What the Johnson Amendment Repeal Discussion Means for Nonprofits

Discussions surrounding repealing the Johnson Amendment has been a hot topic in nonprofit news. This story has gained additional traction after Trump mentioned his plans during his Jan. 18th speech at Liberty University. The major concerns of this amendment repeal are that it would put deductions at risk and damage public trust.

The Johnson Amendment was passed in 1954 and it prevents charitable organizations from engaging in politics. It was introduced by then Senator Lyndon B. Johnson and it was suggested he did so because a charity opposed him in a primary race. The passage of this amendment “…[established] a rationale that, in return for not engaging in partisan politics, charities would continue to receive tax-deductible donations because they focus on contributing to the broader public good rather than narrower partisan interests.”

Supporters of the Johnson Amendment argue that 501(c)(3)s are able to concentrate and achieve their missions when they are not engaged in politics. Nonprofits serve the common good and with a repeal, it would erode people’s trust in who and how organizations help.

Opponents claim that the Johnson Amendment is in violation of the First Amendment. Nonprofits too have the freedom of speech and expression.

A repeal would blur the lines of what is a 501(c)(3) in terms of tax-deductions. Other nonprofits, like 501(c)(4), can engage in politics but cannot receive tax donations. It is possible that more entities and/or political groups would seek tax-deductible status to raise funds for political purposes and for potentially undisclosed donors. Also with the repeal, charities could “…lose the ability to receive tax-deductible donations…” and this would inhibit nonprofits from succeeding at their missions.

Repealing the Johnson Amendment is one option in change of federal law. There could be an executive order that would allow the administration to not enforce the law as long as political activities were ancillary. The IRS however could enforce the law if a nonprofit was engaging in more secular activity. From an opinion news piece, Congress seems hesitant to completely repeal the amendment. However, there is a bill at the House that would “amend the Internal Revenue Code to permit a tax-exempt organization to make certain statements related to a political campaign without losing its tax-exempt status.” This bill is the Free Speech Fairness Act.

What is your take on the Johnson Amendment repeal discussion? How would a repeal or executive order effect your charitable organization?

 

Sources:

Clerkin, Richard. “Repealing the Johnson Amendment could lead to reduced donations to churches and charities.” The News and Observer, http://www.newsobserver.com/opinion/op-ed/article134788344.html. Accessed 6 March 2017.

Hackney, Philip and Brian Mittendorf. “Trump may upend nonprofits with vow to ‘destroy’ Johnson Amendment.” Newsweek, http://www.newsweek.com/trump-upend-nonprofits-destroy-johnson-amendment-557716?_cldee=YW5uZS53YWxsZXN0YWRAYm9hcmRzb3VyY2Uub3Jn&recipientid=contact-75cd000f8e99e311956300155d009001-4e6ebff32b1e4064ade9eceac0048d63&esid=3dd07215-cef9-e611-959c-00155d009001. Accessed 6 March 2017.

“H.R.6195 – Free Speech Fairness Act.” Congress.gov, https://www.congress.gov/bill/114th-congress/house-bill/6195. Accessed 6 March 2017.

 

Verifying Exempt Status for Reinstated Organizations

Internal Revenue Service

My organization’s tax-exempt status was reinstated, but I can’t find my organization on Exempt Organizations Select Check (Pub. 78 Data) or the Exempt Organizations Business Master File extract (EO BMF). Why not?

Select Check (Pub. 78 Data) has been a major improvement in our search function, including monthly updates instead of the old Pub. 78 quarterly version. There still will be a delay between the time your organization is reinstated (or receives its initial exemption determination) and the time it shows up on Select Check (Pub.78 Data) and EO BMF.

Here’s why. Select Check (Pub.78 Data) and EO BMF information is drawn from the IRS Master File. Once a month an automatic computer program pulls updated data from the Master File and transfers it to Select Check (Pub.78 Data) and EO BMF. So, if your organization’s record was updated in the Master File prior to the date the program is run, that information will appear in that month’s update of Select Check (Pub. 78 Data) and EO BMF. If, on the other hand, your Continue reading

Lost tax-exempt status?

Congress passed the Pension Protection Act in 2006, requiring most tax-exempt organizations to file an annual information return (FAQs) or notice with the IRS. Since the list of revoked tax-exempt status was published last month numerous nonprofits in the community have called asking how they can get it reinstated.

To learn more about Automatic Revocation of Exemption and whether or not your nonprofit is required to file go to the IRS website.

If your organization is required to file and you’ve lost your exemption watch  this video about How to Get Your Tax-Exempt Status Back today.

IRS YouTube

Marilynn

IRS Reporting for Small Nonprofits

The Internal Revenue Service today announced that small tax-exempt organizations may be able to shift to the simpler Form 990-N (e-Postcard) for their 2010 annual information reporting. The IRS today issued guidance (Revenue Procedure 2011-15) that will allow more tax-exempt organizations to file the e-Postcard rather than the Form 990-EZ or the standard Form 990.

For tax years beginning on or after January 1, 2010, most tax-exempt organizations whose gross annual receipts are normally $50,000 or less can file the e-Postcard. The threshold was previously set at $25,000 or less. (However, supporting organizations of any size must file the standard Form 990 or, if eligible, Form 990-EZ).

A tax-exempt organization’s annual gross receipts or total assets are used to determine which of the three versions of Form 990 it is required to file. Go to IRS.gov for more information about which form to file.

Source: Exempt Organization Update Jan. 14, 2011

Marilynn

Exempt Organizations User Fees – 2011

Revenue Procedure 2011-8 provides guidance for complying with the user fee program of the Internal Revenue Service as it pertains to requests for letter rulings, determination letters, etc., on matters under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division.

See IRS.gov for general information on the TE/GE user fee program and a listing of the exempt organizations user fees for 2011.

The new exempt organizations user fees are effective as of January 3, 2011.

Source: Exempt Organization Update Jan. 14, 2011

Marilynn