On January 8, 2021, the Supreme Court of the United States decided to review two cases challenging the California Attorney General’s requirement that any charity seeking to operate in California file an unredacted copy of an obscure tax form listing major donors to the organization. The cases, Americans for Prosperity Foundation v. Becerra, No. 19-251, and Thomas More Law Center v. Becerra, No. 19-255, were consolidated and oral arguments may be held this spring or fall.
The Attorney General requires charities that want to operate in California to file an unredacted copy of a federal tax form: Schedule B to Form 990, the annual return filed by charities and other tax-exempt organizations. Schedule B lists identifying information about major donors to the reporting organization. Donor information is highly protected under federal law, but the Attorney General demands the form without complying with onerous federal security requirements and usage restrictions.
The charities are challenging the Attorney General’s demands as violating the First Amendment’s freedom of speech and association. They have shown that the Attorney General’s office has a long and sordid history of leaking tax information on the Internet, endangering their donors’ safety and livelihoods. But the Attorney General claims to need the Schedule B to enforce California’s laws against fraud and abuse of charitable status because it would be more “efficient.”
This article follows the history and purpose of Schedule B. The history shows that Schedule B was created in 2000 as a protection for donor privacy, but unauthorized leaks of the form have continued. Although the Supreme Court is unlikely to interpret the federal tax privacy laws that gave rise to and continue to shape Schedule B, the information may form part of the context in which the Court will analyze the First Amendment issues being discussed.
Caution: this is a very long and complicated article, even for this website, and has many footnotes. But tax-exempt organization law is complex, and especially so when constitutional rights are involved.
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