New Report Highlights Experts' Call for Consistency in IRS Treatment of Charities at Election Time

-For Immediate Release-
November 1, 2007

Contact: Brian Gumm, (202) 234-8494,

New Report Highlights Experts' Call for Consistency in IRS Treatment of
Charities at Election Time

WASHINGTON, Nov. 1, 2007—Today, OMB Watch released a report summarizing an Aug. 3 panel discussion that addressed the pros and cons of creating a bright-line rule defining what is and is not prohibited partisan intervention in elections by charities and religious organizations.

The panelists — Gregory Colvin of Silk Adler & Colvin; Beth Kingsley of Harmon Curran Spielberg & Eisenberg; Marcus Owens of Caplin & Drysdale; and Karl Sandstrom of Perkins Coie — are legal experts on nonprofit tax and election law. They addressed problems created by the current method of applying the partisan intervention standard enforced by the Internal Revenue Service (IRS). The panelists called for changes to the current IRS rules on campaign intervention by charities and debated the pros and cons of different approaches for bringing about such a change.

Under the current tax code, charities, religious organizations and all other 501(c)(3) organizations are banned from participating or intervening in any political campaign on behalf of, or in opposition to, any candidate for public office. The IRS relies on a facts and circumstances test to determine on a case-by-case basis what is and is not permissible activity by charities. Partisan intervention can be either direct or indirect and is "not limited to the publication or distribution of written statements or the making of oral statements on behalf of or in opposition to candidates."

Although the ban is over fifty years old, IRS regulations do not clearly define political intervention, and the case law on the topic is limited. Additionally, IRS enforcement of the ban takes place largely in secret because Section 6103 of the tax code prohibits the IRS from disclosing information about its investigations. As a result, charities have little precedent to guide their decision making.

"For charities concerned with the policies of the government — whether their focus is on the environment, taxation, children's welfare, or gun laws — the vagueness of the IRS facts and circumstances test has left the line between acceptable policy advocacy and unlawful political intervention extremely hazy," said Kay Guinane, Director of Nonprofit Speech Rights at OMB Watch and moderator of the panel discussion.

Guinane added, "Nonprofit leaders' confusion has intensified as the increasing cost of political campaigns has forced many legislators to double as candidates for much of their tenure in office."

The report, titled Overcaution and Confusion: The Impact of Ambiguous IRS Regulation of Political Activities by Charities and the Potential for Change, contextualizes the points of consensus and debate that emerged during the August panel discussion. Those points included the following:

  • In an increasingly complex world, the IRS is failing to provide adequate guidance on what constitutes political intervention
  • Internet communications pose special problems
  • The ambiguity of current IRS rules limits civic engagement and issue advocacy by charities and religious organizations
  • Given recent developments, including the U.S. Supreme Court decision in FEC v. Wisconsin Right to Life, the time is right for the charitable community to push for clear rules
  • Debate on the preferred form of revised guidelines (e.g., a bright-line rule) reflects a need to balance prevention of partisan activity and protection of issue advocacy
  • Charities have several options for effecting a change in the rules, but the most promising path requires strong consensus and collaboration across the sector

The report concludes by identifying near-term actions the charitable community could take to initiate an effort to clarify the IRS's rules. The long-term goal of such an effort would be to clear the path for charities to engage more fully in democratic discourse.

The report is available online at /files/npadv/paci2rpt.pdf.

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OMB Watch is a nonprofit watchdog organization dedicated to promoting government accountability, citizen participation in public policy decisions, and the use of fiscal and regulatory policy to serve the public interest.

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