Proposed bill in New York would limit political activity for tax-exempt nonprofits

The Hill

2 days ago

ALBANY, N.Y. (NEXSTAR) — A new bill floated by Democrats in the New York State Legislature targets tax-exempt nonprofits like churches and charities that participate in political campaigns.
The proposal, introduced by Sen. James Skoufis and Assembly member Tony Simone, would create a new state process to enforce a federal rule currently being challenged.
The Nonpartisan Pulpit Act, S8745, would codify into state law a 1954 provision called the Johnson Amendment. This rule is supposed to prevent 501(c)(3) organizations — a tax category including charities, foundations, and religious institutions — from endorsing or opposing political candidates, or else lose tax-exempt status.
The bill's text defines 'political campaign activity' as any participation or intervention in a political campaign for or against a candidate for office, including actions, communications, or spending. It would block organizations from making or asking for contributions to candidates or parties and from publishing statements advocating for the election or defeat of a candidate.
In a statement on the bill, Simone said, 'Community organizations succeed when they remain safe havens from partisanship.'
The legislation allows for lobbying for or against new laws so long as that lobbying doesn't impede a campaign. It also permits nonpartisan voter education, like publishing voter guides or hosting forums, provided those events are neutral. The text also includes specific safe harbors that let organizations host candidates for public office at an event if all other legally qualified candidates for the same office are invited and offered equal opportunity to speak.
Simone's office added that the new bill creates a separate certification process at the state level, making requirements for tax-exempt organizations a matter of state law. That means the rules would remain in New York even if the federal Johnson Amendment is compromised or overturned.
'Most New Yorkers want politics to stay where it is—in political debates, newspaper op-eds, and the comment section on Facebook,' Skoufis, who previously ran to chair the Democratic National Committee before dropping his bid, said in an email. 'Not in museums, soup kitchens, and certainly not in churches.'
He added that tax exemptions are for the good of all members of the public, not just for people who vote a certain way.
Historically, the federal government and courts have upheld the constitutionality of the Johnson Amendment. In ' Branch Ministries Inc. v. Rossotti,' the Interal Revenue Service (IRS) revoked a church's tax-exempt status after it ran newspaper ads criticizing a presidential candidate. The court ruled that the government has a 'compelling interest in maintaining the integrity of the tax system and in not subsidizing partisan political activity,' and that the ban on political activity was the 'least restrictive means' of achieving those goals.
But the current debate about the Johnson Amendment — whose opponents argue that it violates First Amendment protections for free speech and religion — reignited on July 7. That's when the IRS agreed in a court filing not to enforce the provision against two churches that had sued. The agency justified the position, saying that when a house of worship speaks to its congregation about electoral politics during religious services, it doesn't 'participate' or 'intervene' in a political campaign.
In a 2017 speech at the National Prayer Breakfast, President Trump cited Thomas Jefferson when he said, 'I will get rid of and totally destroy the Johnson Amendment and allow our representatives of faith to speak freely and without fear of retribution.'
He signed an executive order that year that loosened enforcement, instructing the Treasury Department not to take 'adverse action' against religious organizations for speaking about political issues from a religious perspective.
In 2019, then-Gov. Andrew Cuomo (D), who is currently running for New York City mayor, signed S4347 / A623 to enshrine the Johnson Amendment statewide. That bill amended one part of the state tax law to prohibit nonprofits from participating in political campaigns generally, asserting that the prohibition should be interpreted the same way the federal government interprets the amendment.
The new bill goes further, adding a new section to the tax law and amending the real property law so a nonprofit could lose real estate tax exemptions over political campaign activity. It includes more detailed definitions and specific violations and lets the state's Department of Taxation and Finance 'establish rules and regulations to administer and enforce' its provisions.