Now that the Federal Election Commission last week opted not to take its rules on 527 political groups back to the drawing table, most of these groups are expressing satisfaction with the decision. And, some say, they can move ahead with activities without fear of having the FEC rules change on them as the 2006 election approaches.

For more on the case, see the Campaign Legal Center's website.

Posted by Jennifer Lowe, 05:33:14 PM



Lobby Reform Takes Backseat to Election Year Legislation
While serious - or any - negotiations have yet to begin on lobby reform legislation passed by both the House and the Senate over a month ago, the Senate is preparing to focus on inflammatory issues designed to rally its base.

Up next for the Senate:votes aimed at blocking gay marriage, banning flag burning and repealing the estate tax.

Posted by Jennifer Lowe, 05:09:15 PM



Commentary on Recent IRS Comments
Insightful commentary on the recent IRS comments on 501(c)(3) election activities by a new nonprofit blog, "The Nonprofit Blog", by the Vivero Group/501cstrategies.

Posted by Jennifer Lowe, 05:04:02 PM



Grassley Looking at Tax-Exempt Organizations Again
An article in BNA this morning indicates that Grassley is interested in looking at the 501c4 - 527 connection.

Grassley's letter said that, as the Justice Department continues its investigation into congressional corruption, the Finance Committee has reviewed numerous documents relating to charities and social advocacy organizations directly or indirectly related to former lobbyist Jack Abramoff, as well as similar groups with "patterns akin to those associated" with Abramoff. Grassley said he is concerned that some of those groups are disguising lobbying and political activities, in violation of their tax-exempt status.

While not related to Abramoff, Grassley said he is most concerned about the circumvention of the requirements of Internal Revenue Code Section 527 by the use of 501(c)(4) organizations. Grassley wrote about a number of concerns, among them that some of the organizations' activities might generate unrelated business taxable income, and asked Korb to detail whether he receives cases or ruling requests involving these issues and if IRS plans to issue any guidance in the area.

From BNA:

A statement releasing the new study said it showed that contribution limits do not increase the contribution bias in favor of incumbents or increase the differences in fund-raising among gubernatorial candidates in general. Contribution limits benefit challengers by decreasing the ratio of contributions made to incumbents versus challengers by "policy-oriented" contributors, including corporations, labor unions, and political action committees (PACs), the study found.

"This study confirms what common sense and previous research strongly suggest--leveling the playing field through reforms such as contribution limits is not bad for challengers," said one of the report's authors, State PIRGs Democracy Advocate Adam Lioz.

IRS Reminds Charities to Avoid Campaign Activities This Election Season

IR-2006-87, June 1, 2006

WASHINGTON — This election season the Internal Revenue Service reminds charities to avoid becoming involved in political campaign activities.

In the 2004 elections, the IRS noticed an upturn in politicking on the part of 501(c)(3) organizations. The agency responded by increasing its educational efforts and launching an enforcement program, the Political Activity Compliance Initiative (PACI), to investigate specific, credible allegations of wrongdoing.

“While the vast majority of charities and churches do not engage in politicking, an increasing number did take part in prohibited activities in the 2004 election cycle,” IRS Commissioner Mark W. Everson said. “The rule against political campaign intervention by charities and churches is long established. We are stepping up our efforts to enforce it.“

The IRS has put procedures into place for the 2006 election season to more quickly address instances of potential prohibited activity on the part of charities, churches and other tax-exempt organizations. The procedures are meant to ensure that public referrals as well as activities the IRS itself uncovers are reviewed expeditiously and treated in a consistent, fair and nonpartisan manner.

As a rule, charities, religious organizations such as churches, educational organizations and other groups that are tax-exempt under section 501(c)(3) of the tax code may not participate or intervene in any political campaign on behalf of or in opposition to any candidate for public office.

This prohibition means 501(c)(3) organizations may not endorse candidates, distribute statements for or against candidates, raise funds for or donate to candidates or become involved in any activity that would be either supportive or opposed to any candidate. Whether an organization is engaging in prohibited political campaign activity depends upon all the facts and circumstances in each case. For example, organizations may sponsor debates or forums to educate voters. But if the debate or forum shows a preference for or against a certain candidate, it becomes a prohibited activity.

Federal courts have ruled that it is not unconstitutional for the tax law to impose conditions, such as the political campaign prohibition, upon exemption from federal income tax. This position was most recently upheld in Branch Ministries v. Rossotti, 211 F.3d 137 (D.C. Cir. 2000).

more information, see:

IRS Fact Sheet 2006-17, Election Year Activities and the Prohibition on Political Campaign Intervention for Section 501(c)(3) Organizations http://www.irs.gov/newsroom/article/0,,id=154712,00.html
IRS Reports on Political Activity Compliance Initiative http://www.irs.gov/charities/article/0,,id=154622,00.html
Procedures for the 2006 Election Season http://www.irs.gov/pub/irs-tege/paci_procedures-feb_22_2006.pdf.pdf
IRS Publication 1828, Tax Guide for Churches and Religious Organizations http://www.irs.gov/pub/irs-pdf/p1828.pdf

In a country that spends so much time extolling the glories of democracy, it's amazing how many elected officials go out of their way to discourage voting. States are adopting rules that make it hard, and financially perilous, for nonpartisan groups to register new voters. They have adopted new rules for maintaining voter rolls that are likely to throw off many eligible voters, and they are imposing unnecessarily tough ID requirements.

Bob Bauer's Blog

Kate Phillips, "Election Panel Won't Issue Donation Rules," New York Times (May 31, 2006).

Posted by Jennifer Lowe, 10:50:44 AM



FEC Will Provide Further Explanation on 527s Instead of New Rule
The Federal Election Commission voted yesterday, 4 to 2, not to appeal a U.S. District Court opinion mandating either a new rulemaking or further explanation of the political committee definition - specifically, how "527s organizations" are regulated.

According to the Washington Post,

[Commissioner Michael] Toner said he sought to write a rule severely restricting contributions to 527 groups, but lost the vote yesterday. He was joined by fellow Republican Hans A. von Spakovsky. All three Democrats on the commission -- Robert D. Lenhard, Ellen L. Weintraub and Steven T. Walther -- joined Republican David M. Mason in the majority vote.

Legislation has passed the House regulating 527 organizations. It has been folded into the House lobby reform bill currently awaiting conference with the Senate. Senate Democrats will likely oppose the measure.

Posted by Jennifer Lowe, 10:47:31 AM