H.R. 10148: Safeguarding America’s Nonprofits Act

This bill would change the tax code to make clear that getting a federal tax exemption is not the same as receiving “federal financial assistance,” unless another law specifically says otherwise.

What the bill would do

• It would add a new rule to Section 501 of the Internal Revenue Code.
• For organizations covered by certain tax-exempt categories, including:
  • organizations described in Section 501(c) or 501(d), and
  • organizations described in Section 401(a) (generally retirement plans),
  the bill says that a tax exemption should not be treated as “Federal financial assistance” for purposes of federal laws, rules, or regulations, unless a law explicitly says otherwise.

Practical effect

In plain terms, the bill would try to prevent federal agencies or courts from counting a nonprofit’s or other covered organization’s tax-exempt status as if it were a government grant, subsidy, or other form of direct federal aid. The change would matter when other federal rules use the phrase “federal financial assistance” or similar language, because those rules would not automatically apply just because an organization is tax-exempt.

What it would not do

• It would not end tax exemption for nonprofits or other covered entities.
• It would not change whether an organization can receive actual federal grants or contracts.
• It would not stop Congress from writing a different rule in a specific law if it wants tax exemption to count as assistance in that context.

Additional clarification

The bill also says that nothing in this new rule should be read to mean that, before the law is enacted, tax exemption was already considered federal financial assistance. In other words, it is trying to clarify the legal status of tax exemption going forward without implying a position about earlier periods.

Relevant Companies

None found