Tax Planning and Compliance for Tax-Exempt Organizations, Fifth Edition 2014 Cumulative Supplement

CHAPTER 6

Civic Leagues and Local Associations of Employees: § 501(c)(4)

*§ 6.1 Comparison of (c)(3) and (c)(4) Organizations

§ 6.2 Qualifying and Nonqualifying Civic Organizations

*(a) Limitation on Involvement with Political Candidates (New)

§ 6.5 Disclosures of Nondeductibility

*(f) Excepted Organizations

§ 6.1 Comparison of (c)(3) and (c)(4) Organizations

p. 137. Add new bullet to parallel characteristics:

• Governance by sufficient independent directors or trustees to provide good governance is expected by the IRS.¹

^*p. 137. Add new bullets regarding (c)(4) characteristics:

• Donations to a § 501(c)(4) tax-exempt organization do not qualify for the charitable contribution deduction for income tax afforded to (c)(3) entities. Similarly, a (c)(3) entity qualifies for a gift tax deduction, and the gift tax code makes no mention of a (c)(4) entity.
• A (c)(4) entity qualifies for tax exemption if it meets the standards outlined previously. However, such “self-declared” entities may be required to apply for exemption in the future.

^*p. 137. Add to third bullet regarding political activity of (c)(4):

Revised standards for identifying permissible political activity are outlined in new § 6.2(a) later in this chapter.

§ 6.2 Qualifying and Nonqualifying Civic Organizations

^*p. 143. Insert new subsection after bullet list:

(a) Limitation on Involvement with Political Candidates (New)

Nonprofits that the tax code calls civic leagues must operate exclusively for the promotion of social welfare ...