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Fact Sheet Discusses Political Activity by Exempt Organizations

FEB. 27, 1997

FS-97-8

DATED FEB. 27, 1997
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Citations: FS-97-8
====== SUMMARY ======

The Service has released a fact sheet (FS-97-8) that discusses political activity by exempt organizations. The fact sheet notes generally that charities that are eligible to receive tax deductible contributions are prohibited from intervening in political campaigns. It discusses in general terms enforcement of the prohibition, penalties, and appeal rights.

====== FULL TEXT ======

February 1997

POLITICAL ACTIVITY BY EXEMPT ORGANIZATIONS

-- Charities exempt from tax under section 501(c)(3) and

 

eligible to receive tax deductible charitable contributions

 

are prohibited from intervening in political campaigns.

-- Charities exempt from tax under section 501(c)(3) and

 

eligible to receive tax deductible charitable contributions

 

may devote no more than an insubstantial amount of their

 

overall activities attempting to influence legislation

 

(lobbying).

-- While the IRS has published guidance on political campaign

 

intervention, the final decision on whether a charity has

 

intervened in a political campaign requires an analysis of

 

the facts and circumstances of that individual case.

-- Whether a charity has engaged in substantial lobbying depends

 

on the facts and circumstances of each case, but many

 

charities may make an election under section 501(h) to have

 

bright line rules apply in determining the permissible amount

 

of lobbying.

-- Many section 501(c) organizations that are not eligible to

 

receive tax deductible contributions, such as section

 

501(c)(4) social welfare organizations, section 501(c)(5)

 

labor unions and section 501(c)(6) trade associations, are

 

allowed to engage in extensive lobbying as well as

 

significant political campaign activity.

-- During the examination process, the organization under

 

examination does have significant administrative appeal

 

rights.

-- If IRS concludes that a charity intervened in a political

 

campaign, or engaged in substantial lobbying, the

 

organization could: 1) have its exempt status revoked, or

 

2) be subject to excise taxes.

-- If IRS revokes a charity's exempt status, section 7428

 

provides that the charity may file an action in court that

 

protects the tax deductibility of certain contributions until

 

the court decides the issue.

-- Judicial remedies are also available to donors denied

 

charitable deductions and to charities that are assessed an

 

excise tax based on lobbying or political campaign

 

intervention activities.

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