IRS Reminds Charities to Avoid Political Campaign Activities During Election Season

The Internal Revenue Service (IRS) reminds charities to avoid becoming involved in political campaign activities during the coming election season. As a rule, charities, religious organizations such as churches, educational organizations and other groups that are tax-exempt under section 501(c)(3) of the tax code, may not participate or intervene in any political campaign on behalf of, or in opposition to, any candidate for public office.


Advertisement


“While the vast majority of charities and churches do not engage in politicking, an increasing number did take part in prohibited activities in the 2004 election cycle,” IRS Commissioner Mark W. Everson said in a prepared statement. “The rule against political campaign intervention by charities and churches is long established. We are stepping up our efforts to enforce it.”

The IRS has put procedures into place for the 2006 election season to more quickly address instances of potential prohibited activity on the part of charities, churches and other tax-exempt organizations. The procedures are meant to ensure that public referrals, as well as activities the IRS itself uncovers, are reviewed expeditiously and treated in a consistent, fair and nonpartisan manner.

The IRS noted an increase in politicking by 501(c)(3) organizations during the 2004 election season. The agency responded by increasing its educational efforts and launching an enforcement program, the Political Activity Compliance Initiative (PACI), to investigate specific, credible allegations of wrongdoing. For 501(c)(3) organizations, wrongdoing includes:

  • Endorsing candidates
  • Distributing statements for or against candidates
  • Becoming involved in any activity that would be in support or in opposition to any candidate.

Whether an organization is engaging in prohibited political campaign activity depends upon all the facts and circumstances in each case. For example, organizations may sponsor debates or forums to educate voters. But if the debate or forum shows a preference for or against a certain candidate, it becomes a prohibited activity.

Federal courts have ruled that it is not unconstitutional for the tax law to impose conditions, such as the political campaign prohibition, upon exemption from federal income tax. This position was most recently upheld in Branch Ministries v. Rossotti, 211 F.3d 137 (D.C. Cir. 2000).

The IRS published a Fact Sheet on Election Year Activities and the Prohibition on Political Campaign for Section 501(c)(3) Organizations in February of this year. The Fact Sheet provides information to help Section 501(c)(3) organizations stay in compliance with the federal tax law, however, it is not intended to replace the law or be the sole source of information. In addition, churches and religious organizations can find further guidance in Publication 1828: Tax Guide for Churches and Religious Organizations.

You may like these other stories...

A new government report on Monday found that the IRS may not be completing the required research steps in collecting delinquent taxes before considering the cases “not collectible.”The Treasury Inspector General...
The school year is off and running—have your start-up clients launched as well? It may make a big difference in tax status. If your clients can get their businesses up-and-running before the end of the year, they may...
Ernst & Young fiscal-year revenue rises 6% to $27.4 billionMichael Rapoport of the Wall Street Journal reported late Thursday that Ernst & Young's (EY) global revenue was $27.4 billion in its latest fiscal year,...

Already a member? log in here.

Upcoming CPE Webinars

Sep 30This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 9In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards.
Oct 15This webinar presents the requirements of AU-C 600, Audits of Group Financial Statements (Including the Work of Component Auditors).
Oct 21Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience’s communication style.