The new tax law, the measure formerly known as the “Tax Cuts and Jobs Act,” represents the most comprehensive overhaul of the federal tax system in decades. Although the full impact of the law is still unfolding, most of the law’s provisions are effective as of January 1, 2018, so non-profits need to take steps now to understand and adapt to the changes. Following is a discussion of some of the key elements of the law affecting 501(c)(3) organizations, as well as some elements that did not make it into the final statute.
On May 4, President Trump signed an Executive Order declaring the executive branch’s goal to “vigorously enforce Federal law’s robust protections for religious freedom.” Of particular interest to the broad-based charitable community is a provision that purports to make it easier for religious institutions to engage in partisan political speech and electioneering – activities that are prohibited for 501(c)(3) organizations under the “Johnson Amendment.” (Another provision concerns whether insurance companies must cover contraception for individuals if their employers opt out for religious reasons.)
The President’s Executive Order is likely to face legal challenges from a variety of organizations, some of which reportedly are already in the process of preparing their legal filings. But in the meantime, what does it actually say, and what does it mean for 501(c)(3) organizations? Arguably, it says and means both nothing and everything simultaneously.
Proposed “Johnson Amendment” repeal would harm 501(c)(3)s
by Linda M. Czipo
Since 1954, tax law has contained a provision prohibiting 501(c)(3) organizations from directly or indirectly attempting to influence the election or defeat of any candidate for public office. This ban, also known as the Johnson Amendment for its sponsor, then-Senator Lyndon B. Johnson, applies not only to churches, but to all 501(c)(3) organizations.