Nonprofit Law Matters

Top 25 Comments on IRS Proposed Political Activity Rules: #16 — Some Religious Perspectives

Posted in Religious Institutions, Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

Evangelical Council for Financial Accountability

“While the Treasury and the IRS seek greater clarity by further restricting the types of permissible political activity of tax-exempt organizations, the Commission [on Accountability and Policy for Religious Organizations] would achieve greater clarity by allowing more freedom for tax-exempt organizations to engage in political speech—while simultaneously preserving the long-held public policy of not allowing tax-exempt funds to be expended for political purposes.”

The ECFA is an association of more than 3,000 501(c)(3) churches and related evangelical organizations.  Their comments take a unique stance on the proposed rules that urges a loosening of existing standards as applied to 501(c)(3)s.  We think it important to include a religious perspective in our Top 25, and this is one that comes from a particularly intense and passionate group.  From 2011 to 2013, the ECFA facilitated a Commission on Accountability and Policy for Religious Organizations that published a report last August entitled Government Regulation of Political Speech by Religious and Other 501(c)(3) Organizations.  The Commission, like many others, was displeased with the vague and uncertain “facts and circumstances” approach presently used by the IRS.  Instead, it posed a bright-line alternative that would draw the line at express advocacy for expenditures but would allow “no-cost” political communications — even for speech expressly advocating a candidate’s election or defeat.

The ECFA’s comments thus focus on the effect that the proposed rules would have on 501(c)(3) charities if extended beyond 501(c)(4).  In particular, the ECFA, adopting the Commission’s stance, urged the IRS to permit political campaign activity by 501(c)(3)s as long as such activities do not involve the expenditure of funds.  This position would constitute a serious departure from current law, which absolutely prohibits 501(c)(3)s from engaging in any partisan campaign activity, regardless of expense.  The ECFA did not comment on the application of this approach to 501(c)(4)s.


“The last thing America or our churches, denominations, and charities need is to divide our communities along political lines, which will significantly exacerbate these concerns. The prospect of ‘Romney’ churches and ‘Obama’ churches, of ‘Republican’ denominations and ‘Democratic’ denominations, and of ‘charities’ divided along partisan lines unrelated to their core mission, would be a terrible loss to the commonwealth of our nation and to the spirit of comity, tolerance and unity so needed in our houses of worship and the charitable sector.”

The ECFA’s position received substantial objection from other religious groups, portions of which can be read on the website of the Commission on Accountability and Policy for Religious Organizations.  Notably, a group of influential religious leaders of various faiths (Ingrid Mattson, Rabbi David Saperstein, Sayyid M. Sayeed, Rabbi Julie Schonfeld, Siva Subramanian, and Steven Woolf) strongly opposed the ECFA’s proposal to lift the ban on political speech for churches and religious nonprofits.  The Jewish Federations of North America and the Islamic Society of North America both reaffirmed their belief that the current prohibition on political campaign intervention by 501(c)(3) organizations should be retained as currently structured and as interpreted in the Internal Revenue Service.


Top 25 Comments on IRS Proposed Political Activity Rules: #17 – The League of Women Voters of the United States

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“In a democratic country, where government is based on the consent of the governed, there is a vital role for 501(c)(4) organizations to play in providing truly nonpartisan services to voters.”

Many state chapters of the League of Women Voters filed comments.  We note the comments of the national umbrella organization here for the organization’s historic prominence, for its  stance on banning candidate-related activity by all 501(c) organizations, and for its suggestions on how to draw a clear line defining political intervention activity.  While the League clearly promotes nonpartisan voter activity, it comes out strongly in favor of prohibiting partisan political activity across all 501(c)s, preferring to see it confined to 527 organizations subject to donor disclosure.

Further, the League would define candidate-related political activity in finer lines than the proposed rules do, reaching all paid public mass media communications that refer in any way to a candidate within the year before an election, but excluding communications to an organization’s members.  The League is otherwise content with the current IRS “facts and circumstances” approach that has been applied to various election-year forms of voter engagement over the last decades, which many other comments deplore as vague and unworkable.

As our Top 25 list unfolds, various proposals emerge attempting to draw clear lines defining political intervention.  On the one hand, groups like the League of Women Voters and Representative Chris Van Hollen advocate a total prohibition on partisan political activity by 501(c)(4)s; while other groups, like the Evangelical Council for Financial Accountability or the ACLU (keep an eye on our countdown to see if these groups make the list), urge the IRS to relinquish much of its regulatory role and give 501(c)s more leeway to engage in partisan political speech.  A third category of comments also emerges: those that endorse bright-line rules permitting a balance of political speech by 501(c)s that neither advocates a total ban nor a broad abandonment of IRS regulation.  Stay tuned as these expertly crafted comments come to the forefront.

Top 25 Comments on IRS Proposed Political Activity Rules: #18 — Nonprofit VOTE, Project VOTE, and Rock the Vote

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

 “It has never been more important, since the Supreme Court declared in Citizens United that election laws cannot prohibit corporations from independent political spending, for our tax laws to plainly identify what may and may not be funded with tax-free money.”

— Ashley Spillane, Executive Director, Rock the Vote

Together, these three organizations provide an excellent summary of the potential impact of the current proposed rules on organizations whose primary functions are to encourage civic participation through get-out-the-vote drives and nonpartisan election-related education. Nonprofit VOTE provides nonpartisan voter and election materials to nonprofits around the country; Project VOTE mobilizes marginalized and under-represented voters; and Rock the Vote encourages voter registration and engagement by people under 30.  Each of these 501(c)(3) charities would be massively impaired in conducting any of its exempt activities if the current proposed rules were to apply to them.


On Monday, newly-confirmed IRS Commissioner John Koskinen gave us hope that nonpartisan voter engagement would still be a protected non-political activity for exempt organizations.  Commissioner Koskinen told USA Today that

“In all likelihood we will re-propose a redefined rule and ask for more public comment.”

Watch the video interview here.  The six-minute segment is well worth it!



Top 25 Comments on IRS Proposed Political Activity Rules: #19 — National Rifle Association

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“This ‘keep-’em-guessing’ facts-and-circumstance test is intolerable and must be replaced. … Particularly with respect to tax laws that affect First Amendment rights, a system that has clear, comprehensible lines is essential.”

As a threshold matter, the NRA notes in its comments that its ongoing compliance with the tax law has been extraordinarily expensive and time-consuming, in large part because so many of the IRS regulations governing social welfare organizations are “vague and confusing.”  The group then praises the IRS for striving to establish more consistent regulations in this arena.  The first half of the NRA’s comments are devoted to the argument that the current revenue rules on political activity and 501(c)(4) entities (Rev. Rul. 2004-6 and Rev. Rul. 2007-41) are unconstitutionally overbroad and vague:  “The vagueness doctrine requires that the legislative body or agency promulgating rules draw bright lines so that the people being regulated know what they can and cannot do.”

We note in particular that the comments bring attention to an interesting detail regarding “earmarking,” deploring the requirement that contributions to 501(c)(4) organizations must both explicitly prohibit candidate-related political activity, and obtain a written representation from the donee regarding this prohibition.  The NRA notes that this requirement is inconsistent with all other earmarking provisions in the Internal Revenue Code.


Top 25 Comments on IRS Proposed Political Activity Rules: #20 — Rep. Chris Van Hollen, Public Citizen, Democracy 21, Campaign Legal Center

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“Conformity with the statute requires that the IRS amend its regulation to require that § 501(c)(4) organizations pursue promotion of social welfare to the exclusion of other activities, including electoral activity, that do not constitute promotion of social welfare; or, at most, that such non-social welfare activities be de minimis and insubstantial.”

This group had previously filed a lawsuit against the IRS demanding that the Service commence rulemaking to revise the 501(c)(4) regulations, but voluntarily dismissed the suit upon the IRS’s initiation of this rulemaking.  They take the minority position that social welfare organizations are not meant to engage in any candidate-related activity whatsoever, by the plain language of the statute:  “The regulation’s distortion of the language is comparable to that of a person who claims to be in an ‘exclusive’ relationship with someone else because he cheats on her only 49% of the time.”  There is a certain purity to their position, but the IRS has long interpreted “exclusively” for charities to allow an insubstantial amount of non-charitable activity.  Permitting a 49% level of non-exempt activity is probably too much.  Still, stamping out all nonprofit political activity could very well push it out of the tax-exempt system into the shadowy realm of for-profit LLCs, where business interests dominate and the public interest disappears.



Top 25 Comments on IRS Proposed Political Activity Rules: #21 — The Arc of the U.S.

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“We need to ensure that organizations are clearly free to pursue and publicize their legitimate public policy work with lawmakers and on proposed legislation regardless of whether a primary or general election will occur within a certain time period.  We need clear definitions of political intervention that apply consistently across the tax code and that are comprehensible both to those inside the IRS who must enforce the law and to those in the nonprofit sector who must comply with the law.”

The Arc is a 501(c)(3) charity that advocates for people with intellectual and developmental disabilities and includes a network of over 700 chapters across the country, many of which submitted their own comments.  The national branch’s comments are brief, but we note in particular a point raised concerning the difficulty of complying with the 30/60-day election cycle windows in the proposed rules:  “Modern communications, which include social networking that makes content permanently available and re-surfaces it as comments or ‘likes’ increase, would make compliance all but impossible.”


Top 25 Comments on IRS Proposed Political Activity Rules: #22 — 501(c)(4) Organization Joint Comments

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

 “…the IRS should adopt one consistent definition of political activity that applies only to activities truly partisan in nature and which does not interfere with the ability of exempt organizations to engage in valuable civic engagement and advocacy.”

This prominent group of longstanding social welfare organizations (Sierra Club, Human Rights Campaign, League of Conservation Voters, and Planned Parenthood Action Fund) joined forces to urge the IRS to rethink the proposed rules in a way that “recognizes the valuable advocacy and civic engagement role of 501(c)(4)s . . . .”  They provide historic and ongoing examples of nonpartisan activities which would be inappropriately prohibited as political activity under the proposed rules.



Top 25 Comments on IRS Proposed Political Activity Rules: #23 – Over 25,000 Public Citizen Activists

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

 “Don’t let political operatives hide who’s funding their partisan political smears and attack ads!”

This particular comment is even shorter than that of Stephen Colbert.  We think it worth including in our list, however, for the sheer number of signers.  25,054 supporters of Public Citizen signed onto a petition to support the rulemaking and to call on the IRS to improve its proposed rules to prevent the influx of dark money from political operatives leading attack ads and political smear campaigns.  They are listed on a giant spreadsheet by state.

Public Citizen is a nonprofit consumer advocacy organization that has been actively engaging individuals and organizations in the discussions surrounding the 501(c)(4) proposed regulations.  As such, our readers will see its name appear again among other comments in our Top 25.

Top 25 Comments on IRS Proposed Political Activity Rules: #24 – Council on Foundations

Posted in Private Foundations, Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“At a time when the influence of big money in our election cycles has never been more pronounced, foundations and nonprofit organizations have an essential role to play in helping to educate and empower everyday citizens to make their voices heard.”

The Council on Foundations represents over 1,700 different public and private foundations across the country.  Their succinct comments begin by emphasizing that the proposed rules exceed Treasury’s rulemaking authority delegated by Congress to the extent they would prevent nonpartisan voter activities from continuing to be treated as proper social welfare programs.  The Council concludes by pointing out that if the IRS were to extend the proposed rules to public charities or their private foundation grantors, the restrictions would directly contradict Code Section 4945(f), which permits foundations to support voter registration, and would deprive the public of invaluable nonpartisan voter education services.


IRS Proposed Rules for 501(c)(4)s and Other Tax-Exempts: Our Top 25 Comments Countdown

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

More than 140,000 comments were filed online by February 27, 2014, reacting to the IRS/Treasury proposal to define “candidate-related political activity” for 501(c)(4) social welfare organizations.  The IRS also posed questions concerning what the upper limit of candidate-related political activity should be (opinions range between 49% and zero), and whether the definition should apply to all 501(c) exempt organizations.

Some of the comments were very detailed and substantive.  Others were brief expressions of outrage at the prospect of government suppression of free speech.  Still others decried the intrusion of undisclosed “dark money” into American elections through the tax-exempt system.  One evaluation of the organizations represented in the comments found that two-thirds of all comments favored continuation of the IRS rulemaking, but that serious changes were needed to protect nonpartisan civic engagement while calling out big-money abuses of tax-exempt status.

Our Top 25 attempts to recognize those substantial comments supported by broad segments of the nonprofit sector, the most thoughtful critiques and alternative configurations, and the positions taken by some of the most influential organizations.

Our Top 25 counts down from #25 to #1, so stay tuned as each day we’ll unveil another read-worthy comment.

We now present you with #25:


#25: Stephen Colbert

It’s less than a page, and it’s by Stephen Colbert.  Yes, the Stephen Colbert.

We open with Stephen Colbert’s comments not because they’re our least favorite, nor because they’re informative, but because they are perhaps the shortest and the most entertaining of the bunch.  And they succinctly illustrate why the IRS rulemaking must continue:  we wouldn’t want to miss his testimony at the public hearing.

Consider this an amuse-bouche to the remaining 24 on our list.