IRS Open to Feedback on Proposed 501(c)(4) Rules

As the IRS begins sifting through a record number of comments on a single proposed rule, the agency said it will seriously consider that feedback before finalizing regulations that would restrict political activity by tax-exempt social welfare groups.

Internal Revenue Service Commissioner John Koskinen said last week that the agency is just beginning to sift through more than 150,000 comments it received on proposed rules restricting political activity by 501(c)(4) groups and will be looking for specific feedback and suggestions on ways to improve the rules.

“It’s clear we’ve got a lot of very thoughtful comments and they all deserve to be read and reviewed.”

The proposed rules, which the IRS issued last fall, are intended to clarify how much political activity is allowable by groups that hold tax-exempt status as social welfare organizations. The rules would expand the definition of “candidate-related political activity” to include activities such as candidate forums, meet-and-greets, get-out-the-vote efforts, and voter education. The IRS also asked for comments on whether the new rules should be applied to 501(c)(5) labor groups and 501(c)(6) trade and professional associations as well.

The IRS received an unprecedented number of comments on the proposed rules, although many of them are duplicative. But Koskinen said all the comments will be carefully read and considered.

The duplication “doesn’t mean you would discount them,” he told reporters after a congressional hearing this week. “In fact, if 42,000 people all said the same thing, it would be important to know that 42,000 people felt that way. It’s clear we’ve got a lot of very thoughtful comments and they all deserve to be read and reviewed.”

Koskinen said that the IRS will schedule a public hearing on the rules sometime this summer and that the rulemaking process will likely continue through the end of the year. One of the primary considerations in the process is determining how many types of tax-exempt organizations the rules should apply to, he said.

“I can’t tell you where we’re going to come out on that,” he said. “It’s really a question of trying to be educated by people who will tell us what’s the impact if this applies to someone other than a 501(c)(4).”

ASAE submitted comments to the IRS in February [PDF] asserting that the expanded definition of political activity in the proposed rulemaking would regulate far more speech or advocacy than is warranted and could create a chilling effect on the role nonprofit organizations play in fostering civic engagement and democracy.


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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