Treasury Urged to Regulate Exempt Orgs Promoting Insurrection

Ways and Means Democrats Call on Treasury to Update Guidance Warning Tax-Exempt Organizations About Engaging in Insurrection Activities

January 13, 2021

WASHINGTON, DC — Today, House Ways and Means Chairman Richard E. Neal (D-MA) led Committee Democrats in urging U.S. Department of the Treasury (Treasury) Secretary Steven Mnuchin to act upon news reports suggesting that tax-exempt organizations had a role in the seditious and destructive activities that took place last week at the United States Capitol. The members asked Treasury to issue emergency guidance detailing how current laws, rules, and sanctions apply to tax-exempt organizations participating in illegal activities and to consider whether any actions against or investigations of specific organizations may be appropriate in light of these reports.

“We are outraged by recent reports alleging that tax-exempt organizations may have incited and facilitated this act of insurrection that gravely endangered the security of the United States and its institutions of government,” wrote the Ways and Means Democrats. “We must ensure that tax-free dollars are never used to plan or sponsor illegal activities aimed at undermining the Constitution, the rule of law, and our American democracy.”

The members reminded the Secretary that, “tax-exempt organizations must be operated exclusively for exempt purposes. The Internal Revenue Service (IRS) has long held that organizations engaged in the planning and sponsoring, as well as the actual conduct, of illegal activities do not qualify for exemption.”

“Given the media reports and long-standing position on these activities, we urge the Department of the Treasury to immediately issue emergency guidance to tax-exempt organizations on the current laws, rules, and sanctions related to their participation in illegal activities seeking to overturn or interfere with the conduct of our government. The guidance should clarify what specific actions and conduct are not permissible by a tax-exempt organization in support of an attack on the Capitol or any Federal or state persons or buildings,” the Ways and Means Democrats emphasized. “Additionally, we ask that you consider whether any actions against or investigations of specific organizations may be appropriate in light of these reports.”

Read the full letter HERE.

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January 13, 2021

The Honorable Steven T. Mnuchin
Secretary
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

Dear Secretary Mnuchin,

We write today regarding the seditious and destructive activities that took place on January 6, 2021 at the United States Capitol and resulted in the loss of American lives. Specifically, we are outraged by recent reports alleging that tax-exempt organizations may have incited and facilitated this act of insurrection that gravely endangered the security of the United States and its institutions of government. We must ensure that tax-free dollars are never used to plan or sponsor illegal activities aimed at undermining the Constitution, the rule of law, and our American democracy.

According to media reports, some organizations exempt from Federal income tax organized and promoted events on January 6, 2021 that culminated in a violent siege on the Capitol complex.¹ While the exact role these organizations played is yet unknown, it can be said, unequivocally, that the insurrectionist activities witnessed last week, and the loss of life incident to these activities, are wholly contrary to any permissible tax-exempt purpose.

As you are aware, tax-exempt organizations must be operated exclusively for exempt purposes. The Internal Revenue Service (IRS) has long held that organizations engaged in the planning and sponsoring, as well as the actual conduct, of illegal activities do not qualify for exemption. In a 1975 ruling, the IRS held that an organization that induced or encouraged the commission of criminal acts by planning and sponsoring such events did not qualify for exemption.² The organization's primary activity was sponsoring protest demonstrations in which demonstrators were urged to commit violations of local ordinances, breaches of public order, or civil disobedience.

Given the media reports and long-standing position on these activities, we urge the Department of the Treasury to immediately issue emergency guidance to tax-exempt organizations on the current laws, rules, and sanctions related to their participation in illegal activities seeking to overturn or interfere with the conduct of our government. The guidance should clarify what specific actions and conduct are not permissible by a tax-exempt organization in support of an attack on the Capitol or any Federal or state persons or buildings. Additionally, we ask that you consider whether any actions against or investigations of specific organizations may be appropriate in light of these reports.

Thank you, in advance, for your prompt attention to this urgent matter.

Sincerely,

The Honorable Richard E. Neal,
Chairman Committee on Ways and Means

The Honorable Mike Thompson

The Honorable Lloyd Doggett

The Honorable Earl Blumenauer

The Honorable Ron Kind

The Honorable Bill Pascrell Jr.

The Honorable Danny K. Davis

The Honorable Brian Higgins

The Honorable Terri A. Sewell

The Honorable Judy Chu

The Honorable Daniel T. Kildee

The Honorable Don Beyer

The Honorable Bradley S. Schneider

The Honorable Jimmy Panetta

The Honorable Suzan K. DelBene

The Honorable Gwen Moore

The Honorable Brendan F. Boyle

The Honorable Dwight Evans

The Honorable Thomas R. Suozzi

The Honorable Stephanie Murphy

The Honorable Jimmy Gomez

The Honorable Steven Horsford

The Honorable Stacey E. Plaskett