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View Diary: The IRS screwed up. No political group should enjoy 501(c)(4) status (50 comments)

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  •  The statute doesn't say they can't engage (2+ / 0-)
    Recommended by:
    erush1345, VClib

    in politics, and also doesn't define "promotion of social welfare."

    If the statute said the orgs can't engage in politics, then the diary would have a stronger argument, but it doesn't.

    •  You should read the law before commenting on it (0+ / 0-)
      Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.
      26 U.S.C. § 501(c)(3)(emphasis added)
      •  There is a difference (1+ / 0-)
        Recommended by:
        Ender

        (c)(4)s can engage in politics, so long as it isn't electoral advocacy.

        "Well, I'm sure I'd feel much worse if I weren't under such heavy sedation..."--David St. Hubbins

        by Old Left Good Left on Fri May 17, 2013 at 11:20:01 AM PDT

        [ Parent ]

        •  They can engage in bipartisan efforts (0+ / 0-)

          like the league of women voters so long as they don't advocate  or work against any candidate or position. There are substantial financial penalties for groups which attempt to do otherwise.

          The private non profit tax exemption is exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes with very few exceptions
          in cases where no substantial part of the activities is carrying on propaganda, or otherwise attempting, to influence legislation.

          Live Free or Die --- Investigate, Incarcerate

          by rktect on Fri May 17, 2013 at 02:00:26 PM PDT

          [ Parent ]

          •  you have no idea what you're talking about (0+ / 0-)

            you're literally just making shit up out of thin air.  despicable.

            •  Intermediate sanctions of 35% of excess benefit (0+ / 0-)
              Recently there has been increased discussion and communication to NFP entities concerning private inurement and private benefit, such elements that can affect the tax exempt status of a questioned company. Both instances of inurement and benefit could lead to further tax penalties, known as intermediate sanctions, in the amount of 25% of the excess benefit conveyed as well as a 10% tax to others who knowingly and willfully participated in the transaction.
              These measures were in response to a growing number of NFPs filings. Just to outline the magnitude of growth in NFPs from the reporting years 1998-1999 to 2007-2008, the 501(c)(3) organizations increased from 211,000 informational returns accounting for $750B in revenues to 315,180 Form 990 and 990-EZ returns with total revenues of $1.4T (per IRS Statistics of Income).

              Live Free or Die --- Investigate, Incarcerate

              by rktect on Fri May 17, 2013 at 05:25:06 PM PDT

              [ Parent ]

          •  rdtect - your comments are not correct (0+ / 0-)

            regarding the current state of the law for 501 c 4s. Maybe this one page chart will help:

            http://www.nonprofitaccountingbasics.org/...

            "let's talk about that"

            by VClib on Fri May 17, 2013 at 11:30:29 PM PDT

            [ Parent ]

            •  your going to a secondary source (0+ / 0-)

              Accounting for Justice isn't looking at the legislation but rather the IRS interpretation of the legislation. There is a difference.

              The promotion of social welfare does not include participation in political campaigns on behalf of or in opposition to any political candidate. Reg. 1.501(c)(4)–1(a)(2)(ii). An exempt IRC 501(c)(4) organization may intervene in political campaigns as long as its primary activity is the promotion of social welfare.IRC 501(c)(4) organizations are subject to the tax imposed by IRC 527 on any expenditure for a political activity that comes within the meaning of IRC 527(e)(2). See Rev. Rul. 81–95, 1981–1 C.B. 332.

              The rules determining what constitutes intervention in a political campaign for an IRC 501(c)(4) organization are the same as those governing IRC 501(c)(3) organizations.

              An organization whose exempt status under IRC 501(c)(3) is revoked for intervention in a political campaign may not thereafter qualify for exemption under IRC 501(c)(4). See IRC 504.

              Wikipedia is better because it links to the actual laws. All 501 C regardless of suffix is supposed to be exclusively no political with penalties to include revocation of tax exempt status

              Read the actual legislation from 1954 which uses the word exclusively to refer to not political and not the IRS interpretation from 1959 which uses primarily to refer to exclusively not political.

              Live Free or Die --- Investigate, Incarcerate

              by rktect on Sat May 18, 2013 at 06:21:50 AM PDT

              [ Parent ]

              •  You should read Adam B's FR article on this (0+ / 0-)

                Adam practices campaign law so this is right in his wheelhouse. This is the most definitive piece we have from someone who is an expert on the current interpretation that the IRS uses.

                http://www.dailykos.com/...

                "let's talk about that"

                by VClib on Sat May 18, 2013 at 07:59:03 AM PDT

                [ Parent ]

                •  I read it (0+ / 0-)

                  Just because you are a lawyer involved in a campaign doesn't mean you understand the law. (See Alfredo Gonzales and unitary executive).

                  The most definitive piece we have is the 1954 law and not the 1959 IRS interpretation of the law.

                  The law says

                  "The rules determining what constitutes intervention in a political campaign for an IRC 501(c)(4) organization are the same as those governing IRC 501(c)(3) organizations."
                  Democrats reading the IRS directive and asking for a bright line to define what a 501 (C) 4 can and can't do need look no further than what the written law says; ie, "exclusively" and not "primarily" social welfare for all 501 C.

                  Live Free or Die --- Investigate, Incarcerate

                  by rktect on Sat May 18, 2013 at 12:47:42 PM PDT

                  [ Parent ]

            •  other than intervention in a political campaign (0+ / 0-)
              Organizations exempt under IRC 501(c)(4) may engage in germane action organization activities described in Reg. 1.501–1(c)(3) other than intervention in a political campaign, without the restrictions imposed on IRC 501(c)(3) organizations.

              Live Free or Die --- Investigate, Incarcerate

              by rktect on Sat May 18, 2013 at 06:24:10 AM PDT

              [ Parent ]

      •  That is Section 501(c)(3) (3+ / 0-)
        Recommended by:
        johnny wurster, Ender, VClib

        not Section 501(c)(4).    Section 501(c)(3) does not allow for any political activity, which Section 501(c)(4) is subject to the exclusively/primarily test quoted above.

      •  Ender - johnny is a lawyer (1+ / 0-)
        Recommended by:
        Ender

        and very knowledgeable about tax and non-profit law. He practices in these areas.

        "let's talk about that"

        by VClib on Fri May 17, 2013 at 11:33:19 PM PDT

        [ Parent ]

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