[EL] c-4 and issue ads vs campaign intervention

[Ellen Aprill]

Rick asked the following this morning:

“Most independent ads for 2012 election are from groups that don’t disclose
donors” <http://electionlawblog.org/?p=33440>
Posted on April 25, 2012 8:50 am <http://electionlawblog.org/?p=33440> by Rick
Hasen <http://electionlawblog.org/?author=3>

Must-read Dan Eggen
report<http://www.washingtonpost.com/politics/most-independent-ads-for-2012-election-are-from-groups-that-dont-disclose-donors/2012/04/24/gIQACKkpfT_story.html>
 for *WaPo*: “Nearly all of the independent advertising aired for the 2012
general-election campaign has come from interest groups that do not
disclose their donors, suggesting that much of the political spending over
the next six months will come from sources invisible to the public.
Politically active nonprofits that do not reveal their funding have spent
$28.5 million on advertising related to the November presidential matchup,
or about 90 percent of the total through Sunday, a Washington Post analysis
shows.”

I do have a question about one part of the story:

One Crossroads GPS
spot<http://www.washingtonpost.com/blogs/virginia-politics/post/crossroads-gps-virginia-ad-hits-obama-on-gas-prices/2012/04/10/gIQAZGsw8S_blog.html>
currently
running in Virginia, for example, castigates the president for high energy
costs. “No matter how Obama spins it, gas costs too much,” the female
narrator says. “Tell Obama: Stop blaming others and work to pass better
energy policies.”

Despite its anti-Obama message, the ad is not considered an
election-related message under FEC and IRS guidelines. That means the money
spent to air the spot — about $204,000 in the Richmond, Charlottesville and
Washington markets — will not count as part of the group’s political
budget, experts say.

I take it that the only reason that this ad is not considered an election
related message under FEC regulations is that it is not run in the
electioneering communications time window (60 days before the general–a
period which would be extended under the DISCLOSE Act). But would the IRS
not consider this to be a political ad in judging the 501c4′s primary
purpose?

*The answer to his question is maybe, since the IRS test is fact and
circumstances based on multiple factors, without direction as to how to
weigh the factors.  Here is the link to the key ruling on the question of
distinguishing issue advocacy from campaign intervention (exempt function
under sec. 527) for section 501(c)(4), (5), and (6) organizations: *

* http://www.unclefed.com/Tax-Bulls/2004/rr04-06.pdf*

*For those who don't want to read the whole ruling, here are the factors
listed, although the ruling also explicitly states that other facts and
circumstances bear on the issue as well: *

*All the facts and circumstances must be considered to determine whether an
expenditure for an advocacy communication relating to a public  policy
issue  is  for an exempt function under § 527(e)(2). When an*

*advocacy communication explicitly advocates the election or defeat of an
individual to public office, the expenditure clearly is for an exempt
function under § 527(e)(2). However, when an advocacy communication
relating to a public policy issue does not explicitly advocate the election
or defeat of a candidate, all the facts and circumstances need to be
considered to determine whether the expenditure is for an exempt function
under § 527(e)(2).In facts and circumstances such as those described in the
six situations, factors that*

*tend to show that an advocacy communication on a public policy issue is
for an exempt function under § 527(e)(2) include, but are not limited to,
the following:*

*a) The communication identifies a candidate for public office;*

*b) The timing of the communication coincides with an electoral campaign;*

*c) The communication targets voters in a particular election;*

*d) The communication identifies that candidate’s position on the public
policy issue that is the subject of the communication;*

*e) The position of the candidate on the public policy issue has been
raised as distinguishing the candidate from others in the campaign, either
in the communication itself or in other public communications;*

*and *

*f) The communication is not part of an ongoing series of substantially
similar advocacy communications by the organization on the same issue.*

*. . .*

*[F]actors that tend to show that an advocacy communication on a public
policy issue is not for an exempt function under § 527(e)(2) include, but
are not limited to, the following:*

*a) The absence of any one or more of the factors listed in a) through f)
above;*

*b) The communication identifies specific legislation, or a specific event
outside the control of the organization, that the organization hopes to
influence;*

*c) The timing of the communication coincides with a specific event outside
the control of the organization that the organization hopes to influence,
such as a legislative vote or other major legislative action (for example,
a hearing before a legislative committee on the issue that is the subject
of the communication);*

*d) The communication identifies the candidate solely as a government
official*

*who is in a position to act on the public policy issue in connection with
the specific event (such as a legislator who is eligible to vote on the
legislation); and*

*e) The communication identifies the candidate solely in the list of key or
principal sponsors of the legislation that is the subject of the
communication.*

*
*

*All of the examples in the ruling specify that the communication appear
"shortly before an election." Does this one?  Is this an issue that has
been raised as distinguishing the candidates in this communication or
others? Is it part of an ongoing series? If the answers to some of the
questions are yes, how important is each of these factors?  Are there other
relevant facts and circumstances?  I doubt that everyone will answer these
questions in the same way and that any organization asking the questions of
itself will interpret the questions and weigh them in a way that gives the
best result for it.*

*
*

*  Ellen*


-- 
Ellen P. Aprill
John E. Anderson Professor of Tax Law
Loyola Law School
919 Albany Street
Los Angeles, CA 90015
213-736-1157
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