New York’s attorney general is suing the U.S. Department of the Treasury and its subsidiary the Internal Revenue Service, claiming that the agencies did not respond to a Freedom of Information request by the deadline required by law.
Government agencies have 20 business days to inform someone requesting documents whether the agency will respond and the scope of documents the agency will provide. New York Attorney General Letitia James alleged that Treasury and the IRS have “constructively denied” the attorney general’s request by failing to respond for more than six months and for improperly withholding material the attorney general is entitled to review.
James’ office requested documents concerning the elimination of established donor disclosure requirements for groups that are not 501 (c)(3) tax-exempt.
“My office depends on these critical donor disclosure forms to be able to adequately oversee non-profit organizations in New York,” James said in a news release May 6 announcing the lawsuit. “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 – and we will use every tool to ensure they comply with these regulations to provide transparency and accountability.”
The revised reporting standard was released in July 2018, according to the news release. The revision allowed certain organizations to withhold the names and addresses of their substantial contributors from their Form 990 or Form 990-EZ federal information return.
The lawsuit, filed jointly with the state of New Jersey, seeks to require the Treasury Department and IRS to respond as required by law to requests for information regarding agency actions that directly impact the New York Attorney General’s ability to effectively regulate affected organizations operating in New York.
James said that the revised regulation, Revenue Procedure 2018-38, was released without public notice or comment in July 2018. The regulation eliminated from federal and state filings an entire category of information that the attorney general said her office relies on to identify potential control risks, self-dealing transactions, potential insider influence and criminal conduct within the New York non-profit sector.
According to the news release, James and New Jersey Attorney General Gurbir Grewal submitted separate Freedom of Information Act requests to the Treasury Department and the IRS on Oct. 22, 2018 for documents regarding the Revenue Procedure’s origin and adoption. To date, the IRS has provided only a partial production from one of seven categories of requested material and the Treasury Department has failed to respond entirely.
The lawsuit was filed in U.S. District Court for the Southern District of New York.