Rubio introduces bill to safeguard tax-exempt groups from federal regulations

FIRST ON FOX: Sen. Marco Rubio, R-Fla., will introduce a bill Wednesday that aims to protect the independence of tax-exempt organizations from being subject to erroneous federal regulations.

The bill, called the Safeguarding Charity Act, comes after two recent court decisions ruled private organizations are subject to federal restrictions simply due to their tax-exempt status.

"Civic organizations like churches, schools, and charities are crucial to our communities," Rubio said in a statement to Fox News Digital. "I remain concerned by recent court decisions that could subject these organizations to burdensome federal regulations simply because they are tax-exempt."

The bill "would protect these organizations from the government’s politicized battles," Rubio said.

Rubio's bill comes as recent federal court decisions assert that private institutions, based on their tax-exempt status, could face federal restrictions. This poses a risk of penalties for private schools, churches and nonprofit charities that fail to comply with onerous and politically charged regulations.

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Sen. Marco Rubio, R-Fla., plans to introduce a bill that aims to protect the independence of tax-exempt organizations from erroneous federal regulations. (Bill Clark/CQ-Roll Call Inc. via Getty Images/File)

The courts deemed tax-exempt status as a form of "federal financial assistance," as seen in the cases of Buettner-Hartsoe v. Baltimore Lutheran High School in 2021 and E.H. v. Valley Christian Academy in 2022. 

These court decisions have the potential to affect a range of tax-exempt organizations that are not currently receiving federal financial assistance, according to Rubio's office.

This includes private K-12 schools, certain higher education institutions, houses of worship, charitable organizations, private foundations, labor unions, social welfare organizations, homeowners associations, volunteer fire companies, credit unions, chambers of commerce, boards of trade and veterans organizations.

The recent rulings could threaten single-sex private schools, churches and charities. For example, a private Catholic all-girls school would not be able to deny a biological male who identifies as a transgender female from attending.

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The U.S. Capitol (Anna Rose Layden/Bloomberg via Getty Images)

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"If the reasoning of these decisions is more widely embraced, hundreds of thousands of tax-exempt organizations will be unexpectedly subject to burdensome federal statutes and regulations for the first time," the bill text analysis reads. "They will incur substantial compliance costs and could potentially lose their tax-exempt status if they are found to have violated any of the relevant statutes."

Sens. Mike Braun, R-Ind., JD Vance, R-Ohio, and Marsha Blackburn, R-Tenn., are co-sponsoring the legislation, and House Rep. Greg Steube, R-Fla., introduced companion legislation in the House.

"Due to multiple, radical judicial decisions targeting religious schools, Congress must now codify that an organization holding tax-exempt status is not to be considered as a recipient of federal financial assistance," Steube said in a statement.