On June 8, the Internal Revenue Service (IRS) released a report on the initial results of its 2006 program enforcing the ban on partisan electioneering by charities and religious organizations. The same day, it also released Revenue Ruling 2007-41, which provides guidance nonprofits can rely on in planning permissible voter education and mobilization activity. The results of the enforcement program to date show a continued low level of violations.

Overall, the IRS received 237 complaints for the 2006 election season. Of these, 137 were dismissed after the initial review, and the remaining 100 were investigated. 44 percent of these are religious organizations. The IRS has completed 40 investigations, and none merited revocation of exempt status. Written advisories were issued in 26 cases, and 14 were dismissed after further investigation. The types of activities selected for investigation indicate that many cases occur in gray areas of the law, such as allowing candidates to speak at organizational functions or distributing printed materials. This makes the new guidance a welcome development, but clearer rules are still needed.

The report said the IRS now tracks organizations that received written advisories as a result of activities in 2004 to see if there are further violations, using quarterly Internet searches to review publicly available documents and news reports.. So far, there have been "no instances of repeat political intervention." Another new development is the Political Contributions Sub-Project. It compares state data on campaign finance contributions with the IRS lists of 501(c)(3) organizations. It found 269 cases of possible direct campaign contributions by charities, which are not permitted to make campaign contributions. In the 92 cases investigated, 65 organizations received written advisories, and no violations were found in 21 cases (the match appeared to be due to errors in state databases).

The guidance in the new Revenue Ruling uses 21 examples to illustrate permissible and impermissible activities of voter education, registration and participation efforts, activities of individuals, candidate appearances, issue advocacy, renting facilities, mailing lists and other business activities, and web sites. While it leaves many gray areas undefined, it makes two important points:

• "Section 501(c)(3) organizations may take positions on public policy issues, including issues that divide candidates in an election for public office."
• Issue advocacy communication "is particularly at risk of political campaign intervention when it makes reference to candidates or voting in a specific upcoming election."

For a summary of the Revenue Ruling, click here.