[EL] Rudimentary 501(c)(4) question

[Marty Lederman]

Thanks, Joe.  Yes, by 1975 "primarily was well-established," and Congress
presumably relied upon that reading then, so perhaps there's no going back
now without a statutory amendment.

But in thinking about whether there should be such an amendment, by reg or
by statute, it would help to know why the "primarily" reading was adopted
in the first instance.

It might have something to do with this dictum in the 1945 *Better Business
Bureau *Supreme Court case, involving "exclusively" in (c)(3), although it
still would not explain the "primarily" test:

"in order to fall within the claimed exemption, an organization must be
devoted to educational purposes exclusively. This plainly means that the
presence of a single non-educational purpose,* if substantial in nature*,
will destroy the exemption regardless of the number or importance of truly
educational purposes."

On Mon, May 20, 2013 at 1:27 PM, Joseph E. Sandler <sandler at sandlerreiff.com
> wrote:

> Marty--****
>
> In 1975 Congress enacted section 527 including section 527(f) which
> specifically contemplates that 501(c) organizations may engage in SOME "527
> exempt" activity, i.e., political activity, since they are taxed on the
> amount expended on such activity.   So it was perfectly reasonable for the
> IRS in its regulations and in its rulings to determine that it would not be
> inconsistent with Congressional intent fo find  no absolute prohibition
> against a c-4 engaging in political activity.  The  problem is that the IRS
> has failed to define by regulation or ruling how much is too much-- clearly
> one of its fundamental  obligations as the agency charged with interpreting
> and enforcing the law.****
>
> Joe ****
>
> ** **
>
> *From:* law-election-bounces at department-lists.uci.edu [mailto:
> law-election-bounces at department-lists.uci.edu] *On Behalf Of *Marty
> Lederman
> *Sent:* Monday, May 20, 2013 1:13 PM
> *To:* law-election at UCI.EDU
> *Subject:* [EL] Rudimentary 501(c)(4) question****
>
> ** **
>
> I probably should know this -- so apologies in advance if there's a
> well-known answer -- but I've never really thought about it, and it's an
> obvious question in light of recent events:
>
>
> When did the IRS decide that “[a]n organization is operated *exclusively*for the
> promotion of social welfare [the statutory standard] if it is *primarily*
> engaged in promoting in some way the common good and general welfare of
> the people of the community”?  26 CFR 1.501(c)(4)-1(a)(2)(i)
>
> And why?  Since Congress chose the adverb "exclusively," how and whey did
> the agency and everyone else settle on "primarily"?****
>
>
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://webshare.law.ucla.edu/Listservs/law-election/attachments/20130520/ab919e04/attachment.html>