To enjoy the benefits of Section 501(c)(3) tax-exempt status, nonprofits (other than churches and their integrated auxiliaries), must apply to the IRS using its Form 1023 or the newer Form 1023-EZ. A few years ago, with Form 1023 processing times bogged down to a year or more, the IRS issued the streamlined Form 1023-EZ application as a way to expedite decisions made on tax-exempt applications. But this cure is not so curative, as reflected in recently published Internal Revenue Service (IRS) reports. These reports flash caution signals for nonprofits seeking Section 501(c)(3) approval.
In a letter to Congress dated February 7, 2018 (“Letter”), 145 faith-based and secular organizations raised hue and cry against the inclusion of Section 116 of House Bill H.R. 3280 within the proposed federal appropriations bill for 2018 (now incorporated into 115 H.R. 3354). Section 116 does not directly repeal the Johnson Amendment’s prohibition on political campaign involvement by churches and other Section 501(c)(3) organizations. Rather, it provides stringent measures to protect against overzealous governmental interference with constitutionally protected houses of worship, effectively preventing the IRS from revoking churches’ tax-exempt status for partisan communications during election seasons.
Non-public schools have an opportunity to receive funds through the newly effective Illinois “Invest in Kids” Act. The Act offers an innovative way for qualified Illinois private schools to receive additional funding, for supporters of these schools to claim an income tax credit against their 2018 tax liability, and for Illinois students to receive scholarships.