July 17, 2018 / 4:53 PM / 3 months ago

U.S. move to protect 'dark money' donors raises Russia concerns

WASHINGTON (Reuters) - A U.S. Treasury Department decision to safeguard the identities of so-called “dark money” donors to politically active nonprofit groups spawned warnings on Tuesday that the policy could inadvertently aid foreign actors, including Russia.

FILE PHOTO: The United States flag flies atop the U.S. Treasury Department in Washington November 18, 2008. REUTERS/Jim Bourg

The Trump administration’s Treasury said on Monday it will no longer require certain tax-exempt groups to disclose the identities of their donors to the Internal Revenue Service.

The move was hailed by Republican lawmakers as a win for free speech. The conservative political group FreedomWorks urged Congress to enact legislation that would codify the policy change to prevent its reversal by a future administration.

Democrats criticized the change as a setback for election transparency at a time of high tension over Russia’s meddling in the 2016 U.S. presidential election.

President Donald Trump on Monday came under fierce criticism from lawmakers - from both parties - for failing to confront Russian President Vladimir Putin over his nation’s meddling during a summit meeting in Helsinki between the two leaders.

The Treasury’s policy change was unveiled just hours after federal investigators announced conspiracy charges against a Russian woman with ties to the National Rifle Association, a nonprofit group whose donors would be protected by the change.

“(The) Treasury Department made it easier for anonymous foreign donors to funnel dark money into non-profits the same day a Russian national linked to the NRA was arrested for attempting to influence our elections,” Senator Ron Wyden, top Democrat on the Senate Finance Committee, said in a statement.

NRA officials were not immediately available to comment.

For decades, the Treasury has required tax-exempt groups organized under Section 501(c) of U.S. tax law to disclose to the IRS the identities of their financial donors. The disclosures have been confidential, not public.

Under the new policy, traditional charities will still be required to meet the disclosure requirements.

But so-called social welfare organizations, including some with household names such as the NRA, Planned Parenthood and the Sierra Club, will no longer be required to include donor identities with their tax filings. Nor will labor unions and trade associations, including chambers of commerce.

“Foreigners are not allowed to contribute directly or indirectly to campaigns. If a foreign entity or government tried to use a (non-profit) indirectly, the IRS ought to make sure that money’s not being used in a political campaign,” said Steven Rosenthal, senior fellow at the Urban-Brookings Tax Policy Center, a Washington think-tank.

On Monday, the Justice Department charged 29-year-old Russian Maria Butina, founder of the pro-gun Russian advocacy group Right to Bear Arms, with conspiracy while developing ties with American citizens and infiltrating political groups.

The criminal complaint said Butina worked to try to influence U.S. politics and infiltrate a pro-gun rights organization that was not named in the documents.

Photos on Butina’s Facebook page showed that she attended events sponsored by the NRA.

On Friday, a U.S. special counsel unveiled indictments of 12 Russian spies on charges of hacking Democratic Party computers as part of election meddling, the second set of charges against Russians in a probe that Trump calls a political witch hunt.

Special Counsel Robert Mueller for months has been investigating Russian interference in the 2016 election and possible collusion between Moscow and Trump campaign aides.

Reporting by David Morgan; Editing by Kevin Drawbaugh and Dan Grebler

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