Now that the U.S. Senate has passed tax reform plan (see details below), House and Senate leaders are negotiating a final version of the bill that they hope to send to the President for his signature as soon as this Friday. While both the House and Senate plans include a variety of tax changes that are problematic for nonprofits (plus a few small changes that might benefit nonprofits), there is a big difference between the two plans. The House plan includes language to severely weaken the Johnson Amendment, the language in Section 501(c)(3) of the Internal Revenue Code that protects charitable nonprofits, houses of worship, and foundations from partisan politics. The Senate wisely chose not to include this language in its tax legislation.
Senator Richard Burr (R-NC) and Senator Thom Tillis (R-NC) need to hear from nonprofits so they fully appreciate the harm that the Johnson Amendment provision in the House bill would cause for nonprofits, foundations, and communities across our state. We are asking you to call (do this first!) and tweet (do this second, if you can spare another 38 seconds!) them today to urge them not to weaken the Johnson Amendment in the final tax reform bill.
WHAT TO SAY
When you call Senator Burr’s office (202-224-3154), use this simple message:
“I’m a constituent and I’m calling in opposition to a very harmful provision in the tax bill that would weaken the Johnson Amendment and politicize charitable nonprofits, houses of worship, and foundations against our wishes. The harmful provision is Section 5201 of the House-passed tax bill that is now in a conference committee with the Senate. I am asking Senator Burr to reach out to every member of the conference committee and tell them the Johnson Amendment language in the House bill must not be included in the final bill. Thank you.”
When you call Senator Tillis’ office (202-224-6342), use this simple message:
“I’m a constituent and I’m calling in opposition to a very harmful provision in the tax bill that would weaken the Johnson Amendment and politicize charitable nonprofits, houses of worship, and foundations against our wishes. The harmful provision is Section 5201 of the House-passed tax bill that is now in a conference committee with the Senate. I am asking Senator Tillis to reach out to every member of the conference committee and tell them the Johnson Amendment language in the House bill must not be included in the final bill. Thank you.”
WHAT TO TWEET
.@SenatorBurr Sec. 5201 of the House bill would be damaging to work of #nonprofits. Remove this language in the final #taxreform bill and protect the #JohnsonAmendment.
.@SenThomTillis Sec. 5201 of the House bill would be damaging to work of #nonprofits. Remove this language in the final #taxreform bill and protect the #JohnsonAmendment.
UPDATE ON TAX REFORM
Early Saturday morning, the U.S. Senate approved its version of its tax reform plan by a narrow 51-49 margin. On Monday, the House formally rejected the Senate version and appointed a conference committee to negotiate a final version of the tax plan. See the Center’s comparison chart for more details about the variety of ways the House and Senate tax reform plans would affect nonprofits.
Like the House plan, the Senate version nearly doubles the standard deduction, meaning that only about 5% of taxpayers would itemize their taxes (both plans). The latest estimates suggest this will reduce charitable giving by between $12 billion and $20 billion per year and lead to the loss of 220,000 or more nonprofit jobs nationally. But there was a bit of a silver lining. When the Senate released the final version of its tax plan on Friday night, it made several improvements to provisions in the bill affecting nonprofits:
- Despite rumors to the contrary, the Senate didn’t include a provision to weaken the Johnson Amendment it is version of H.R. 1. This is a testament to nonprofits’ strong advocacy on this issue (i.e. your calls and tweets from last week)!
- The Senate removed a problematic provision that would have punished nonprofits that are the victims of excess benefit transactions by imposing “intermediate sanctions” on nonprofit organizations themselves, in addition to penalizing board members or nonprofit executives who receive excessive compensation. The proposal that had been in an earlier Senate version also would have removed a “safe harbor” for nonprofits that use comparability data to set compensation.
- The Senate also removed the provision that would have taxed (as unrelated business income) royalty income from licensing nonprofits' names and logos.