Regulations.gov - Proposed Rule Document

Regulations.gov - Proposed Rule Document

Guidance for Tax-Exempt Social Welfare Organizations on Candidate-Related Political Activities

Summary

This document contains proposed regulations that provide guidance to tax-exempt social welfare organizations on political activities related to candidates that will not be considered to promote social welfare. These regulations will affect tax-exempt social welfare organizations and organizations seeking such status. This document requests comments from the public regarding these proposed regulations. This document also requests comments from the public regarding the standard under current regulations that considers a tax-exempt social welfare organization to be operated exclusively for the promotion of social welfare if it is “primarily” engaged in activities that promote the common good and general welfare of the people of the community, including how this standard should be measured and whether this standard should be changed.

Background

Section 501(c)(4) of the Code provides a Federal income tax exemption, in part, for “[c]ivic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.” This exemption dates back to the enactment of the federal income tax in 1913. See Tariff Act of 1913, 38 Stat. 114 (1913). The statutory provision was largely unchanged until 1996, when section 501(c)(4) was amended to prohibit inurement of an organization's net earnings to private shareholders or individuals.
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New 501(c)(4) Qualification Requirements Get Mixed Reviews: Associations Now
“Though the new definitions attempt to clarify existing rules, they also create a danger to citizen participation in our democracy,” Alliance for Justice President Nan Aron said in a statement. “If implemented, there would be no such thing as a nonpartisan election activity conducted by a 501(c)(4). … These activities have been critical to the ability of nonprofits to influence the public-policy debate on a wealth of issues.”

Newly Proposed IRS Rules Could Change the Landscape of Political Engagement for 501(c)(4) Social Welfare Organizations | 501(c)(4), candidate-related political activity, Internal Revenue Service, tax-exempt social welfare organizations | Politics, Law and Policy Blog

Finalization of Regulations and the Potential Impact on Other Types of Tax-Exempt Entities

In light of the new ground being broken by these preliminary regulations and their potential effect on the already-ambiguous legal standards for politically-active 501(c)(4)s, the Treasury Department will undoubtedly be receiving a wide range of public comments over the next few months concerning the contents and application of the proposed rules and guidance.  Regardless of how those comments shape the final regulations implemented by the IRS, 501(c)(4) organizations need to be prepared for what lies ahead and begin developing sensible policies and procedures to minimize future risk associated with political engagement. Likewise, 501(c)(3) charities, 501(c)(5) labor organizations, and 501(c)(6) trade associations need to be wary of how the finalized  regulations will influence future IRS treatment of their political activities.

New Guidance Issued for Tax-Exempt Social Welfare Organizations Regarding Candidate-Related Political Activities
Looks like anything that might possibly impact an election including "get out the vote" drives would be included.