Tag Archives: Tax Exempt Organizations

Tax-Exemptions

Pearl River     Paying attention to President Trump’s tweets is a fool’s errand, best delegated to journalists paid for the practice.  These are “thought bombs” sometimes disguised as policy or personnel decisions.  They are “Mission Impossible” instructions that dissolve or explode in many cases almost as soon as they are written.  Little more than blustering masked as orders to subordinates and governmental departments, rather than something real.  Yet, it’s a window to the darkness, because it’s the stick he’s using to stir the devil’s brew of mischief and mayhem that he is trying to use to move his base.

The other day he tweeted that he had ordered the Treasury Department to investigate the tax-exemptions of universities because, in his words, they were more involved in “Radical-Left indoctrination, than education.”  Obviously, this is balderdash.  He’s grasping at straws because he’s desperate for universities to reopen, so he can pretend everything is hunky-dory with the virus this fall on Election Day.  Some, like Harvard and MIT, are even suing him over his attempts to deny visas to foreign students and their families if they are not fully enrolled in classes.  All of this despite reports that 60% of the nation’s colleges and universities have already announced that they plan to go full-tilt in the fall, because their business model depends on it.

Little matter.  President Trump feels he can’t go wrong by attacking universities because of the deep-seated anti-intellectualism that has been an undercurrent of American politics for decades.

Playing to the cheap seats is a Trump specialty, so why would we even bother to note it?  Simply put, because attacking tax-exemptions, even in such a shotgun style, harkens back towards a Nixonian-style “enemies list.”  It’s a standard tool of autocrats.  It’s why Russia’s Putin years ago denied licenses for nonprofits of every persuasion.  It’s why India’s Modi has delisted thousands of nonprofits and denied their ability to operate from Greenpeace to the Ford Foundation.  Attacking tax-exemptions for educational and charitable organizations is designed to chill their activity and leave them cowering.   Often it works.

Remember the controversy with the IRS during the Obama years?  Tea Party groups claimed they were being denied tax-exemptions by the IRS, often concealing the fact that the IRS was also investigating left-liberal applications as well.  Republican-controlled Congressional committees have managed to defund the tax-exempt division of the IRS subsequently, leading to more approvals and less scrutiny, so they couldn’t follow Trump’s tweet-storm, even if they wanted to do so.  The IRS at every level is overwhelmed.  Recent reports indicate that refunds will be issued in the by and by at best.

Finally, the issue for tax-exemption, if Trump asks any of you, is not whether there is a political orientation, but whether the activity is nonpartisan.  Tea Party zealots are able to apply and receive exemptions and so are Radical-Left outfits, as long as they are about education and charitable purposes, rather than supporting candidates, like Trump, or parties like the Republicans or the Democrats.  Universities are just grist in that mill.  Tweet away, Mr. President, no one is listening anymore, but we are still keeping count and filing away the information for November.

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Church Exemption: Good for the Goose is Good for the Gander

New Orleans   The membership of legacy religious institutions may be falling like a rock, but their privileges are increasing. President Trump last week signed an executive order that sought to do a couple of things for churches. On one hand he wanted to give them some more flexibility in opposing abortion for their workers and institutions, but most of that had already been done by the courts in the Hobby Lobby case. The other penance he offered was protection for political endorsements being made by pastors right from the pulpit, and that’s interesting.

The Internal Revenue Service provides a tax exemption under its 501c3 classification for religious institutions and other nonprofits providing charitable, educational, and other benefits. In exchange for such a tax exemption there are some restrictions including the level of profit-making enterprises escaping taxation, unless they are directly related to the mission and purpose of the exempt nonprofit. There is also a ban on political activity and endorsements.

Trump’s executive order was a promise to the evangelical and religious community that he would get them around the Johnson Amendment and its restriction on religious endorsements. In some ways this was a bit of a straw man. Priests and pastors have been making political endorsements from the pulpit for years without provoking any investigations from the IRS, so they have been able to do so with impunity. Evangelical preachers have hardly been quaking in their brogans as they have embraced and endorsed conservative politicians from right to far-righter for fear of losing their tax privileges. Archbishops and Cardinals in heavily Catholic cities and states have sometimes jumped into the middle of political campaigns, including threatening excommunication of parishioners for voting for governors, senators, and representatives bold enough to support abortions. Trump’s claim was that his order would now protect them and give them license to jump into politics at their will and whim.

Talking to the director and organizer of an environmental group the other day who was debating whether his tax exempt group needed to form an entity that could be more aggressively active in pushing climate change into the political agenda, I had jokingly suggested that since a lot of environmentalists already talked about nature as their church, a simple fix for this problem would be to just say his outfit was now religious, and say whatever they wanted to say. Now in truth Trump’s order doesn’t mean much. The IRS will likely just ignore it and given the way they’ve ignored such blatant politics in the pulpit in the past and their depleted ranks in the exemption debate, it doesn’t add up to much.

But, what’s good for the goose, should be good for the gander. If the IRS lightened up on one group of nonprofits, they would have to lighten up on the whole bunch, equal protection being what it is once the matter finds its way to the courts. Nonprofit staff and leadership wouldn’t have to dance around whether they were speaking and acting personally and not as representatives of their organizations as they jumped into politics any more than pastors and priests. The President may not care that if he opens the door for one, everybody can walk in, but if this order has any weight, that’s what it should end up meaning. What’s good for one is good for all.

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