The Treasury Department and IRS on Friday issued proposed rules to reduce donor disclosure requirements for certain tax-exempt groups after a federal judge set aside guidance the agencies had previously released on the topic because it hadn’t gone through a notice and comment period.

Under the proposed rules, certain tax-exempt groups — including organizations such as the National Rifle Association and American Civil Liberties Union, as well as labor unions and business leagues — would no longer be required to provide the names and addresses of major donors on annual tax forms.

The tax-exempt groups would still have to report the amounts of contributions from each substantial donor, and would have to keep the names and addresses of the donors in their files in case the IRS needs the information on a case-by-case basis.

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Charities that have tax-exempt status under section 501(c)(3) of the tax code, as well as political organizations, would still be required to report the names and addresses of donors.

The IRS had previously issued guidance reducing the donor disclosure requirements in 2018 in the form of a revenue procedure, meaning there wasn’t a notice of proposed rulemaking and a comment period. Montana and New Jersey, which both have Democratic governors, filed a lawsuit challenging that guidance.

In July, Judge Brian Morris, an appointee of former President Obama in a federal court in Montana, ruled that the revenue procedure be set aside because it hadn’t gone through a notice and comment period. The proposed rules Treasury and the IRS issued Friday provide stakeholders the opportunity to have notice and provide comments on the donor-disclosure change.

The Treasury Department and IRS argued in their proposed rules that the names and addresses of major donors of tax-exempt groups, other than 501(c)(3)s, are not needed to carry out tax laws, and that a requirement for groups to report such information annually raises compliance costs. Treasury and the IRS also said that the names and addresses of groups’ donors have been inadvertently made public in the past.

Republican lawmakers have generally been supportive of Treasury and the IRS reducing the donor disclosure requirements, arguing that doing so helps to protect taxpayers’ First Amendment rights.

But Democrats are strongly opposed, arguing that the move could make it easier for foreign governments to influence U.S. elections through illegal donations to “dark money” groups.

“The State of Montana looks forward to giving the IRS a better picture of the devastating impacts its rules could have on state tax agencies as well as efforts to prevent foreign influence in our elections,” Raph Graybill, chief legal counsel in the Montana governor’s office, said in a statement. “We appreciate that the agency reversed from its prior course that excluded public comment.”

Montana's governor, Steve Bullock Steve BullockCourt removes Pendley from role as public lands chief On The Trail: Making sense of this week's polling tsunami McConnell locks down key GOP votes in Supreme Court fight MORE, is running in the Democratic presidential primary, and Graybill is running to be the state's attorney general.

Sen. Ron Wyden Ronald (Ron) Lee WydenHillicon Valley: Subpoenas for Facebook, Google and Twitter on the cards | Wray rebuffs mail-in voting conspiracies | Reps. raise mass surveillance concerns On The Money: Anxious Democrats push for vote on COVID-19 aid | Pelosi, Mnuchin ready to restart talks | Weekly jobless claims increase | Senate treads close to shutdown deadline Democratic senators ask inspector general to investigate IRS use of location tracking service MORE (Ore.), the top Democrat on the Senate Finance Committee, said in a statement that he continues "to strongly oppose the Trump administration’s attempts to weaken protections against illicit and foreign money in our elections."

"A key piece of Republicans’ electoral strategy is to allow as much dark money to be pumped into the system as possible," Wyden added. "Advocates for election security and good governance of tax-exempt organizations must voice their concerns during this comment period.”

Treasury and the IRS said in their proposed rules that they're aware of stakeholders' campaign finance concerns, but that the agency isn't responsible for enforcing campaign finance laws and the tax code generally prohibits the IRS from disclosing the names and addresses of donors to other federal agencies in non-tax investigations.

Last year, the Senate approved a resolution to disapprove of the revenue procedure on the donor-disclosure topic, primarily with Democratic votes, but the House, then under Republican control, didn’t take it up.

The proposed rules would take effect as of the date that final rules are published. However, tax-exempt groups can elect to apply the rules to returns filed after Friday.

Along with the proposed rules, the IRS on Friday issued a revenue procedure to provide penalty relief for tax-exempt groups who didn’t report the names and addresses of donors on returns for tax years ending between Dec. 31, 2018, and July 30, 2019.

--Updated at 3:37 p.m.