A conservative political action committee funded by billionaires David and Charles Koch must disclose their largest donors in confidential tax filings in California, a federal appeals court ruled Tuesday.
The 9th U.S. Circuit Court of Appeals ruling overturns a lower court order blocking the state from collecting information from Americans for Prosperity. Although the information is already required by the IRS, this ruling clears the way for the state attorney general to scrutinize the Koch’s nonprofit group and its major donors.
The nonprofit argued the state’s disclosure requirement burdened its First Amendment right to free association.
The ruling upholds the constitutionality of California’s charitable registration requirement as it is applied to two nonprofits that solicit tax-deductible contributions, Americans for Prosperity Foundation and the Thomas More Law Center. The More Center is a conservative legal organization representing “Roman Catholic values” and opposition “to the imposition of Sharia law” in the US.
California attorney general collects IRS Form 990 schedule B, which contains names and addresses of the very largest contributors. The state AG uses the information solely to investigate and prevent potential fraud. The information is not made public.
California has a substantial interest in preventing fraud that outweighs the scrutiny the plaintiffs might face, the panel held.
“Even assuming arguendo that the plaintiffs’ contributions would face substantial harassment if Schedule B information became public, the strength of the state’s interest in collecting Schedule B information reflects the actual burden on First Amendment rights because the information is collected solely for nonpublic use, and the risk of inadvertent public disclosure is slight,” Judge Raymond Fisher wrote for the panel.
He was joined by Judges Richard Paez and Jacqueline Nguyen.
Case: Americans for Prosperity v. Becerra, No. 16-55727