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Exempt Organization Attorneys Raise Comments and Concerns to IRS

Yesterday a bipartisan coalition of lawyers representing tax-exempt 501(c)(4) social welfare organizations issued joint comments to the Internal Revenue Service (IRS) commending the IRS for attempting to bring additional clarity to political activities by tax-exempt organizations. The comments also highlight the key ways in which current proposed regulatory rulemaking falls short. Among the concerns raised by the bipartisan coalition, the lawyers recommended the following…

“Whatever rules are crafted defining political activity should apply as universally as possible throughout the tax code, applying not only to 501(c)(4)s, but also to other 501(c)s, and also applying, to the degree possible, to other matters, including the proxy tax paid by some 501(c) entities under 6033(e) and the denial of a business expense deduction under 162(e)(1)(B).

Whatever limits on political activity are set for 501(c)(4)s should also apply to 501(c)(5)s, 501(c)(6)s, and other 501(c)s permitted to engage in political activity.

Rules should attempt to define political activity clearly and narrowly and should seek to exclude nonpartisan election-related and non-election-related activities that are not attempts to influence the outcome of elections, including:

  • nonpartisan voter registration
  • nonpartisan get-out-the-vote efforts
  • nonpartisan voter guides
  • candidate debates and forums
  • events prior to an election that feature, in a non-candidate capacity, government officials who are candidates
  •  lobbying and other communications near an election that mention a candidate or political party in a non-election-related context (including old references still available on an organization’s website as an election approaches)

The definition of “candidate” should not include persons:

  • who have taken steps to seek non-elective public office, or positions as officers of non-governmental political organizations; or
  • who are merely “proposed by others” (such as bloggers or news media outlets) as candidates but whom the organization making the communication has not referred to as a candidate.

Regulations should, to the degree possible, not impose burdensome recordkeeping obligations, such as requiring organizations to:

  • allocate costs for previous communications that remain available (e.g., on a website) within the 30- or 60-day pre-election time periods; and
  • calculate the value of the efforts of volunteers to the organization.

A volunteer’s or official’s personal political activities should not be attributed to the organization unless such activities are either subsidized or endorsed by the organization.

 

Grants to another 501(c) organization should not be treated as a political expenditure if the contribution is reasonably structured to prevent use of the funds for political activity.”

Exempt Organization Attorneys Raise Comments and Concerns to IRS