Thanks, Rick for the pointer to the IRS TEGE Newsletter.  I agree the "PACI" statistics are very informative.

 

However, it is important to note that the statistics in that newsletter have to do with examinations of (c)(3) entities, not (c)(4)s.

 

There are two key differences: the ban on political activity for (c)(3)s is absolute and, as a result, the IRS can begin an examination as soon as an allegation is made (see reference in the newsletter to 2010 allegations now under review.)

 

Lois Lerner spoke at COGEL last week and reminded everyone that for (c)(4) entities (allowed to participate in political activity, so long as it is not their major purpose) that IRS can examine a (c)(4) only after a return is filed, which with automatic extensions, is often 6 months after the end of that entity's fiscal year.  As a result IRS will not even start looking at (c)(4) activity in fall 2010 until after returns covering that period are filed, which may be up to a year from now.

 

Dave Mason