IRS sniffing around 501(c)(4) groups (Jack Bog's Blog)

The federal tax agency is reportedly checking up to see whether "social welfare" groups, exempt from tax under section 501(c)(4) of the tax code, are really that, or just political action committees by another name -- especially since the 501(c)(4)'s can keep their donors secret, while PACs can't. The Tea Party groups that have been contacted are screaming discrimination, but even The New York Times thinks it's time that these organizations, all across the political spectrum, are reformed.

The Huffy had a piece on this on Friday, and another one on March 1, and we found these passages pretty interesting:

The tea party was first widely emblazoned on the public's mind for their noisy opposition to President Barack Obama's health care overhaul at congressional town hall meetings in the summer of 2009. Support from its activist members has since helped nominate and elect conservative candidates around the country, though group leaders say they are chiefly educational organizations.
They say they mostly do things like invite guests to discuss issues and teach members about the Constitution and how to request government documents under the Freedom of Information Act. Some say they occasionally endorse candidates and seek to register voters.

"We're doing nothing more than what the average citizen does in getting involved," said Phil Rapp, executive director of the Richmond Tea Party in Virginia. "We're not supporting candidates; we are supporting what we see as the issues."...

The tax code requires 501(c)(4) groups to be operated "exclusively" for social welfare purposes -- which does not include intervention in political campaigns. The IRS has allowed the groups to engage in political activity as long as it was not their primary purpose. But for many of these groups, it's hard to see what other purpose they could possibly have.

It's also hard to see why a political group would file under section 501(c)(4) instead of under Section 527 -- the part of the tax code explicitly designed for political groups including PACs and super PACs -- other than to hide its donors. Like the C4s, the 527 groups are allowed to raise unlimited funds and pay no taxes. They just have to disclose who donates money.

Hmmmmm... 501(c)(4)... associated with a particular candidate... same office address as his campaign office... says it's "getting out the vote"... think it's worth the IRS taking a look?

Comments (7)

Yes....but...but...but...corporations are people! Mittens says so! Along with a few dems.
I don't care which side of the political spectrum one leans, there is way too much of these kinds of activities and it damages our country.

Posted by Portland Native | March 12, 2012 10:03 AM

I'm concerned that we get caught up in the details of the Jefferson Smith experience, and lose sight of the big picture: Mainly, that he's a pompous, disingenuous jerk.

Posted by Bill McDonald | March 12, 2012 10:14 AM

That "transportation vehicle project" was the first thing that came to mind as I started to read this.

All aboard!

Posted by Mike (one of the many) | March 12, 2012 10:14 AM

By the way, on a visit last Friday, the office ... associated with a particular candidate... was locked up.

A woman, in an orange safety vest, coming out of the building asked me who I was there to see. I didn't want to lie, and hadn't thought to line up a meetiing with some other tenant, so I told her I wanted to see the Lithuanian consul. "Oh, Randy's not here", she said, and "I can't let you in today". She then walked over to my vehicle and looked it over before meeting some other "creative" looking folks who gave me the fish-eye. Since I wasn't wearing my usual "homeless" attire, I wondered who, or what, they thought I was.

You don't suppose they read your post and the comments from last week, eh?

My favorite part was the "Scooter Parking" sign.

To be fair, it appears that this building and parking lot are connected with Tazo, as well as the other, possibly hinky, stuff.

Posted by cc | March 12, 2012 10:17 AM

Hmmm, I thought 501(c)(4)groups were allowed to be politically active w/o restraint. I've been around that question off and on for over a year, concerning whether there would be any advantage for a certain 501(c)(3) to either go c4 or have a second c4 status.

Better brush up, it seems! Another meeting is coming up soon.

Posted by Starbuck | March 12, 2012 10:29 AM

Isn't anyone concerned about the apparent use of the IRS for political purposes ?

Posted by tankfixer | March 12, 2012 6:33 PM

Not as long as they persecute both sides. Go by Bus!

Posted by Jack Bog | March 12, 2012 8:31 PM

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Monday, March 12, 2012

IRS sniffing around 501(c)(4) groups

Comments (7)

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