Showing posts with label 501(c). Show all posts
Showing posts with label 501(c). Show all posts

No (c)(4) status for entities connected to parties

Election Law Blog:
"The IRS has released rulings denying 501(c)(4) status to three different organizations, on the grounds that the organizations’ activities are “conducted primarily for the benefit of a political party and a private group of individuals, rather than the community as a whole.”

Though identifying information was redacted in the rulings, the IRS determined that all three organizations sought, as their primary activity, to train and recruit members of an (undisclosed) political party to run for public office."

Politics and the gift tax: The role of noncharitable exempt organizations

Loyola Law School | Faculty Blog:
"The current gift tax treatment of transfers to section 501(c)(4) organizations is an anomaly. Under the Internal Revenue Code, neither transfers to charitable organizations nor transfers to political organizations are subject to the gift tax. Yet, transfers to section 501(c)(4) organizations, which can share features of charities and political organizations, enjoy no such statutory exception. Perhaps the current furor over IRS enforcement of the gift tax for transfers to section 501(c)(4) organizations will impel Congress to do what it should have done long ago and change the law and provide a statutory exception for such transfers. At the same time, as I have suggested in a recent article, Congress could reconsider the disclosure rules applicable to section 501(c)(4) organizations."
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Huffington Post: IRS To Take On Karl Rove? Tax Laws Could Take A Bite Out Of Secret Political Spending

Democracy 21 :
"Republican political strategist Karl Rove's method of secretly funneling unlimited contributions from big donors was so hugely successful in the 2010 campaign that Democrats are now trying to copy it. But his model may yet end up backfiring spectacularly.

In one scenario, groups like Rove's Crossroads Grassroots Political Strategies could find themselves subject to massive fines, ranging as high as 35 to 70 percent of the money they received in secret donations.

In another scenario, their deep-pocket donors could be hit by a 35 percent tax on their contributions."
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Republican Redistricting Efforts Bankrupt for 2011?

Roll Call:
"Republicans are in danger of entering the next stage of redistricting at a significant financial disadvantage thanks to a cash-strapped Republican National Committee and a high-profile outside group that never got off the ground.
In 2009, former Senate Majority Leader Trent Lott (R-Miss.), former Speaker Newt Gingrich (R-Ga.) and GOP lobbyist Charlie Black were part of a group that started Making America’s Promise Secure. The 501(c)(4) was supposed to handle the analytical and legal legs of the redistricting tripod for the GOP.
Traditionally, the RNC centralized the Republican redistricting effort using soft money donations. But the Bipartisan Campaign Reform Act of 2002 banned soft money and left Republicans scrambling to reconfigure their redistricting strategy."

CRS Report: The state of campaign finance policy

These CRS Reports are always helpful in summarizing recent cases and FEC activity, especially for those who aren't experts in the area.


Both minor and major changes have occurred in campaign finance policy since 2002, when Congress last substantially amended campaign finance law via the Bipartisan Campaign Reform Act (BCRA). More recently, the Supreme Court’s 2010 ruling in Citizens United v. Federal Election Commission and a related lower-court decision, SpeechNow.org v. Federal Election Commission, arguably represent the most fundamental changes to campaign finance law in decades. During the 111th Congress, the House responded by enacting the DISCLOSE Act (H.R. 5175; S. 3295; S. 3628). The Senate has, thus far, declined to do so.
Fundraising and spending in the 2010 election cycle suggest that previously prohibited sources and amounts of funds will continue to be a factor in federal elections. Activities by independent expenditure-only political action committees (commonly called super PACs) and tax-exempt organizations that are typically not political committees (e.g., many Internal Revenue Code 501(c) and 527 organizations) may be particularly prominent.
Despite these recent developments, some traditional aspects of campaign finance policy, such as disclosure requirements and most contribution limits, remain unchanged. Issues such as the presidential public financing program and the Federal Election Commission may require congressional attention regardless of more recent developments. In addition, the Supreme Court will continue examining campaign finance issues during the 112th Congress. Arizona Free Enterprise, et al. v. Bennett and McComish v. Bennett appear to be most relevant for state-level policy, but might also affect federal campaign finance law or legislation in Congress.

Applying Citizens United and the First Amendment to the IRC § 501(c)(3) Political Prohibition

The Federalist Society:
Citizens United and other cases dealing with core speech affect the tax exempt sector in at least three ways. First, IRC § 501(c)(3) and the Service’s enforcement thereof must comport with the procedural due process requirement that a law provides fair notice of the conduct it prohibits. Second, the political prohibition is unconstitutionally vague on its face and as applied to charities engaging in political issue education and advocacy. Third, Citizens United casts serious doubt on the veracity of the “alternate channel doctrine” (ACD), which allows speech-related prohibitions on an entity so long as there exists an alternative route or channel by which an entity may engage in those activities.

Very interesting read.

SEIU, American Crossroads look back at 2010 spending

POLITICO.com:
"Forti said he wasn’t sure whether GPS’s donors would have contributed had they faced the prospect of having their identities publicly revealed. “I don’t know if those people who gave to GPS would have given to the 527 or not. That’s impossible to know,” he said. “But they were more comfortable giving to a (c)4, so we created one.”

American Crossroads, which initially struggled to raise money, is incorporated under section 527 of the tax code, enabling it to accept unlimited contributions, but requiring it to publically disclosure its donors’ identities.

Meanwhile, section 501(c)4 of the code, under which Crossroads GPS is incorporated, allows groups to shield their donors’ identities, but requires them to spend a majority of their cash on apolitical purposes – an obligation Democratic critics say Crossroads GPS and other right-leaning groups flaunted during the campaign, when they bombarded Democratic candidates with bitingly critical ads.

“Disclosure was very important to us, which is why the 527 was created,” Forti said. “But some donors didn’t want to be disclosed and, therefore, a (c)4 was created,” Forti explained, referring to Crossroads GPS."

Axelrod Calls for End to Mystery Donors

Roll Call: "Outside groups favoring GOP candidates and causes are pummeling Democratic-leaning outside groups in spending. The administration has argued that because the groups are not required to disclose their donors, foreign money could be playing an illegal role in U.S. politics, but it has not been able to show evidence to back up the accusation.

Axelrod sought to make the broader point during an appearance on CNN’s “State of the Union” that voters do not know the source of the money behind the campaign ads of groups known as 501(c)s. The nonprofit organizations are not obligated to disclose donors if their primary mission is not political."

Hey, Secret Big Political Donor, Don’t Forget The 35% Gift Tax

Forbes: "A Los Angeles tax lawyer is telling clients such gifts could be subject to the federal gift tax, which is a hefty 35% this year but is scheduled to rise to a weightier 55% on January 1.

In a memo, Ofer Lion, a lawyer with Mitchell Silberberg & Knupp who specializes in nonprofit organizations, writes that unlike contributions to certain other political organizations, there is no gift-tax exemption written into federal law for contributions to 501(c)(4)’s, which the IRS officially classifies as social-welfare organizations but also are often used for lobbying. And that, he says, raises the possibility that down the road the Internal Revenue Service might come calling for the tax, plus interest, plus penalties. “The IRS may well find irresistible the potential revenue to be raised from assessing gift taxes on 501(c)(4) contributors,” writes Lion."

News Links 10/07/2010 (p.m.)


Posted from Diigo. The rest of my favorite links are here.

Democrats mounting attack on outside political spending

Radio Business Report/Television Business Report - Voice of the Broadcasting Industry: "The Supreme Court’s Citizens United ruling has opened the money spigots, and allowed unaffiliated political organizations to attack candidates without revealing who is funding the advertising. Democrats are charging that illegal foreign cash is finding its way into the process, and are attempting to enlist the IRS and FEC to investigate.
Max Baucus (D-MT) is trying to bring the IRS into the issue. He says that entities operating as 501(c) organizations are supposed to have a reason for being other than the elect and/or defeat political candidates. He thinks that many such organizations operating this year were formed specifically for political purposes and warrant investigation. One prominent target, among many, is Karl Rove’s American Crossroads."
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Baucus seeks probe of GOP groups

POLITICO.com: "Political spending by 501(c)4 groups appears to be on the rise across the board, but thus far, neither the IRS nor the Federal Election Commission, which is charged with enforcing election laws, have signaled they intend to look into the groups’ spending.
Baucus leads the Senate Finance Committee, which has oversight authority over non-profits and the IRS, and in his letter he asked the IRS to identify “possible violation of tax law” and suggested those could result in non-profits losing their tax-exempt status. He also indicated that based on the IRS’s findings he might open his own committee investigation and may “take appropriate legislative action.”
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Weekly Wrap-Up -- State of Elections

From State of Elections.com:
Fox News wants to make sure their viewers know they don’t endorse Democrats. The network has sued Democratic Senate candidate Robin Carnahan for copyright violations based on a campaign ad.

Dreaming of a Third Party? Libertarians in Georgia are dreaming of a permanent place on the ballot. Their gubernatorial candidate, John Monds, is polling at 9% while the Republican candidate, Nathan Deal, continues to have financial problems. If Monds can capture over 20% of the vote, the Libertarians will be considered a “political party” under state election law, allowing them to hold primary elections and be guaranteed ballot access in future races.

Texting to support a candidate may soon be more than simply asking your friends to vote for someone. Cell phone carriers are seeking approval from the Federal Election Commission to allow customers to make campaign donations via text message, similar to the recent campaigns for donations to help victims in Haiti and Pakistan.

Politically motivated non-profit organizations have been cropping up in order to campaign for parties or candidates without having to reveal where their donor money is coming from. Groups such as Crossroads Grassroots Policy Strategies are listed as 501(c)(4) non-profit corporations, but spend millions on political advertisements while taking advantage of an exemption that allows non-profits to keep their donor list to themselves.
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