[EL] IRS report on actions and next steps

[Beth Kingsley]

I don't think we can extrapolate that 40% is the threshold in all cases, any more than we should export the definitions they adopted in this streamlined safe-harbor approach. But it does indicate that they are comfortable saying that no more than 40% using those expanded definitions will not lead to approving 501(c)(4) rulings for groups that are primarily political and so exempt under section 527.

Also, the safe harbor option only applies to a select group of applicants. It remains to be seen whether this rule serves as the basis for more broadly applicable guidance.

Beth

Elizabeth Kingsley
Harmon, Curran, Spielberg & Eisenberg, LLP
1726 M St., NW
Suite 600
Washington, DC 20036
202-328-3500
www.harmoncurran.com




From: law-election-bounces at department-lists.uci.edu [mailto:law-election-bounces at department-lists.uci.edu] On Behalf Of Daniel Abramson
Sent: Monday, June 24, 2013 10:11 PM
To: John Pomeranz
Cc: Law-election at department-lists.uci.edu
Subject: Re: [EL] IRS report on actions and next steps

One notable item from this report - the IRS has apparently settled on 40% as the threshold for determining whether an organization is "primarily engaged in social welfare activity."  See:

"Initiated a new process whereby certain taxpayers whose applications for
501(c)(4) tax exempt status had been identified for potentially inappropriate
campaign intervention and have been in our backlog for more than 120 days
have the option of obtaining an approval if they self-certify that no more
than 40% of their expenditures and voluntary person-hours will go toward
political campaign intervention activities and that at least 60% of their
expenditures and voluntary person-hours will go toward promoting social
welfare;" Page 14.

"5. We chose the thresholds described here (below 40% for political
campaign intervention activity and above 60% for social welfare
activity) and provided special instructions for measuring activities
in order to provide a basis for determining what is meant by
"primarily" engaged in social welfare activities (with the
understanding that no precise definition exists in relevant revenue
rulings, cases, or regulations for "primarily" in this specific context
and that the statute does not provide clear guidance on how the
determination should be made). Organizations that wish to be
evaluated under all the facts and circumstances rather than to
conduct their own measurements retain that option via Path 1"  Page 25.

Presumably this is all subject to change, but for now it adds significant clarity.

Daniel

On Mon, Jun 24, 2013 at 2:01 PM, John Pomeranz <jpomeranz at harmoncurran.com<mailto:jpomeranz at harmoncurran.com>> wrote:
Acting IRS Commissioner Werfel has released his promised 30-day report outlining the problems found, the measures taken to address them to date, and the next steps.  Here's the IRS release, with links to the longer report and associated documents.

http://www.irs.gov/uac/Newsroom/Report-Outlines-Changes-for-IRS-To-Ensure-Accountability,-Chart-a-Path-Forward;-Immediate-Actions,-Next-Steps-Outlined



John Pomeranz
Harmon, Curran, Spielberg & Eisenberg, LLP
1726 M Street, NW, Suite 600
Washington, DC  20036
office: 202.328.3500<tel:202.328.3500>
mobile: 703.597.7663<tel:703.597.7663>
fax: 202.328.6918<tel:202.328.6918>
e: jpomeranz at harmoncurran.com<mailto:jpomeranz at harmoncurran.com>



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