Fredreka Schouten

USA TODAY

WASHINGTON — The House approved a bill Tuesday that would bar the IRS from collecting the names of donors to tax-exempt groups, prompting warnings from campaign-finance watchdogs that it could lead to foreign interests illegally infiltrating American elections.

The measure, which has the support of House Speaker Paul Ryan, R-Wis., also pits the Obama administration against one of the most powerful figures in Republican politics, billionaire industrialist Charles Koch. Koch’s donor network channels hundreds of millions of dollars each year into groups that largely use anonymous donations to shape policies on everything from health care to tax subsidies. Its leaders have urged the Republican-controlled Congress to clamp down on the IRS, citing free-speech concerns.

The names of donors to politically active non-profit groups aren't public information now, but the organizations still have to disclose donor information to the IRS on annual tax returns. The bill, written by Rep. Peter Roskam, R-Ill., would prohibit the tax agency from collecting names, addresses or any “identifying information” about donors.

Proponents say the bill is needed to stop the government and others from harassing politically active donors.

“Speech is special. Speech is sacrosanct, and speech ought not to be manipulated and intimidated by people with power,” Roskam said Tuesday on the House floor.

Roskam argued the IRS can’t be trusted to protect contributors’ identities because it has “squandered and abused” taxpayer information in the past. The agency has been in the Republicans’ cross-hairs in recent years, following revelations that it targeted conservative groups for extra scrutiny in the run-up to the 2012 elections.

“This isn’t about the IRS,” Rep. Bill Pascrell, D-N.J., countered Tuesday during the floor debate. “This is about hiding who contributes and how much.”

Fred Wertheimer, president of the watchdog group Democracy 21, said the measure benefits groups and wealthy individuals who want to spend unlimited amounts in elections and conceal their giving. Stripping the IRS' ability to scrutinize donors’ identities “creates a clear, new opportunity for foreign governments and corporations to launder illegal contributions into our elections,” he argued.

This week, the Obama administration also issued a formal statement opposing the bill, saying it “would constrain” IRS enforcement of tax laws.

The House approved the measure Tuesday afternoon by 240-182 vote.

The House action comes as conservatives and liberals battle in Washington and statehouses around the country over the role of money in politics and efforts to unmask contributors to non-profit groups that are playing a bigger part in elections. Groups that don’t have to reveal their donors’ names spent more than $300 million in federal elections in 2012, up from about $5.2 million in 2006, according to a tally by the non-partisan Center for Responsive Politics, which tracks political spending.

Last week, top Senate Democrats, led by New York Sen. Chuck Schumer, began pushing a package of campaign-finance and lobbying rules aimed at reining in the spending. It includes a bill authored by Sen. Sheldon Whitehouse, D-R.I., that would require the disclosure of any donor who contributes $10,000 or more during an election cycle to a tax-exempt group that operates under the 501(c)(4) section of the federal tax code reserved for social-welfare organizations.

Hillary Clinton, the Democrats’ presumptive nominee, is pushing her own package that includes a provision requiring companies with federal contracts to disclose their political giving.

Hillary Clinton outlines campaign-finance plan

In a statement, Mark Holden, who oversees Koch’s Freedom Partners Chamber of Commerce said Clinton, Schumer and others are “determined to eviscerate and rewrite the First Amendment."

He said the House measure would help protect donors from “threats, harassment and intimidation.”

It’s an argument Koch officials have been making in fights at the state level. An arm of the Koch-affiliated Americans for Prosperity has sued California Attorney General Kamala Harris over her office’s attempt to review the donor lists the group now provides to the IRS.

Officials in Harris’ camp say the donor information helps the office investigate possible fraud by tax-exempt groups. A federal judge has sided with Americans for Prosperity. Harris, a Democrat running for the U.S. Senate, has appealed.

In Arizona. Republican Gov. Doug Ducey — who has attended invitation-only retreats with Koch and donors to his network — recently signed a bill that shifted much of the state’s authority to police anonymous political spending by non-profits to the IRS.

Doug Ducey headed to Koch summit near Palm Springs

Previously, any group organized to influence elections in Arizona had to register with the appropriate state or local office and file reports disclosing its donors and spending. Non-profits no longer have to do so under the new law.

If the measure passed by the U.S. House on Tuesday becomes law, “there won’t be anyone left to enforce election laws” for non-profits active in Arizona politics, argued state Sen. Steve Farley, a Democrat from Tucson. He is working on a effort to gather the 75,000 signatures needed for a ballot referendum challenging the new Arizona law.

During a meeting with reporters this week, Freedom Partners spokesman James Davis identified "protecting free speech" as one of the top three issues the Koch network will pursue in the coming years.

Koch's team to meet Trump's camp, but industrialist remains skeptical