IRS Examining 501(c)(4) Groups’ Tax Status

The agency is evaluating whether the groups are more political than charitable.

The IRS is examining more than 70 section 501(c)(4) social welfare organizations, in some cases to determine if their primary purpose is in fact political, Sen. Carl Levin (D-MI) said last week.

The IRS has not revoked the tax-exempt status of any 501(c)(4)s in the past six months.

But while the IRS is scrutinizing many 501(c)(4) groups, agency officials told Levin that they have not revoked the tax-exempt status of any 501(c)(4)s in the past six months. Steven Miller, IRS deputy commissioner for services and enforcement, said in a letter to Levin that examinations typically look at activities during the complete tax year at hand.

Section 501(c)(4) groups are not banned from political activities as long as it’s not their primary purpose. Political activity by 501(c)(4) organizations has fallen under congressional and public scrutiny because these groups have spent millions of dollars on campaign activities in the two-plus years since the Supreme Court’s Citizens United ruling.

Levin took issue with the IRS response to organizations he said are “misusing our tax code for political gain.”

“The IRS – the organization that grants these groups their tax-exempt status in the first place – should be protecting the voting public from these groups that pretend to be acting in the social welfare but are instead engaging in partisan politics,” Levin said.

(photo by 401(K) 2012/Flickr)

Chris Vest, CAE

By Chris Vest, CAE

Chris Vest, CAE is vice president, corporate communications and public relations at ASAE. MORE

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