Johnson, Richmond, Scalise, Clyburn to Agencies: Do Not Impose Arbitrary Condition on Churches’ Eligibility for Coronavirus Relief Funds
Washington, DC, April 2, 2020
Tags: Individual Freedom
BOSSIER CITY, La. – U.S. Representatives Mike Johnson (LA-04) and Cedric Richmond (LA-02), Republican Whip Steve Scalise (LA-01), and Democratic Whip James Clyburn (SC-06) have sent a bipartisan letter to key federal agency heads to make clear that it was and is Congress’ intent that houses of worship have equal access to the COVID-19 relief funds made available to non-profits under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The letter urges Treasury Secretary Steven Mnuchin, Small Business Administration Administrator Jovita Carranza, and Labor Secretary Eugene Scalia to ensure that access to relief funds is not conditioned on houses of worship having previously submitted a non-legally required from to the Internal Revenue Service (IRS).
The letter was sent in response to concerns raised by faith leaders that small and independent houses of worship could be unintentionally excluded from receiving aid if agencies only allow non-profit organizations with a formal IRS exemption determination letter to apply for funds. Under current law, churches that meet the definition of a 501(c)(3) are automatically considered tax-exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS. While churches can voluntarily seek recognition of tax-exempt status to guarantee certain tax benefits, it is not uncommon for smaller churches to forgo this unnecessary formal recognition process due to the fees and legal resources required to complete it.
The letter represents a proactive, bipartisan effort by Johnson, Richmond, Scalise, and Clyburn to ensure these considerations are built into the application process so that small and independent houses of worship have equal access to COVID-19 relief funds, just as Congress intended.
"It was clearly the intent of Congress to make certain that America's churches and religious institutions have the exact same access to relief through the CARES Act as all other non-profit organizations, and we need that to be affirmed immediately by the executive branch,” said Johnson. “Our churches are the heart and soul of this nation, and this can be their finest hour, and there is no justification why our government should unjustly leave them behind during these difficult times.”
“Our houses of worship have always been there in good times and bad,” said Richmond. “We go to them to celebrate joyous occasions such as weddings and to seek solace when tragedy strikes. They have never let us down when we needed them and Congress certainly did not intend to leave them and their employees behind as they help us deal with this unimaginable tragedy. We must do everything in our power to correct this error and ensure that relief funds make it to all houses of worship—with or without unnecessary paperwork.”
“The CARES Act delivers much-needed relief to families and businesses across the country who are facing uncertainty during the Coronavirus crisis. This relief must be extended to houses of worship just as Congress intended,” said Scalise. “In Louisiana and across the country, churches continue to support communities in times of need. They deserve to be equipped with the necessary tools to overcome this virus just like other nonprofits who are eligible for assistance.”
“Places of worship are the center of many of the communities in my congressional district, and they are suffering as a result of the necessary social distancing measures that are in place,” said Clyburn.“Congress clearly did not intend that churches’ eligibility for relief under the CARES Act should depend on previously filling out a form that was not legally required. Such an arbitrary requirement, if imposed, would add insult to injury for many of the most vulnerable communities I represent.”
March 31, 2020
The Honorable Steven Mnuchin
The Honorable Jovita Carranza
The Honorable Eugene Scalia
Dear Secretary Mnuchin, Administrator Carranza, and Secretary Scalia,
While this bipartisan legislation is designed to provide immediate relief to all American businesses and non-profits that are experiencing unprecedented challenges as a result of the current pandemic, it has come to our attention that certain non-profits—the many churches, synagogues, mosques, temples, and other organizations that are not required to file Form 1023 for recognition of exemption under Internal Revenue Code section 501(c)(3)—may not be afforded equal access to the bill’s relief measures. The sections of the CARES Act for which non-profit organizations are eligible are Section 1102 – Paycheck protection program; Section 1110 – Emergency Economic Injury Disaster Loan (EIDL) grants; Section 2103 – Emergency unemployment relief for government entities and non-profit organizations; and Section 4003 – Emergency relief and taxpayer protections. In the midst of this crisis, Congress did not intend for a non-profit organization’s eligibility for this assistance to hinge on whether it previously submitted a form it was not legally required to submit.
As you know, for federal income tax purposes, churches and other places of worship are treated as organizations described in section 501(c)(3) of the Internal Revenue Code without applying for a formal exemption determination letter. Because of this, many smaller and independent houses of worship have never formally applied for and paid the fee to receive an exemption determination letter. Although some houses of worship are included in group exemptions if a house of worship is part of a larger denominational organization, many smaller congregations do not have such an affiliation. Section 1102 of the CARES Act defines non-profit organization as “an organization that is described in 501(c)(3) of the Internal Revenue Code of 1986 and that is exempt from taxation under section 501(a) of such Code.” This definition clearly requires that non-profits which meet the delineated criteria be deemed eligible; possession of a formal IRS exemption determination letter is not an additional criterion, and adding it administratively would be contrary to the plain meaning of the text of the statute.
While the definition of non-profit organization in Section 1102 explicitly applies only to the paycheck protection program under Section 7(a) of the Small Business Act established by that section, we can assure you that Congress did not intend to require non-profits to possess an exemption determination letter to be eligible for assistance through any other section of the CARES Act either. We respectfully urge you to take the necessary administrative action to ensure congressional intent is effectuated.
Just as any other business or non-profit, a local religious institution typically has several staff members on its payroll and operates on a thin margin. In so many places, these houses of worship are also the heart and soul of their respective communities, providing leadership, spiritual guidance and a sense of belonging for countless Americans. In times of disaster, our faith communities are the primary providers of charitable giving, emotional support and volunteer efforts. Houses of worship lacking an exemption determination letter must not be treated differently than other 501(c)(3) organizations under the CARES Act merely because they do not possess paperwork that the IRS does not require for tax-exempt status and Congress did not include as an eligibility requirement.
Many houses of worship and their congregations would suffer great harm if they are not eligible to receive the assistance Congress intended for them to receive. We respectfully ask that assurance be provided to our offices that lack of an exemption determination letter will not be an obstacle to eligibility for assistance under the provisions of the CARES Act administered by your departments and agencies. We are asking that this assurance be provided immediately as to not delay any critical resources to these faith communities. As our great nation heals from the profound effects of coronavirus, churches, synagogues, mosques, temples, and all other venues for worship and solace will be needed more than ever.
We thank you in advance for your time and prompt attention to this matter.