Tax-exempt status: insurrection.
This legislation would enhance the state’s ability to regulate nonprofit organizations by allowing action against those that are found to encourage or engage in violence or subversion against the government. By explicitly linking state tax-exempt status to adherence to public policy and the avoidance of criminal acts, SB 834 seeks to ensure that charitable organizations do not undermine the principles of democracy and law. This may lead to a review process that could scrutinize the activities of nonprofits more rigorously, especially during times of social or political upheaval.
Senate Bill 834, introduced by Senator Wiener, aims to amend the Revenue and Taxation Code to clarify the revocation process of tax-exempt status for nonprofit organizations that engage in or incite acts of insurrection or similar federal crimes. The bill empowers the California Attorney General to determine if a tax-exempt organization is involved in actions that may lead to imminent violations of specified federal laws, such as treason or seditious conspiracy. Upon such determination, the Attorney General is required to inform the Franchise Tax Board, which then holds the authority to revoke the organization's tax-exempt status.
The sentiment around SB 834 has been a mix of support and concern. Proponents argue that the bill is a necessary step to protect democratic functions and ensure that public funds are not misused by organizations that oppose governmental authority. Conversely, critics view this as a potential governmental overreach that could infringe on the rights of nonprofit organizations, potentially chill free speech, or place undue pressure on entities that might engage in legitimate political dissent or advocacy.
Key points of contention include the definitions of 'insurrection' and related acts within federal law, and the ethical implications of revoking tax-exempt status. Concerns have been raised about the administrative capability and process required for the Attorney General and the Franchise Tax Board to investigate and act on such findings. There is also a debate around the balance of ensuring accountability for public nonprofits while protecting their function as a voice for various social and political causes in society.