurbir Grewal (D), filed a lawsuit against the Treasury Department and the Internal Revenue Service, a subsidiary of the Department. While not going up against Trump by name, she's going up against policy changes made by his administration that could benefit him in a lawsuit filed by her predecessor.


James' lawsuit contends that Treasury and the IRS failed to respond to her requests for information regarding their guidance in reducing donor disclosure requirements for some tax-exempt groups. 

Last July Treasury and the IRS released guidance that eliminated a requirement for those groups to provide the names and addresses of major donors on annual forms. The groups this requirement loss applies to are 501(c)(4) social welfare organizations such as the National Rifle Association, American Civil Liberties Union, labor unions, and chamber of commerce.


The White House and Republican members of Congress have said this helps protect the privacy of taxpayers and prevents them from being targeted for their political beliefs. However, congressional Democrats believe all this guidance does is make it easier for foreign governments to influence U.S. politics through donations. 

"My office depends on these critical donor disclosure forms to be able to adequately oversee non-profit organizations in New York," explained James.


"Not only was this policy change made without notice, the Treasury and the IRS are now refusing to comply with the law to release information about the rationale for these changes. 

"No one is above the law — not even the federal government," she complained, "and we will use every tool to ensure they comply with these regulations to provide transparency and accountability."


It's unknown how much this will matter to the Treasury and the IRS. They have currently faced demands from the House Ways and Means Committee to turn over Trump's tax returns and have failed to comply.  

However, it leaves the question if this has to do with the president's former charity, the Trump Foundation. Former New York Attorney General Barbara Underwood filed a lawsuit against the charity. The Trump family were ordered to pay restitution for misuse of funds, then agreed to dissolve the foundation.


James then initiated an investigation and suggested the charity should be fined even more because they spent money from the charity on Trump's personal and business needs, as well as the campaign, money that is all tax-free.  

Since she was previously looking into that matter, the question remains if her request for information and the connected lawsuit has to do with that previous action. It should be noted that Underwood filed the lawsuit in July, the same month the Treasury and IRS released the guidance.

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