By Alex Jimenez
SACRAMENTO, CA- California state senator Scott Wiener (D- San Francisco) said Monday Senate Bill 834, formally known as the No Tax Exemption for Insurrection Act, will move to the Senate Appropriations Committee after passing 4-0 in the Senate Public Safety committee.
SB 834 is a bill that would effectively strip the California tax exempt status from non-profit organizations that participate in or incite efforts to overthrow the United States government or any state government.
The bill in part is a response to the Jan. 6, 2021, insurrection where organizations allegedly used “the big lie” to fund and funnel money to extremist groups, most notably groups that sought out to overturn the results of the 2020 presidential election, claiming the election was fraudulent.
Inciting and conspiring to commit insurrection are illegal acts, proponents of the bill argued, noting tax exemptions are a “privilege” and organizations who engage in insurrection should not be granted special status that would help fund them.
Non-profits outside of California would be prohibited from raising money in the state if they are engaging in or inciting insurrection.
“History will not be kind to us if we allow organizations working to overthrow the U.S. government and overturn democratic elections to continue operating with tax-exempt status,” said Senator Wiener. “It’s not complicated: if you engage in or promote illegal behavior, you shouldn’t be allowed the privilege of tax-exempt status.”
He added, “SB 834 will make this important and overdue change in California, sending an important message to these organizations and creating real consequences for engaging in or inciting insurrection.”
On Jan. 6, 2021, pro-Trump extremists breached the U.S. Capitol in response to former president Trump’s claim the Democratic party “stole the election.” Five people were killed and hundreds more injured as a result of the insurrection attempt, where it is believed that former Vice President Pence and Speaker Pelosi were targeted.
Several non-profits that supported the insurrection continue to have tax exempt status, both at the state and federal levels.
The bill, if signed into law, specifies the CA Franchise Tax Board’s (FTB) existing authority to revoke tax exempt status for non-profits found to have actively engaged in or incited treason, misprision of treason, insurrection, seditious conspiracy, advocating overthrow of the government or the government of any State, or advocating mutiny by members of the military or naval forces of the U.S.
Under SB 834, the California Attorney General would notify the FTB if non-profit organizations were found to have acted on or likely to violate the listed crimes.
The U.S. Supreme Court had previously ruled that charitable organizations claiming tax exempt status “may not be illegal or contrary to public policy.” The attempt to overturn a legal and legitimate election while trying to attack government officials would fit it in that description, claims Wiener, noting SB 834 ensures that these organizations can no longer claim financial advantages.
Non-profits with tax exempt status are not required to pay corporate income taxes and could be exempt from other taxes, and donations to many non-profits are income tax deductible. Donor-advised funds and private foundations can only donate to tax exempt non-profits where they represent a major source of funding for non-profits.
According to the bill’s backer, organizations involved in the Capitol attack have fundraised millions of dollars in tax exempt donations, and new organizations are using the same model hoping to cash in on this narrative. These organizations are both California non-profits and non-profits outside of the state that hold fundraisers in California.
The “Oath Keepers,” a national militia movement, was charged with seditious conspiracy, and although it does not have tax exempt status in California, it has an “educational foundation” with federal exempt status and tax-exempt branches in several states.
“It can only be presumed that [funds contributed to the Oath Keepers], which [donors were] able to deduct from their federal taxes, went to transporting and lodging members of the group slated to participate in the ensuing riots,” said Wiener.