Proposed Rules May Curtail Political Activities by Nonprofit Organizations

Summary -

Last week, the Internal Revenue Service (“IRS”) published a proposed rule concerning the political activities of nonprofit organizations. The proposed rule may make it significantly more difficult for certain politically active organizations to claim tax-exemption under Section 501 of the Internal Revenue Code (“Code”).

Increasing Role of 501(c)(4)s in U.S. Elections -

Before 2010, most nonprofit organizations participating in U.S. elections were traditional political committees (“PACs”) that, under federal and state elections regulations, are generally required to disclose publicly all their donors and expenditures. Since 2010, however, nonprofit organizations that are not PACs have played an increasingly important role in U.S. elections. 501(c)(4) organizations have been particularly important in the shift, and are estimated to have spent more than $300 million in federal elections during the 2012 cycle.

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IRS
Tax

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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