[EL] "I.R.S. Begins Enforcing Rule on Gifts to Political Nonprofits"

[Lloyd Mayer]

To expand on Beth’s last point, what is currently considered election-related activity for federal election law purposes is significantly different from what is considered election-related activity for federal tax law purposes.

As Mr. Lacy correctly notes, for constitutional reasons the Supreme Court has limited the reach of federal election law to express advocacy and its functional equivalent for most purposes, although that reach also extends to all “electioneering communications” as originally defined by BCRA for disclosure purposes.

But for federal tax purposes, the current and not yet successfully challenged definition of political campaign intervention is much broader, generally defining such intervention as encompassing any activities that, based on all of the relevant facts and circumstances, support or oppose a candidate for elected public office.  The federal tax definition is important because it controls not only whether election-related expenditures are deductible as business expenses under Internal Revenue Code section 162 – they are not if they fall within the federal tax definition of political campaign intervention – but it also defines those activities that a charitable (section 501(c)(3)) organization is not permitted to engage in, and those activities that a social welfare (section 501(c)(4)) organization, union, or trade association/chamber of commerce is not permitted to engage in as its primary activity.

I say not yet successfully challenged because there is a credible argument that this facts and circumstances standard is unconstitutionally vague.  No court has yet ruled on this issue, however, although a Jim Bopp is, I believe, representing organizations (one a C3, the other a C4) trying to challenge the federal tax law definition on these grounds.

(And now I really should get back to grading exams.)

Lloyd Hitoshi Mayer
Associate Professor
Notre Dame Law School
P.O. Box 780
Notre Dame, IN 46556-0780
Phone: (574) 631-8057
Fax: (574) 631-4197
Web Bio<http://law.nd.edu/faculty/lloyd-hitoshi-mayer>: http://law.nd.edu/faculty/lloyd-hitoshi-mayer
SSRN Author Page<http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=504775>: http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=504775



From: law-election-bounces at department-lists.uci.edu [mailto:law-election-bounces at department-lists.uci.edu] On Behalf Of Jim Lacy
Sent: Friday, May 13, 2011 4:48 PM
To: Ellen Aprill
Cc: law-election at uci.edu
Subject: Re: [EL] "I.R.S. Begins Enforcing Rule on Gifts to Political Nonprofits"

Correct, however, consider Wisconsin Right to Life and how far the Court has said a nonprofit c4 can go in criticizing an officeholder before it becomes express advocacy!

James V. Lacy
Sent from my iPhone
Confidentiality applies


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