House Ways and Means Committee Republicans have asked the IRS for information on its practices and procedures regarding tax-exempt organizations, particularly those the legislators assert receive financial support from the Chinese Communist Party.
The April 24 letter to IRS Commissioner Danny Werfel expresses concerns with foreign influence over US-based organizations that are tax-exempt under Code Sec. 501. It was spearheaded by Ways and Means Committee Chairman Jason Smith (R-MO), Oversight Subcommittee Chairman David Schweikert (R-AZ), and Ways and Means member Nicole Malliotakis (R-NY), and signed by all 25 Republican Ways and Means members.
The letter requests details by May 8 on the IRS’ processes for determining whether an organization is “in practice” engaged in its stated exempt purpose and whether the IRS would revoke an organization’s tax-exempt status for conduct that is “counter to public policy.” It also asks whether the IRS conducts random reviews of tax-exempt organizations to ensure they meet legal requirements, and whether the agency accepts public referrals of organizations whose conduct should be investigated.
The legislators focus specifically on tax-exempt organizations they say have ties to the Chinese Communist Party, including the Energy Foundation and a network of nonprofits run by “tech mogul” Roy Singham. They cite a Fox News investigation of the Energy Foundation’s tax forms suggesting “the majority of its operations are conducted in China with a staff that has substantial connections to the CCP” and that it “contributed $3.8 million to promote ‘green’ energy policies that would increase our country’s dependence on Chinese minerals and materials.”
They also cite a New York Times report on Singham’s tax-exempt organizations they say shows “Singham works closely ‘with the Chinese government media machine and is financing its propaganda worldwide’ and… attended a CCP propaganda forum in July 2023.” They specifically call out an organization they contend Singham funds, The People’s Forum, linked in a New York Post story to anti-Israel events.
To that end, the letter requests specific information from the IRS on its knowledge of the Energy Foundation and The People’s Forum’s funding sources and relationships with the Chinese Communist Party. The letter also asks whether the IRS has an official definition of antisemitism and whether it considers it when looking into an organization’s tax-exempt status claim.
Schweikert noted last year that “[p]ublic reporting has raised questions about whether tax-exempt sectors are operating in a manner consistent with the laws and regulations that govern such organizations and whether foreign funds are flowing through these organizations to influence American politics.” In an August 2023 open letter, Schweikert and Smith called on groups organized under Code Sec. 501(c)(3) or Code Sec. 501(c)(4) to provide information on current rules and regulations governing them, including those regarding foreign sources of funding, and asked for proposed policy changes for Congress to consider.
Malliotakis has been vocal about recent antisemitic protests on college campuses, introducing legislation to limit federal funding (HR 7231) and revoke student visas (HR 7232) in February and calling for Columbia University President Nemat Shafik’s resignation days ago.
For more on tax-exempt organizations, see Checkpoint’s Federal Tax Coordinator ¶ D-4070.
Get all the latest tax, accounting, audit, and corporate finance news with Checkpoint Edge. Sign up for a free 7-day trial today.
