Prohibited Political Activity: New IRS Guidance for
501(c)(3) Organizations

Your charitable organization may be aware of the absolute prohibition on engaging in political campaigns, but are you also clear as to where the lines are drawn between permissible and impermissible political activities? If not, the IRS's recently issued Fact Sheet provides practical guidance to help section 501(c)(3) organizations understand what they can and cannot do during an election campaign. Since it appears from the IRS's recent review of political activities by charitable organizations that noncompliance is widespread, the Fact Sheet offers much-needed guidance.

Federal tax laws absolutely prohibit all section 501(c)(3) organizations from directly or indirectly participating or intervening in any political campaign on behalf of (or in opposition to) any candidate for elective public office. Violation of this prohibition can have serious consequences for the organization, including revocation of tax-exempt status and the imposition of excise taxes.

The IRS Fact Sheet discusses examples illustrating proper and improper conduct with regard to voter education activities of charities, individual activity by charity leaders, candidate appearances at charity-sponsored events, and the often fuzzy line between permissible “issue advocacy” and prohibited political campaign intervention. The Fact Sheet also addresses the circumstances under which the posting of material on a charity's website or the carrying on of a business activity by a charity (such as selling or renting mailing lists) can constitute impermissible political campaign intervention.

With the 2006 elections fast approaching, churches, schools, hospitals, social service providers, and other 501(c)(3) organizations would be wise to review the Fact Sheet, which can be accessed by clicking on the links in this article or by visiting the IRS website at: http://www.irs.gov/newsroom/article/0,,id=154712,00.html . We would also be happy to discuss your questions and concerns in connection with specific proposed activities your charity is considering this election year.

 

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© 2006 All rights reserved. Please note that the information contained herein is not intended to provide specific legal advice. You should consult with an attorney and not rely on any information contained herein regarding your specific situation.