[EL] why seek c4 recognition?

Tue May 14 13:00:53 PDT 2013

Beth has accurately summarized the reasons for not filing. But if you  
don't, you get bugged by the IRS. 

The most common reason for non-filing c4s to file a 1024 may  be that, when 
they file their 990s (as they are required to whether they  file a 1024 or 
not), they get a letter from the IRS asking them to file a 1024.  Even Pub 
57, the basic guide to exempt orgs suggests that c4s file. 

Plus donors and regulators want to see "your IRS letter." 

In actuality, you don't need to do any of that, but it requires some  
effort. For example, you simply respond to the plaintive pleas of the IRS  
computers after filing a 990 without having filed a 1024 with a copy of the  IRS 
Chief Counsel's own guidance on how to code (for computer purposes) c4s that  
haven't filed a 1024 (IRS FSA 200046038 -- obtained after much effort by 
John  Pomeranz of Harmon Curran). Excerpt: "Because section 501(c) 
organizations other  than those described in sections 501(c)(3), 501(c)(9), and 
501(c)(17) are not  required to obtain recognition from the Service of their 
tax-exempt status,  these organizations qualify for exemption, if they meet the 
requirements of the  Internal Revenue Code. Nevertheless, most of these 
organizations may voluntarily  file Form 1024. It is appropriate for the Service 
to strongly encourage these  organizations to apply for exemption to decrease 
the uncertainty of their tax  status." It's a pretty good analysis of the 
whole area of filing and non-filing. 

It sounds pretty funny to simply give the IRS a copy of its own operating  
procedures, but it happens all the time. We used to sit for hours reading 
CCH  summaries to IRS agents looking at the same books during exams (audits in 
Exempt  Org-speak), but now we just text them links. Progress. 

Barnaby Zall 
Of Counsel 
Weinberg, Jacobs & Tolani,  LLP 
10411 Motor City Drive, Suite 500
Bethesda, MD 20817
301-231-6943  (direct dial) 
bzall at aol.com  
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In a message dated 5/14/2013 3:43:25 P.M. Eastern Daylight Time,  
schmitt.mark at gmail.com writes:

I'm curious, then: Does anyone know why so many local Tea Party  groups did 
decide to file 1024's? I recall that long before last Friday, a  number of 
lawyers on this list, esp. Mr. Zall, had said that they discourage  (c)4 
clients from filing. Were the Tea Party groups just poorly advised? Was  Cleta 
Mitchell's advice on whether groups should file different from other  
lawyers?

Mark  Schmitt
Senior  Fellow, _The Roosevelt  Institute_ 
(http://www.rooseveltinstitute.org/) 
_202/246-2350_ (tel:202/246-2350) 
gchat  or Skype: schmitt.mark
twitter: mschmitt9  

On Tue, May 14, 2013 at 3:19 PM, <_JBoppjr at aol.com_ 
(mailto:JBoppjr at aol.com) > wrote:

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_ (tel:202-328-3500)  
_www.harmoncurran.com_ (http://www.harmoncurran.com/) 

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