Key House Panel Votes to Loosen Restrictions on Nonprofit Politicking

The House Ways and Means Committee on Thursday adopted an amendment to the Republican tax bill that would loosen restrictions on the political activities of all 501(c)(3) organizations. Passage of the measure makes it highly likely that the provision will be included in the House’s final version of the bill.

The changes would go into effect in 2019 but expire after five years, at which time the current restrictions would again apply, according to the text of the amendment put forth by the committee chairman, Kevin Brady, a Republican from Texas.

The first draft of the bill, released last week, would have created an exception specifically for churches. As it stands now, under an IRS rule commonly referred to as the Johnson Amendment, nonprofits are barred from engaging in overt political activities, including endorsing candidates and spending on campaigns.

The cost of easing the politicking ban for all nonprofits was not immediately clear. Congress’ nonpartisan Joint Committee on Taxation estimated that loosening the restrictions just for churches would cost $2.1 billion over 10 years.

The Brady amendment also extended a proposed 1.4 percent excise tax on some large private university endowments to apply to endowment money held by organizations related to such institutions. The first draft of the bill imposed the tax exclusively on university endowments, not related organizations.

The Senate Finance Committee is expected to release its tax bill on Friday.