[EL] IRS Rules concerning 501cs
BZall at aol.com
BZall at aol.com
Tue Nov 26 12:37:06 PST 2013
The media release can be mis-leading.
Political campaign intervention is ALREADY not social welfare. This just
seems to describe what is already current practice using a catchy new term:
"candidate-related political activity" or CRaP. (We'll have to await the
Federal Register publication to see if that's the actual acronym.)
Already attorneys are pointing out that under the media release's
description, ballot measure activity (which is currently considered lobbying, not
electioneering) and non-partisan GOTV and voter registration (which can be
engaged in by 501(c)(3) charities) might be covered by the new CRaP
definition. Same with events with "candidates" on the program.
This will likely not reduce the "factual" inquiries required under current
law. More likely just re-arranging the deck chairs. Perhaps this is what
comes of installing new leadership at the IRS EO Division who have no
experience in EO law; the appearance of motion can be deceiving.
But we'll have to see the details when the actual proposal comes out. (As
of the time of this message, it's not out yet.)
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 11/26/2013 1:20:43 P.M. Eastern Standard Time,
btau at politico.com writes:
Here's the press release. If anyone has thoughts, I am writing for
politico.
--
Byron Tau
Lobbying and influence reporter || POLITICO
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Begin forwarded message:
From: "U.S. Department of the Treasury"
<_subscriptions at subscriptions.treas.gov_ (mailto:subscriptions at subscriptions.treas.gov) >
Date: November 26, 2013 at 1:02:27 PM EST
To: <_btau at politico.com_ (mailto:btau at politico.com) >
Subject: TREASURY, IRS WILL ISSUE PROPOSED GUIDANCE FOR TAX-EXEMPT SOCIAL
WELFARE ORGANIZATIONS
Reply-To: <_subscriptions at subscriptions.treas.gov_
(mailto:subscriptions at subscriptions.treas.gov) >
U.S. Treasury Department
Office of Public Affairs
FOR IMMEDIATE RELEASE: November 26, 2013
CONTACT: Victoria Esser, Treasury Public Affairs (202) 622-2960
TREASURY, IRS WILL ISSUE PROPOSED GUIDANCE FOR TAX-EXEMPT SOCIAL WELFARE
ORGANIZATIONS
Initial Proposed Guidance Clarifies Qualification Requirements and Seeks
Public Input
WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue
Service (IRS) today will issue initial guidance regarding qualification
requirements for tax-exemption as a social welfare organization under section
501(c)(4) of the Internal Revenue Code. This proposed guidance defines
the term “candidate-related political activity,” and would amend current
regulations by indicating that the promotion of social welfare does not
include this type of activity. The proposed guidance also seeks initial
comments on other aspects of the qualification requirements, including what
proportion of a 501(c)(4) organization’s activities must promote social welfare.
The initial guidance is expected to be posted on the Federal Register
later today.
There are a number of steps in the regulatory process that must be taken
before any final guidance can be issued. Given the significant public
interest in these and related issues, Treasury and the IRS expect to receive a
large number of comments. Treasury and the IRS are committed to carefully
and comprehensively considering all of the comments received before issuing
additional proposed guidance or final rules.
“This proposed guidance is a first critical step toward creating clear-cut
definitions of political activity by tax-exempt social welfare
organizations,” said Treasury Assistant Secretary for Tax Policy Mark J. Mazur. “We
are committed to getting this right before issuing final guidance that may
affect a broad group of organizations. It will take time to work through
the regulatory process and carefully consider all public feedback as we
strive to ensure that the standards for tax-exemption are clear and can be
applied consistently.”
“This is part of ongoing efforts within the IRS that are improving our
work in the tax-exempt area,” said IRS Acting Commissioner Danny Werfel. “
Once final, this proposed guidance will continue moving us forward and
provide clarity for this important segment of exempt organizations.”
Organizations may apply for tax-exempt status under section 501(c)(4) of
the tax code if they operate to promote social welfare. The IRS currently
applies a “facts and circumstances” test to determine whether an
organization is engaged in political campaign activities that do not promote social
welfare. Today’s proposed guidance would reduce the need to conduct
fact-intensive inquiries by replacing this test with more definitive rules.
In defining the new term, “candidate-related political activity,”
Treasury and the IRS drew upon existing definitions of political activity under
federal and state campaign finance laws, other IRS provisions, as well as
suggestions made in unsolicited public comments.
Under the proposed guidelines, candidate-related political activity
includes:
1. Communications
· Communications that expressly advocate for a clearly identified
political candidate or candidates of a political party.
· Communications that are made within 60 days of a general
election (or within 30 days of a primary election) and clearly identify a
candidate or political party.
· Communications expenditures that must be reported to the
Federal Election Commission.
2. Grants and Contributions
· Any contribution that is recognized under campaign finance law
as a reportable contribution.
· Grants to section 527 political organizations and other
tax-exempt organizations that conduct candidate-related political activities (note
that a grantor can rely on a written certification from a grantee stating
that it does not engage in, and will not use grant funds for,
candidate-related political activity).
3. Activities Closely Related to Elections or Candidates
· Voter registration drives and “get-out-the-vote” drives.
· Distribution of any material prepared by or on behalf of a
candidate or by a section 527 political organization.
· Preparation or distribution of voter guides that refer to
candidates (or, in a general election, to political parties).
· Holding an event within 60 days of a general election (or
within 30 days of a primary election) at which a candidate appears as part of
the program.
These proposed rules reduce the need to conduct fact-intensive inquiries,
including inquiries into whether activities or communications are neutral
and unbiased.
Treasury and the IRS are planning to issue additional guidance that will
address other issues relating to the standards for tax exemption under
section 501(c)(4). In particular, there has been considerable public focus
regarding the proportion of a section 501(c)(4) organization’s activities that
must promote social welfare. Due to the importance of this aspect of the
regulation, the proposed guidance requests initial comments on this issue.
The proposed guidance also seeks comments regarding whether standards
similar to those proposed today should be adopted to define the political
activities that do not further the tax-exempt purposes of other tax-exempt
organizations and to promote consistent definitions across the tax-exempt
sector.
###
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