Firm Cites Concerns With Holding on Political Ad Expenditure Tax

Dear Ms. Judson:

I understand that August 8^th is the deadline for the IRS to appeal the Parks Foundation Tax Court decision, 145 T.C. 12 (2015).

As you may recall when we ran into each other at the ABA Exempt Orgs Committee meeting on January 29^th, I had circulated a one-page reaction to the decision (attached) to those in attendance with particular alarm that a portion of the decision could greatly weaken the lobbying exception for nonpartisan analysis, study or research in the private foundation regulations under IRC Section 4945.

I also attach an article by Jack Cummings, "Private Foundation and Two-Sided Lobbying," from Tax Notes, May 2, 2016, making a similar critique in great and persuasive detail.

If left to stand, the Tax Court interpretation could lead to more unregulated money in politics as foundation funds could be used to pay for one-sided broadcast advertising in state and local ballot measure elections, as the Parks Foundation had done in Oregon in 2000.

Because the requirement to present both sides, in communications under the lobbying exception for nonpartisan analysis, is such a cornerstone of the IRS lobbying rules, the diminishment of this standard would have a collateral impact upon all 501(c)(3) organizations, including public charities, and upon all forms of lobbying, including congressional legislation on issues such as gun violence, minimum wage, health care, terrorism, civil rights, and all sorts of causes in which 501(c)(3) advocates would be eager to use tax-deductible funds without limit to present facts only on their side of the debate.

In my opinion, the law enforcement credibility of the Service to carry out the mandate of Congress enunciated in the Code, restricting the use of charitable funds for legislative influence, is at stake. I hope you agree.