The U.S. Senate unanimously passed the Taxpayer Assistance and Service Act (S.5441) on September 30. The bill, which contains amendments intended to protect organizations seeking, or attempting to maintain, nonprofit status, has a dubious future during this legislative session. Assuming the bill is passed by the U.S. House of Representatives without changes, it must then be signed by President Donald J. Trump.
As of October 1, the House had only 21 working days scheduled before the end of 2026. Past October 1, none of those days were scheduled before the midterm elections on November 3. A new Congress is due to be sworn in on January 3, 2027.
The bill itself consists of 65 reforms intended to “modernize the Internal Revenue Service (IRS), strengthen taxpayer rights and improve the agency’s ability to administer the tax code predictably and efficiently,” according to a statement from the U.S. Senate Committee on Finance. Those reforms include an amendment jointly offered by Sen. James Lankford (R-Okla.) and Sen. Raphael Warnock (D-Ga.) that would add “determinations of tax-exempt status” to a list of circumstances under which entities would have the right to appeal determinations.
The Trump Administration has a history of using threats of tax-exempt status revocation against organizations that embrace diversity, equity and inclusion or which promote missions contrary to the administration’s priorities.
According to the amendment offered by Lankford and Warnock, the bill was modified to include “any determination to deny or revoke the tax-exempt status of an organization” within its “Appeals” section. According to a statement from Independent Sector, a membership organization for nonprofits and philanthropies, “[t]his would apply to revocations of status for existing organizations and to denials of initial application for tax exempt status.” If the bill is passed, the amendment would further codify into law the general practice within the Internal Revenue Service of requiring notice of this right is provided.
“For nonprofit organizations, tax-exempt status is a privilege and a responsibility, a measure of trust earned through good governance and service to their communities every day. This trust depends on an IRS that is rigorous, transparent, and protected from political or ideological pressures,” Independent Sector President and CEO Akilah Watkins said via a statement.
Watkins continued: “The bipartisan Taxpayer Assistance and Service Act is an important step towards safeguarding fair and impartial due process for every American, including the millions of nonprofit organizations entrusted with tax-exempt status. I am grateful to Senators Lankford and Warnock for strengthening this bill by ensuring nonprofit organizations have access to the same due process protections as all other sectors of our society, preserving the independence and integrity of charitable service for generations to come.”
