Charitable Organizations - Charitable Donation and Tax-Exempt Status - Revocation (Keeping Charities Nonpartisan Act of 2026)
HB 514 would tighten Maryland’s regulation of certain charitable organizations, especially organizations recognized by the IRS under section 501(c)(3) that can receive tax-deductible donations. The bill expands the state definition of “charitable organization” to include IRS-recognized tax-deductible charities and adds a new prohibition barring those organizations from participating in or intervening in political campaigns on behalf of or in opposition to candidates for public office. It also requires registration statements to include a certification that the organization will not engage in campaign activity.
The bill creates a new enforcement section authorizing the Secretary of State and Attorney General to investigate violations, issue cease-and-desist orders, assess civil penalties, and, for willful violations, jointly order revocation of the organization’s state tax-exempt status. If revocation is ordered, the Comptroller and the State Department of Assessments and Taxation must revoke related income, sales and use, and property tax exemptions for a two-year period, after which the organization may reapply. The bill also directs the Secretary of State to adopt regulations governing penalty avoidance and penalty amounts, and it preserves existing enforcement authority under other charitable solicitation laws.
HB 514 further amends Maryland tax law so that a charitable organization subject to the new restrictions loses eligibility for state income, sales and use, and property tax exemptions if it engages in prohibited political campaign activity. The bill ties the state standard to the IRS interpretation of the federal Johnson Amendment as of January 19, 2025, and applies the same rule across the Business Regulation, Tax-General, and Tax-Property articles. It also includes a contingency clause: the bill’s operative provisions take effect only if federal action or a change in federal law prevents enforcement of, or nullifies, the Johnson Amendment for affected charities.
The overall sentiment reflected in the bill text is strongly regulatory and preventive, with the stated purpose of keeping charities nonpartisan. Because there are no committee transcripts or recorded votes in the provided material, there is no documented public debate to show support or opposition. The structure of the bill suggests its sponsors view political campaign activity by tax-exempt charities as a misuse of charitable status, while the absence of recorded discussion leaves any counterarguments unconfirmed in the provided record.
The main point of contention likely concerns free speech, political activity by nonprofits, and whether the state should condition tax benefits on strict nonparticipation in campaigns. The bill gives enforcement authority to state officials and imposes significant consequences, including loss of tax exemptions, which could be viewed as a strong deterrent. The contingency on federal action also suggests the bill is designed as a backstop in case federal restrictions on charity political activity are weakened or eliminated.
The bill would amend Maryland’s charitable solicitation and tax statutes to create a new state-level prohibition on political campaign intervention by qualifying charitable organizations and to impose penalties, including revocation of state tax exemptions, for violations. It would affect the Business Regulation Article provisions governing charitable organization registration and enforcement, as well as the Tax-General and Tax-Property provisions that grant income, sales and use, and property tax exemptions to nonprofits and charities. Affected parties include 501(c)(3)-type charities, the Secretary of State, the Attorney General, the Comptroller, and the State Department of Assessments and Taxation.
The bill’s tone is clearly restrictive and enforcement-oriented, reflecting a policy preference that charitable organizations remain nonpartisan and not use tax-advantaged status for campaign activity. No committee testimony or vote history was provided, so there is no recorded legislative sentiment beyond the bill’s text and title. Based on the language alone, the measure appears intended to deter partisan activity by charities rather than to expand nonprofit political participation.
The likely controversy is whether Maryland should impose a state-level campaign activity ban on charities and tie tax-exempt status to compliance with the federal Johnson Amendment standard. Supporters would likely emphasize preserving the integrity of charitable tax exemptions and preventing partisan use of donor-supported organizations, while opponents may argue the bill chills speech, burdens nonprofits, and gives state officials broad enforcement power. The most significant practical point of contention is the revocation mechanism, which can strip income, sales and use, and property tax exemptions for two years after a willful violation.