Republican lawmakers on the House Ways and Means Committee urged their Democratic colleagues on Tuesday to work with them on legislation to update the Internal Revenue Service’s 990 forms used by tax-exempt organizations to include disclosures for donations from foreign actors.

The overtures took place at a House Ways and Means Committee hearing on the rise of foreign influence operations targeting the U.S. nonprofit sector, where Democratic and Republican witnesses agreed on the need for reforms to the disclosure forms to ensure foreign donations are easily identifiable for IRS investigators. 

Witnesses included Scott Walter, president of Capital Research Center; Bruce Dubinsky, a veteran forensic accountant and managing director of Dubinsky Consulting; Caitlin Sutherland, executive director for Americans for Public Trust; Adam Sohn, CEO of Narravance, a financial firm focused on cybersecurity; and Robert Weissman, co-president of Public Citizen, a consumer advocacy organization.

Rep. Jason Smith (R-MO), the committee’s chairman, said at the outset that the hearing was a continuation of “our investigations into the money trails behind tax-exempt organizations failing to operate within their stated tax-exempt purpose and sowing chaos, fueling antisemitism, and interfering in elections across America.”

Smith mentioned several anti-Israel nonprofits in his opening statement, including Alliance for Global Justice, Samidoun and American Muslims for Palestine. He also pointed to Beijing-based tech mogul Neville “Roy” Singham and the People’s Forum, a Manhattan-based arm of the global network Singham finances.

“Certain tax-exempt organizations funded by foreign donors are exploiting their lucrative U.S. tax benefits to incite violence and unrest in our communities and destabilize our political process, all to the benefit of the foreign flags their donors fly,” Smith said. “Other tax-exempt organizations are masking the flow of foreign money by allowing separate entities to utilize their tax-exempt status in order to hold riots across the United States featuring intimidation and violence.”

Democrats largely used the hearing to accuse their Republican colleagues of hypocrisy, pointing to the committee’s failure to look into President Donald Trump’s foreign financial dealings since returning to office and arguing that Republicans were not serious about addressing the full scope of the issue. Several Democrats on the committee expressed willingness to engage on the proposed reforms to Form 990, though they argued doing so without looking into foreign influence in U.S. politics would be insufficient.

Walter, a Republican witness, said in his remarks, “We possess near universal agreement that foreigners and foreign money should not meddle in our politics. To ignore this overwhelming democratic consensus against foreign meddling is to suppress our democracy.”

“I heartily agree with you, and I think there’s a lot to learn from this,” Rep. Don Beyer (D-VA) said. “For example, 990 reform. I’d love to be participating in that. We don’t want foreigners affecting our elections, but I want you to share my horror at the amount of dark money that poured into seven battleground states at the end [of the 2024 election]. Billions of dollars. We have no idea where it came from. I can’t determine where it came from.”

Weissman, a Democratic witness, concurred with the need for reforms to the IRS reporting process for tax-exempt organizations, and suggested that Democrats reintroduce the Disclose Act, legislation from 2023 requiring organizations that spend money in U.S. elections to disclose donors who have given $10,000 or more. 

“On the election side, there is a problem with foreign money coming in, and we have no idea the scale of that. The solution for that is the Disclose Act, which would require these different forms … to disclose from whom they were receiving funding and to certify they are not receiving funding from foreign entities,” Weissman said. “I think if we move away from these individual cases and selecting out organizations based on political viewpoints and actually look at the policy issues, there should be room for agreement.”

Smith, along with several of his GOP colleagues on the committee, said they hoped to find common ground with Democrats on this issue.

“Nothing about today’s hearing should be partisan. Republicans and Democrats should work together to stop foreign actors from interfering with our politics and public discourse through non-profits,” Smith said. “The people who want America weak, divided, and torn apart would love nothing more than a partisan battle. This is not politics, it’s national security.”

Several witnesses suggested specific changes to Form 990, including the addition of questions about foreign donations and special projects that are not tax exempt. 

Dubinsky urged lawmakers to take “a fresh look at the form” and work on “basically reconstructing it from top to bottom.” He suggested that tax exempt organizations be required to disclose the source of contributions “above a certain threshold.”

“I would start by taking a fresh look at the form and basically reconstructing it from top to bottom. I think there’s some good information on the current 990,” Dubinsky said. “There are a lot of different schedules and sub-schedules, but it needs to be designed in a way that information can be easily used and not for political purposes. I’m totally against that, but for proper purposes by the IRS, for transparency.”

“Banks have a tremendous anti-money laundering and know-your-customer regime that they have to follow. I’m not suggesting that nonprofits and tax exempts should do that. It’s very onerous,” he continued. “But I think if you have some questions along the lines of: ‘Who’s the ultimate beneficial owner? Do you know?’ If certain contributions are above a certain threshold, we need to know who’s behind those. I think that that’s very important.”

Walter noted that adding an Employer Identification Number (EIN), which the IRS assigns to businesses as a form of identification, and disclosures about salaries or fiscal sponsorships to the form could prove beneficial.

“EIN numbers are not always used on 990s when one nonprofit is giving to another, that’s certainly an important way to help track,” Walter said. “You could expand the disclosures for the highest paid employees, highest paid contractors, the fiscal sponsorships could be required to be listed, possibly with a basic budget for them, or the name of the individual who’s the principal officer of the fiscally sponsored project, when the project begins and ends, then whether the project applied for its own exempt status independently. And obviously, the simple thing of, do you accept foreign money?”

“One simple thing would be requiring that sponsored projects be named on the 990, perhaps the basic budget of revenues, expenses, assets,” he later added. “You certainly could also designate a person as the principal officer for the fiscally sponsored project, the dates of when the sponsorship began [and] when it ended, yes or no to whether it received foreign funding and yes or no to whether the fiscally sponsored project applied for its own independent tax exempt status.”

Rep. Lloyd Smucker (R-PA) and Walker agreed with the former’s suggestion that the fiscal sponsorship model used by 501(c)(3) nonprofits for special projects that are not tax exempt is being misused to prevent full public disclosure of the funding of those projects. 

The Pennsylvania lawmaker, who is working on legislation on the issue, said that fiscal sponsorships “are often used for legitimate purposes, to help new nonprofits sort of get off the ground, if you will, but it also can allow a non-exempt entity to maintain limited public disclosure.”

Walker told Smucker that “one of the most egregious examples of the abuse here would be a fiscal sponsor that was helping Samidoun,” a Vancouver, B.C.-based NGO against which the Biden administration and Canada issued terrorism sanctions in October 2024 for raising money for the Popular Front for the Liberation of Palestine (PFLP), a proscribed terror organization.