Tax Planning and Compliance for Tax-Exempt Organizations, Fifth Edition 2019 Cumulative Supplement, 5th Edition
by Jody Blazek
CHAPTER 6Civic Leagues and Local Associations of Employees: § 501(c)(4)
§ 6.1 Comparison of (c)(3) and (c)(4) Organizations
*p. 136. Add after second sentence at top of page:
Distinguishing between social welfare activities and campaign activities,1 the 1959 regulations for § 501(c)(4) state: “The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office,” similar to statutory restrictions on § 501(c)(3) EOs. Controversy has affected this exemption category since 2013. The issue was created by the fact that neither the tax code nor the regulations provide specific dollar limitations on electioneering expenses. The code says the § 501(c)(4) must operate “exclusively,” a term generally understood to mean 85 percent or more of expenditures, as do the regulations.2 The IRS did allow some campaign activity as long as social welfare activity was essentially seen as “primary.” Identifying activity that is clearly promotion of social welfare rather than advocacy for a candidate who supports changes in laws is difficult.3 Due to the lack of a precise expense limit, many § 501(c)(4) ...