The U.S. Treasury Department, under Secretary Scott Bessent, is reportedly developing plans to examine and potentially revoke the tax-exempt status of nonprofits that engage in significant political activism, according to a New York Post report.
The review could affect up to a dozen high-profile liberal organizations, including the Open Society Foundations, the Southern Poverty Law Center (SPLC), and the Council on American-Islamic Relations (CAIR). The initiative aims to ensure that taxpayers do not subsidize political activities they oppose.
Under Section 501(c)(3) of the Internal Revenue Code, tax-exempt organizations must operate primarily for religious, charitable, scientific, literary, or educational purposes. They are expressly forbidden from engaging in excessive lobbying or promoting political campaigns.
Treasury's review reportedly seeks to classify organizations that function as political activists as businesses or political machines for tax purposes. This would potentially lead to these groups paying taxes on their activities. The New York Post estimates this could result in a $165 million increase in tax payments from the targeted groups.
Critics argue that organizations like the Open Society Foundations, which funds groups supporting causes such as criminal justice reform and climate change initiatives, should not receive tax exemptions while promoting a specific political agenda. Similarly, CAIR is noted for its criticism of U.S. foreign policy regarding Israel. The SPLC has also faced scrutiny for its advocacy on issues like economic inequality and voting access, and for labeling groups such as Moms for Liberty as hate groups. The SPLC has also been involved in internal financial accusations, with its former finance officer charged with misleading donors.
Some of the groups under review have responded to the potential action. The Open Society Foundations maintain that Treasury has no grounds to investigate them. CAIR and the SPLC have declined to comment on the matter.
The Treasury's focus may extend to other organizations, including MediaJustice, which advocates for racial equity in the telecom industry, and labor-backed entities like the Service Employees International Union's Strategic Organizing Center and the Athena Coalition, which opposes Amazon's business practices.
Secretary Bessent's administration is pursuing a strategy to ensure that private groups promoting political agendas do not receive taxpayer support for their activism, particularly when their agendas may be contentious to the public.