By MADISON HIRNEISEN
THE CENTER SQUARE STAFF REPORTER
(The Center Square) — Nonprofits that are found to participate in or incite efforts to overthrow the federal or state governments could have their California tax-exempt status revoked under a bill advanced by lawmakers this week.
The bill, dubbed the “No Tax Exemption for Insurrection Act,” would strip the California tax-exempt status of nonprofits that the state’s attorney general has determined “participate in or incite efforts to overthrow the United States government or any state government.”
The bill would require the attorney general to notify the Franchise Tax Board of findings, ultimately giving the board the authority to revoke the tax-exempt status of nonprofits in violation.
Sen. Scott Wiener, D-San Francisco, introduced the bill in January, a year after the attack on the U.S. Capitol on Jan. 6, 2021. A committee of federal lawmakers has recently begun a series of hearings revealing findings of the investigation surrounding the Capitol insurrection.
“There was a very organized effort to prevent the peaceful transition of power and to overthrow our government,” Sen. Wiener told lawmakers in the Assembly Revenue and Taxation Committee on Monday. “Tragically, there were nonprofits involved, and we want to make sure that going forward that these nonprofits do not get tax subsidies from California taxpayers.”
During his testimony, Sen. Wiener noted that the Franchise Tax Board is currently directed by law to revoke the tax-exempt status of nonprofits who sponsor international terrorism, but there is no existing authority concerning nonprofits who “literally tried to overthrow our government.” He told lawmakers his bill would “fill an important gap” in the law.
Following the Jan. 6 attack on the Capitol, the FBI began a search for individuals involved. Thus far, at least 865 people have been charged following the insurrection, according to a tracker published by Business Insider.
Supporters of Sen. Wiener’s bill said Monday that some “extremist and hateful groups” operating as nonprofits “may be abusing their tax-exempt status to further their violent or hateful objectives.” Beth Holtzman, a civil rights counsel for the Anti-Defamation League, argued Sen. Wiener’s bill would ensure nonprofits “do not abuse tax-exempt status in California or anywhere else.”
“Hateful groups with tax-exempt status may be using that status to raise money for violent and illegal purposes,” Ms. Holtzman said. “This status allows groups to raise money or financing while avoiding state and federal income and unemployment taxes.”
The bill received no opposition testimony during Monday’s committee hearing, and there are no groups currently registered in opposition of the bill, according to the committee’s analysis.
Lawmakers in the Assembly Revenue and Taxation Committee passed the bill in a 7-0 vote. It will now move on to the Assembly Appropriations Committee.
Madison Hirneisen covers California for The Center Square.
