Statement from the National Council of Nonprofits on IRS Scandal | Don’t Let the IRS Scandal Hurt the Work of Charities

Statement from the National Council of Nonprofits on IRS Scandal | Don’t Let the IRS Scandal Hurt the Work of Charities

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Tim Delaney, President and CEO of the National Council of Nonprofits, releases the following statement:

Charitable nonprofits are justifiably outraged by reports that the Internal Revenue Service targeted applicants for tax-exempt status based on their apparent political beliefs. As more facts emerge on the developing story, the National Council of Nonprofits calls on policymakers and the news media to strengthen public respect for, and not exacerbate ignorance of, the laws governing and distinguishing the nonpartisan work of charitable nonprofits in communities across the country. We are concerned that the IRS scandal is causing collateral damage to the work of innocent charitable nonprofits in at least two ways:

First, media reports and statements from politicians are lumping all “nonprofits” together, thus misleading the public by failing to recognize the important distinctions between different types of tax-exempt organizations. Federal law is crystal clear that ”charitable nonprofits,” which are tax exempt under section 501(c)(3) of the Tax Code, may not lawfully engage in partisan political electioneering activities. The types of organizations at the center of the IRS scandal, however, are “social welfare” nonprofits, which are exempt from taxation under section 501(c)(4) of the Tax Code and may engage in some political activities. The current admissions by and allegations against the IRS relate largely if not exclusively to IRS treatment of applicants for 501(c)(4) status; yet when headlines across America link “nonprofits” and politics they give the false impression that all nonprofits, including charitable nonprofits, are engaged in partisan political activities, when they are not. The public is justifiably confused about which groups do and do not engage in politicking. As a result, some people may be walking away rather than supporting or engaging with their community-based charitable (and nonpartisan) nonprofits, thus lessening the impact in communities.

Second, the American people and charitable nonprofits alike depend on the Internal Revenue Service to be the cop on the beat enforcing the tax laws that govern all nonprofits. Therefore, we encourage policymakers to conduct their investigations swiftly and thoroughly, and then take quick corrective action. The fact that the IRS must respond to these investigations of serious allegations means that it is being diverted from its assigned duties of enforcing against fraud, lawfully screening applications for tax-exempt status, and providing help to the public and charities about appropriate stewardship of donor resources.

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