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.
It’s no secret that the slow economic recovery continues to take its toll on the ability of New Jersey’s non-profits to provide essential services for our communities in the face of a stagnant funding environment.
One important way to address the problem is to make it easier for people to give to charity by providing a state-level tax deduction for charitable donations. Several bills now pending in the New Jersey Legislature would allow taxpayers to deduct their charitable gifts from their state income taxes.
A New Jersey charitable deduction would be good for our state’s charities and everyone that relies on them. Here’s why:
Recently, the Star-Ledger ran an opinion column by a prominent Rutgers University faculty member regarding the changing tax policy landscape for tax-exempt organizations and calling for a variety of reforms to address the problems identified by the author.
Presumably, a major impetus (but not the only one) behind this piece is the recent debate surrounding the property tax exemptions of New Jersey’s largest hospitals and universities.
Perhaps I might have been less dismayed by the article had it focused more specifically on the pros and cons of tax exemption for these mega-institutions (or, for that matter, of providing tax incentives to large for-profit corporations for locating within particular municipalities). But as written, the column contains a number of sweeping generalities and misleading and inaccurate statements regarding the entire non-profit community that cannot go unanswered.