In November, the Internal Revenue Service and the Treasury
Department released proposed regulations regarding permissible
political activity for Section 501(c)(4) organizations -- those
that are required to have social welfare as a primary
purpose.
The IRS received a record-breaking number of public comments on the
proposed regulations (over 150,000!), mainly from those who felt
the proposed rules were too restrictive on the activities of social
welfare organizations. Although the IRS originally planned to hold
a public hearing on the proposed regulations this summer, given the
extremely strong substantive response the IRS recently announced it
will first revise the proposed regulations before holding a public
hearing. Although the IRS has not announced what form the revisions
will take or when to expect a revised draft, IRS Commissioner John
Koskinen recently told lawmakers not to expect a revised version of
the rules until next year.
Under the existing rules, such organizations are permitted to
engage in an unlimited amount of lobbying and some lesser amount of
political activity, and are not required to disclose their donor
lists, thus permitting wealthy donors to anonymously spend money to
influence political campaigns. The proposed guidelines explicitly
define certain political activities as "candidate-related
political activities" and thus outside the category of social
welfare. Notably, nonpartisan activities, such as voter
registration drives, are included in the proposed guidance as
candidate-related political activities. Given that the proposed
rules are intended to limit advocacy on behalf of or against any
particular political candidate, one questions whether voter
registration drives and other nonpartisan activities are broadly
includable as candidate-related political activities. It will be
interesting to see if the revised draft of the guidance continues
to define such nonpartisan activities as outside the category of
social welfare.
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