Senator Wiener Introduces Legislation to Strip State Tax-Exempt Status from Organizations That Engage in or Aid Insurrection

January 6, 2022

SACRAMENTO - Today, Senator Scott Wiener (D-San Francisco) introduced Senate Bill 834, a first-in-the-nation bill that authorizes the suspension of the California tax-exempt status of nonprofit organizations that participated in or aided the insurrection of January 6, 2021, or that support current and future efforts to overthrow our democratically elected government. Nonprofit organizations have used the “Big Lie” – the fraudulent notion that the 2020 election was stolen – to fundraise for and funnel money to extremist and anti-democratic initiatives like the January 6 insurrection. Tax-exempt status is a privilege, not a right, and organizations that promote insurrection and conspiracy to commit insurrection – both of which are illegal – should not be given this special status to help them fundraise.

The January 6 insurrection took place one year ago today, when pro-Trump extremists – in response to the false narrative that the Democrats “stole” the 2020 election and incited by then-President Donald Trump – breached the United States Capitol. Five people were killed as a result of this insurrection, and hundreds were injured. Vice President Pence and Speaker Pelosi were specific targets of this violent attack on our democracy. Many nonprofits that supported the insurrection and continue to perpetuate lies about the 2020 election in hopes of overturning the results still operate with tax-exempt status, both at the federal and state level.

The United States Supreme Court has ruled that the purpose of charitable organizations claiming tax-exempt status “may not be illegal or contrary to public policy." Trying to overturn elections and violently attacking our legislators fits the bill. SB 834 will ensure that these organizations no longer claim this financial advantage.

Tax-exempt nonprofits are not required to pay corporate income taxes and may be exempt from other taxes as well. Additionally, donations to many nonprofits are deductible from income taxes, and private foundations and donor-advised funds can only donate to tax-exempt nonprofits. Private foundations and donor-advised funds represent a major funding source for many nonprofits.

Authoritarian and anti-democratic organizations have increasingly used the “Big Lie” to fundraise, and this narrative has driven millions of dollars in tax-exempt donations. And many new organizations have cropped up in the past year, hoping to ride the coattails of the insurrection and cash in. These include California nonprofits and nonprofits registered in other states that fundraiser in California. These organizations, which are fundamentally undermining our democracy and cheering for the destruction of free and fair elections in America, should not be allowed to operate with advantages like tax-exempt status.

There is precedent for making this distinction in California’s tax code. Under federal and California law, for instance, if a nonprofit organization supports terrorism, its tax-exempt status is suspended. The nonprofit organizations that support insurrection should receive the same treatment.

SB 834 has been introduced with summary intent language. Full bill language will be available in the next 30-45 days. Senators Josh Becker (D-Peninsula), Dave Min (D-Irvine) and Josh Newman (D-Fullerton) and Assemblymember Buffy Wicks (D-Oakland) are co-authoring this legislation. Assemblymember Kevin Mullin (D-South San Francisco) is a principal co-author.

“Nonprofits that fundraise off of the insurrection and that are working to overthrow our government and dismantle our democracy should not receive privileged tax status,” said Senator Wiener. “These poisonous organizations are attacking the heart of our nation and cynically scamming people and preying on their fears and misunderstandings. Nonprofits that conduct and support illegal activity – like insurrections – should not benefit from the privilege of tax-exempt status. SB 834 is one step on a long path toward accountability for those who perpetrated the January 6 insurrection and who run the movement to overthrow American democracy.”