S.1428 - Safeguarding Charity Act (119th Congress)
Summary
The Safeguarding Charity Act aims to amend Title 1 of the United States Code to clarify that certain tax exemptions for 501(c), 501(d), and 401(a) organizations are not to be treated as Federal financial assistance. This bill seeks to provide a consistent interpretation of 'Federal financial assistance' across all federal laws, rules, and regulations. The bill explicitly states that unless otherwise specified, tax exemptions do not constitute federal assistance.
Expected Effects
The primary effect of this act would be to prevent federal laws, rules, or regulations from interpreting tax exemptions for certain charitable and retirement organizations as a form of federal financial assistance. This clarification could impact how these organizations are treated under various federal programs and requirements. It could also reduce potential administrative burdens and compliance costs for these organizations.
Potential Benefits
- Reduced Regulatory Burden: Clarifying that tax exemptions are not federal financial assistance could reduce the regulatory burden on non-profit organizations.
- Simplified Compliance: This clarification simplifies compliance with federal laws and regulations for affected organizations.
- Protection of Charitable Resources: By preventing tax exemptions from being classified as federal assistance, the bill helps protect the resources available to charitable organizations.
- Consistent Interpretation: Ensures a consistent interpretation of 'Federal financial assistance' across different federal agencies and programs.
- Supports Retirement Savings: Clarifies the treatment of tax exemptions for organizations described in section 401(a) of the Internal Revenue Code, which relates to retirement savings plans.
Potential Disadvantages
- Potential for Unintended Consequences: The broad language could lead to unintended consequences in areas where tax exemptions are currently considered a form of federal support.
- Reduced Federal Oversight: By clarifying that tax exemptions are not federal financial assistance, the bill could reduce federal oversight of organizations receiving these exemptions.
- Possible Misinterpretation: There is a risk that the clarification could be misinterpreted, leading to legal challenges or inconsistent application.
- Limited Scope: The bill only addresses the definition of 'Federal financial assistance' and does not address other potential issues related to tax-exempt organizations.
- Lack of Transparency: The bill does not address transparency concerns related to tax-exempt organizations.
Constitutional Alignment
The bill appears to align with the general principles of limited government and the encouragement of charitable activities, which could be argued as promoting the general welfare as stated in the Preamble of the US Constitution. The bill does not appear to infringe upon any specific constitutional provision or individual right. Congress has the power to legislate on matters related to taxation and to define terms used in federal law, as granted by Article I, Section 8 of the Constitution.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).