California bill would revoke tax-exempt status of nonprofits that supported Jan. 6 attack

Nonprofit organizations that participated or aided in the Jan. 6, 2020 "insurrection" at the U.S. Capitol or support future attempts to overthrow a democratically elected government would lose their California tax-exempt status under the full text of a first-in-the-nation bill introduced by a state lawmaker on Thursday.

The "No Tax Exemption for Insurrection Act," introduced by Sen. Scott Wiener, D-San Francisco, would allow a nonprofit organization's tax-exempt status to be revoked if the state's Attorney General determines the organization has "actively engaged in, or incited the active engagement in, acts or conspiracies defined as criminal under specified federal law."

According to Wiener's office, this includes acts such as treason, insurrection, seditious conspiracy or advocating for an overthrow of the government or the government of any State.

The bill states that if the office of the Attorney General determines that a nonprofit has engaged or incited one of these acts, it would be required to notify the Franchise Tax Board, which would then revoke their California tax-exempt status.

"The January 6 insurrection is a stain on our democracy, and we must ensure nothing like it ever happens again," Wiener said in a statement. "Under no circumstance should we provide tax subsidies to organizations that engage in or incite insurrection. Tax-exempt status is a privilege, not a right. Insurrectionist organizations should never benefit from that privilege."

The bill comes as investigations regarding the Capitol breach remain ongoing. According to Politico's data tracker, more than 725 people have been arrested for crimes tied to the Capitol insurrection, and about 87 of those have been sentenced as of Jan. 21.

Wiener says that nonprofit organizations have claimed the 2020 election was stolen "to fundraise for and funnel money to extremist and anti-democratic initiatives," including the storming of the Capitol on Jan. 6.

He said that organizations – including California nonprofits and nonprofits registered outside the state that raise money in California – have used faulty claims about the 2020 election to fundraise millions in tax-exempt donations.

"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," Wiener's office wrote in a press release.

Existing federal and California law dictates that organizations who support or engage in terrorist activity can have their tax-exempt status suspended. Wiener’s office said that this bill would dictate that nonprofits who "support insurrection should receive the same treatment."

The bill is co-authored by Senators Josh Becker, D-Peninsula, Dave Min, D-Irvine, and Josh Newman, D-Fullerton, and Assemblymember Buffy Wicks. Assemblyman Kevin Mullin, D-South San Francisco, is a principal co-author.

The bill has been referred to the Senate Rules Committee, according to the state's legislative database.