Senate Finance Committee Advances Bipartisan Tax Bill With New Nonprofit Due Process Protections

What happened:
In late July, the Senate Finance Committee voted 26-1 to approve the bipartisan Taxpayer Assistance and Service (TAS) Act. The wide-ranging IRS modernization bill includes a provision authored by Senators James Lankford (R-OK) and Raphael Warnock (D-GA) that would strengthen due process protections specifically for nonprofits.

What the provision does:
The Lankford-Warnock provision would codify into law the existing regulatory right of a nonprofit to seek an administrative appeal when the IRS either denies an application for tax-exempt status or moves to revoke an organization’s existing exemption. Writing the right into statute, rather than leaving it as a regulation, would prevent a future IRS from narrowing or eliminating that appeal right through rule-making alone.

Why it matters:
Given the intensified federal scrutiny nonprofits have faced this year — the IRS Whistleblower Alert, the Form 990 Transparency Initiative, the House Oversight Task Force, and now the fraud/terrorism disclosure proposal noted above — a guaranteed statutory right to appeal an adverse tax-exempt status decision is a meaningful backstop. NCN and Independent Sector jointly announced their support for the provision, with NCN President and CEO Diane Yentel calling it “a bipartisan, commonsense measure to ensure nonprofits can focus on their true mission — serving communities,” and thanking Senators Lankford and Warnock “for their leadership in protecting the nonprofit sector.”

Where things stand:
The bill passed committee with near-unanimous, bipartisan support (26-1) and now awaits a full Senate floor vote, followed by House action, before it could reach the President’s desk. PANO will track its progress and flag opportunities for nonprofits to weigh in.

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Image by AymaneJed from Pixabay