Heads up: Congress is considering two measures that will affect IRS regulation of nonprofits.
First, a little background – for the past ten years, Republicans lawmakers have vented their anger at the IRS’ supposed bias against right-leaning nonprofits by slashing its budget big-time (current budget is 18% less than it was in 2010, adjusted for inflation) – despite the inconvenient fact that numerous left-leaning groups were also targeted for similar scrutiny.
Now, suddenly things have changed, following the passage of the new tax (their signature and pretty much only legislative accomplishment since they have controlled the Presidency, the House, and the Senate). The House Appropriations Committee just released a spending bill for 2019 that would increase the IRS budget, albeit modestly, including new funds to help implement the GOP tax law.
Here’s what else is in the bill: a provision that would pretty much bar the IRS from denying tax-exempt status to churches that participate in political campaigns. Sound familiar? It’s the Johnson Amendment redux (quick review – it’s a long-standing tax law that prevents churches and other nonprofits from endorsing or opposing political candidates). The House Appropriations Committee included a provision trashing the Johnson Amendment in the 2018 spending bill, but it didn’t make the cut. Apparently, if at first they didn’t succeed, they intend to keep trying and trying again.
On the other side of the aisle, the Senate Appropriations Committee is considering a proposal eliminating donor reporting requirements. As it stands now, federal tax law requires nonprofits that file an annual tax return to provide information on donors giving contributions totaling $5,000 or more (in money or property). Note that the IRS is required by law to keep this information confidential.This issue has long been fought in state courts. In 1958, the NAACP successfully challenged an Alabama law requiring nonprofits to provide a list of members, arguing that disclosure would harm them, their supporters, and their right to free speech - and they won. But more recently, in a case brought by Citizens United in New York, a federal court ruled the other way. According to the judge, "an individual who seeks to advance a cause might reasonably hesitate knowing that an officer of the state will see that they have done so, but totalitarian tendencies do not lurk behind very instance of a state's collection of information about those in their jurisdiction."
So: Is maintaining donor anonymity essential to protect free speech, especially for those voicing controversial options in hostile environments? And does free speech mean that churches should be able to use tax-deductible dollars to support partisan political candidates? The debate continues in courts, in Congress, and online.
Here's where I stand: I'm firmly on the side of donor transparency. I believe the public has the right to know the provenance of tax-deductible donations supporting issue-driven nonprofits, whether conservative or liberal. And I'm firmly on the side of separation of church and state. All nonprofits, including churches, can already speak out and advocate on important issues, but active participation in partisan politics crosses the line.
On the other side of the aisle, the Senate Appropriations Committee is considering a proposal eliminating donor reporting requirements. As it stands now, federal tax law requires nonprofits that file an annual tax return to provide information on donors giving contributions totaling $5,000 or more (in money or property). Note that the IRS is required by law to keep this information confidential.This issue has long been fought in state courts. In 1958, the NAACP successfully challenged an Alabama law requiring nonprofits to provide a list of members, arguing that disclosure would harm them, their supporters, and their right to free speech - and they won. But more recently, in a case brought by Citizens United in New York, a federal court ruled the other way. According to the judge, "an individual who seeks to advance a cause might reasonably hesitate knowing that an officer of the state will see that they have done so, but totalitarian tendencies do not lurk behind very instance of a state's collection of information about those in their jurisdiction."
So: Is maintaining donor anonymity essential to protect free speech, especially for those voicing controversial options in hostile environments? And does free speech mean that churches should be able to use tax-deductible dollars to support partisan political candidates? The debate continues in courts, in Congress, and online.
Here's where I stand: I'm firmly on the side of donor transparency. I believe the public has the right to know the provenance of tax-deductible donations supporting issue-driven nonprofits, whether conservative or liberal. And I'm firmly on the side of separation of church and state. All nonprofits, including churches, can already speak out and advocate on important issues, but active participation in partisan politics crosses the line.
