On November 26, 2013, The Treasury Department and IRS released proposed regulations under Section 501(c)(4) of the Internal Revenue Code. The proposed regulations define more clearly permissible political activities of organizations operated exclusively for the promotion of social welfare under Section 501(c)(4). The proposed regulations when finalized, will replace the existing “facts and circumstances” test with a “bright-line rule” to determine when 501(c)(4) organizations are engaged in political activities that do not promote social welfare.
The proposed regulations provide that the promotion of social welfare does not include direct or indirect “candidate-related political activity”. The term “candidate-related political activity” is defined as certain communications, contributions and election-related activities that do not promote social welfare. The definition of communications, contributions and election related activities are outlined below:
The IRS and Treasury Department invite comments on the proposed changes and other aspects of the tax-exempt qualification requirements, including what proportion of a 501(c)(4) organization’s activities must promote social welfare, and whether similar standards should be adopted regarding 501(c)(5) and 501(c)(6) organizations to standardize the class of political activities that do not further the tax-exempt purposes. Written or electric comments must be received by February 27, 2014.
Click here for a full copy of the proposed regulations.