Expanding on a previous campaign promise by Republican Presidential nominee Donald Trump, his running mate, Republican Vice Presidential nominee Mike Pence (R-IN), said this week that the candidate would allow tax-exempt organizations to endorse or oppose political candidates.
Specially, Pence called for a full repeal of the Johnson amendment, a 1954 change to the U.S. tax code proposed by then-Senator Lyndon Johnson which prohibits tax-exempt organizations from endorsing or opposing political candidates. That includes making donations to a particular campaign, as well as publishing or distributing statements in support of a candidate.
Such a move would have a broad impact on the nonprofit sector, tax experts say, affecting not only the churches and religious leaders Trump had previously mentioned in promising the repeal, but also any other 501(c)(3) exempt organizations. Trevor Potter, president of the Campaign Legal Center and a former Republican chairman of the Federal Election Committee, also said that abolishing the Johnson amendment may result in 501(c)(3) groups following recent trends of Section 501(c)(4) social welfare organizations, which are permitted to engage in some political activity as long as that isn’t their primary purpose. “If you look at what’s happened to (c)(4)s, the situation without the Johnson amendment would be very similar” for 501(c)(3) organizations, he said.
Marcus Owens, a partner at Loeb & Loeb LLP and former IRS official from the agency’s Exempt Organizations Division, agreed. Repealing the amendment could “encourage the formation of a lot of new charities that would have political activity as an ulterior motive,” he said yesterday.
Independent Sector has historically supported the prohibition of political activity by 501(c)(3) tax-exempt charitable organizations, arguing that the public trust requires such organizations to “remain above the political fray, advocating and informing leaders, but never engaging in political activity.”
Source: BNA Daily Tax Report (subscription required)
