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House wants to go around Johnson amendment

On Behalf of | Jul 27, 2018 | IRS Issues

For roughly 50 years, the Johnson amendment has prohibited nonprofit organizations in Georgia and throughout the country from engaging in political campaigns. However, the House of Representatives voted to prevent the IRS from taking away the tax-exempt status of any church that supports a political candidate. The head of the National Council of Nonprofits was critical of the rule and said that it could erode the trust people have in nonprofit entities.

The House vote came days after the Treasury Department ruled that charitable organizations no longer have to disclose their donors to the IRS. President Trump has made it his goal to get rid of the Johnson amendment. Members of the GOP tried to get rid of it when passing new tax legislation in 2017. Although the measure passed in the House, it is not clear how much support it will have in the Senate.

Those in the GOP believe that repealing the Johnson amendment gives church leaders greater freedom of speech. However, critics of a repeal say that it could lead to dark money or foreign campaign contributions being funneled to politicians through churches. The new rule would still require that nonprofit groups keep internal records of those who donate more than $5,000. That information would need to be given to the IRS in the event of an audit.

Failure to follow IRS rules as they relate to operating a nonprofit could result in an audit. In some cases, assets owned by a charity or other group could be seized to repay any taxes or fees owed to the government. Any entity that is under an audit may benefit from speaking with an attorney. A lawyer could negotiate directly with the IRS and work to obtain a favorable outcome for a person or entity.