The IRS has just proposed new regulations that would effectively prevent many so-called 501(c)(4) organizations from engaging in political activity. These regulations are deeply flawed both from tax and First Amendment perspectives and should be opposed by anyone who supports free speech. Unfortunately, there seems to be a great deal of confusion about what 501(c)(4) organizations are and why they are tax-exempt (though donations to them are not tax-deductible). Once these points are understood, the unfairness of the proposed new regulations is laid bare. A 501(c)(4) organization is not a charity. Charities are organized under a different section of the Internal Revenue Code, section 501(c)(3), and gifts to them are generally deductible from the donor’s taxable income. A 501(c)(3) organization exists for religious, educational, charitable, scientific, literary, or other similar purposes and is prohibited from participating in political activities.
Don’t Tax Political Speech | National Review Online
