BILL NUMBER: S7880A
SPONSOR: KRUEGER
 
TITLE OF BILL:
An act to amend the tax law, in relation to enacting the "NY-PROTECT
ACT"; and providing for the repeal of such provisions upon expiration
thereof
 
PURPOSE:
The NY-PROTECT Act will ensure that 501(c)3 organizations that lose
tax-exempt status as a result of an illegal or improper revocation by
the IRS can continue operating in New York as if it maintained such
status.
 
SUMMARY OF PROVISIONS:
Section 1: titles the bill the "NY-PROTECT Act"
Section 2: Creates a new Section 27-A of the tax law to develop a proc-
ess within the Department of Tax and Finance to allow organizations that
held tax-exempt status on January 19, 2025, to continue operating with
tax-exempt status in New York if the Internal Revenue Service, revokes
their 501(c)3 status.
The Commissioner of Tax and Finance will create an application for
organizations that lose their tax-exempt status to become a 'state
protected not-for-profit organization'. This designation will remain in
effect until the earlier of (1) April 15th following the year that tax
and finance issues `state protected not-for-profit organization' status
or (ii) one year after the IRS restores the organization's Federal tax-
exempt status.
Section 3: This act shall take effect immediately and shall be deemed to
have been in full force and effect on and after January 19, 2025, and
shall expire and be deemed repealed January 20, 2029.
 
JUSTIFICATION:
It is critically important to protect nonprofits that have or that may
be targeted by the federal government by means of an illegal or improper
revocation of that group's 501(c)(3) status by the IRS as recently has
been threatened by the President of the United States and senior federal
officials. Organizations such as colleges, climate or environmental
groups, and civil rights organizations are doing critical work in New
York communities and losing 501(c)3 designation would have far reaching
impacts. A 501(c)3 organization, whose status is illegally or improperly
revoked by the IRS, may be concomitantly subjected to an array of state
or local taxes.
Further, a 50l(c)3 designation provides more than just a status for
taxing purposes. This status, and a certification of such status, is
required by an myriad of programs, contracts and qualifications under
New York State education law, housing law, health law, ag & markets law
and other areas in connection with the state and local governments.
The NY PROTECT Act will ensure that no services or contracts are inter-
rupted as a result of federal actions that are illegal or improper.
 
LEGISLATIVE HISTORY:
2025: New Bill
 
FISCAL IMPLICATIONS:
None
 
EFFECTIVE DATE:
This act shall take effect immediately and shall be deemed to have been
in full force and effect on and after January 19, 2025, and shall expire
and be deemed repealed January 20, 2029.