Newsom vetoes bill stripping tax exemptions from nonprofits for anti-government activity

Gov. Gavin Newsom on Thursday vetoed a bill that would have removed California tax-exempt status from nonprofits that have engaged in anti-government activities, including treason and insurrection.

Sen. Scott Wiener, D-San Francisco, authored the measure, which would have allowed the state Attorney General’s Office to find that a registered nonprofit with tax-exempt status “actively engaged in” treason, rebellion or insurrection, seditious conspiracy or government overthrow and report the group to the Franchise Tax Board, according to a Senate floor analysis

The FTB could then use the Attorney General’s finding to revoke the nonprofit’s exempt status, forcing them to start paying taxes again.

“Without question, extremist groups that participate in anti-government acts such as those that took place during the insurrection on January 6, 2021 should be renounced and investigated for their participation,” said Newsom’s veto message. “However, these are issues that should be evaluated through the judicial system with due process and a right to a hearing.”

Bill would have targeted groups spreading the ‘Big Lie’

Wiener targeted Senate Bill 834 at groups similar to the ones that engaged in the Jan. 6 attack at the U.S. Capitol. He wanted to prevent organizations perpetuating the “Big Lie” that President Joe Biden did not win the election from reaping the benefits of tax exemption.

SB 834 easily received final legislative approval in late August.

The Senate analysis estimated California would spend $754,000 during fiscal year 2022-2023 and $1.1 million during fiscal year 2023-2024 and in subsequent years to investigate nonprofits allegedly involved in Jan. 6 and other anti-government activities.

The state Department of Justice estimated it would likely investigate up to five complaints per year.

Wiener said in a news release that “tax-exempt status is a privilege, not a right.”

“I’m very disappointed that Governor Newsom vetoed SB 834, which would have ensured that insurrectionist organizations — those trying to overthrow our democracy or overturn our democratic elections — don’t get tax breaks designated for California nonprofits,” he said in a release.

“I respectfully disagree with the governor’s rationale for the veto,” Wiener added. “What the governor is suggesting — mandatory judicial oversight of tax-exempt status revocation — is unprecedented.”

This story was originally published September 23, 2022 at 5:00 AM with the headline "Newsom vetoes bill stripping tax exemptions from nonprofits for anti-government activity."