Tax Planning and Compliance for Tax-Exempt Organizations, 6th Edition

CHAPTER 23Electioneering and Lobbying

• § 23.3 Tax on Political Expenditures
  • (e) IRS Guidance on Political Activity

§ 23.3 Tax on Political Expenditures

(e) IRS Guidance on Political Activity

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Rev. Rul. 2004-6, 2004-1 C.B. 328, analyzes six situations to determine whether the organization described in each has expended funds for a § 527(e)(2) exempt function as a result of an advocacy communication on a public policy issue. A § 527(e)(2) exempt function means “the function of influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any federal, state or local public office or office in a political organization, or the election of Presidential or Vice-Presidential electors, whether or not such individual or electors are selected, nominated, elected, or appointed.” All the facts and circumstances must be considered when making this determination. Factors that tend to show that an advocacy communication on a public policy issue is for a § 527(e)(2) exempt function include, but are not limited to, the following:

• The communication identifies a candidate for public office;
• The timing of the communication coincides with an electoral campaign;
• The communication targets voters in a particular election;
• The communication identifies that candidate's position on the public policy issue that is the subject of the communication;
• The position of the candidate on the public policy issue ...