[EL] why seek c4 recognition?

Tue May 14 12:59:51 PDT 2013

An organization may claim exemption under section 501(c)(4) (or most other types of non-501(c)(3) exemption, for that matter) without seeking formal IRS recognition via a Form 1024 Application for Recognition of Tax-Exempt Status.  Such "self-declarers" are different from the "taxable nonprofits" - groups organized as state nonprofit corporations that don't claim federal tax-exempt status - that we've discussed previously on this list.

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

From: law-election-bounces at department-lists.uci.edu [mailto:law-election-bounces at department-lists.uci.edu] On Behalf Of Scarberry, Mark
Sent: Tuesday, May 14, 2013 3:47 PM
To: law-election at uci.edu
Subject: Re: [EL] why seek c4 recognition?

I thought there was a serious argument (though it seemed wrong to me) that contributions to such groups would be taxable income to them absent (c)(4) status. Is it not necessary for a group to get approval from IRS to avoid a claim that they have taxable income?

Mark Scarberry

Sent from my Verizon Wireless 4G LTE Smartphone

-------- Original message --------
From: JBoppjr at aol.com<mailto:JBoppjr at aol.com>
Date: 05/14/2013 12:21 PM (GMT-08:00)
To: bkingsley at harmoncurran.com,rhasen at law.uci.edu,law-election at uci.edu<mailto:bkingsley at harmoncurran.com,rhasen at law.uci.edu,law-election at uci.edu>
Subject: Re: [EL] why seek c4 recognition?

Beth is absolutely right, IMHO.  Jim Bopp

In a message dated 5/14/2013 12:04:43 P.M. Eastern Daylight Time, bkingsley at harmoncurran.com<mailto:bkingsley at harmoncurran.com> writes:
For some groups the question is why seek recognition, not why not.

The form takes time and energy to complete. If you don't know the lingo you risk saying something that raises a red flag and triggers further scrutiny, so you'll spend time and energy responding to further IRS inquiries. To avoid that you can hire a lawyer and spend thousands on legal fees. Plus it costs $850 just to file the application, for all but the very smallest groups.

And what are the benefits? If the IRS ever happens to audit your group, you can rely on the determination to avoid retroactive revocation, provided there have been no material changes in operations. If you're pretty confident where you fit in the tax code, that benefit is pretty slim, and it can be easier just to start operating.

Many groups do file a 1024, and of course my experience tends to be with those who decide to do so, since they've probably come to me for help. There are some ancillary benefits -- being able to provide assurances to funders and other supporters that you're operating within the law, or in some cases eligibility for local tax exemption. But for many the plusses are not worth the hassles.

Beth

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

-----Original Message-----
From: law-election-bounces at department-lists.uci.edu<mailto:law-election-bounces at department-lists.uci.edu> [mailto:law-election-bounces at department-lists.uci.edu] On Behalf Of Rick Hasen
Sent: Tuesday, May 14, 2013 11:50 AM
To: law-election at UCI.edu<mailto:law-election at UCI.edu>
Subject: [EL] why seek c4 recognition?

Over on Twitter the NYT's Nick Confessore is tweeting about the question
why only some groups seek c4 recognition status. Apparently the
Democratic-oriented Priorities USA has not.

Can someone shed some light on the reasons why a group would not seek
such recognition from the IRS and what the risks are?

Thanks!

Rick

--
Rick Hasen
Chancellor's Professor of Law and Political Science
UC Irvine School of Law
401 E. Peltason Dr., Suite 1000
Irvine, CA 92697-8000
949.824.3072 - office
949.824.0495 - fax
rhasen at law.uci.edu<mailto:rhasen at law.uci.edu>
http://law.uci.edu/faculty/page1_r_hasen.html
http://electionlawblog.org

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