Category Archives: 501(c)(4)

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Discussion on IRS Rulemaking – Video Available

Ron Jacobs recently moderated a panel at the George Washington University Law School on the IRS’s proposed rules for political activity of 501(c)(4) organizations. The panelists included Cleta Mitchell of Foley & Lardner LLP, John Pomeranz of Harmon, Curran, Spielberg & Eisenberg, LLP, and Paul Ryan of the Campaign Legal Center. You can watch the presentation … Continue Reading

Down But Not Out: IRS Cites Political Activity in Denying Groups Tax-Exempt Status

The IRS recently denied tax-exempt status to two organizations based on their political activities. The two groups – whose names have been redacted from letters released by the agency – sought tax-exempt status under Section 501(c)(4), which is reserved for “social welfare” groups whose primary purpose is to benefit the general community. Controversy has been … Continue Reading

Venable Hosts Webinar on Government Affairs Compliance – January 16

Please join us for a webinar on January 16, 2014, at 1:00pm EST, which will provide a tune-up on government affairs compliance and examine recent trends. We will cover all the major topics you need to be thinking about as you ramp up for lobbying the new Congress and state legislatures and prepare for the mid-term elections: Forming and operating … Continue Reading

501(c)(4) Proposed Regulations—An Unsafe Harbor

On November 26, the Department of Treasury released proposed regulations billed as “more definitive rules” for when the IRS will treat certain activities by section 501(c)(4) organization as political activity. It is hard to argue that the proposal provides some clarity, but only by classifying a wide variety of activities as candidate-related and therefore not qualifying … Continue Reading

California Settles Case Involving Contributions to a Ballot Committee

The California Fair Political Practices Commission (“FPPC”) issued its largest fines ever on October 24, 2013, against two groups that allegedly served as conduits for millions of dollars spent on California ballot measures in 2012. Together, the groups have been tagged with a combined $1 million fine, and the PACs that received some of the … Continue Reading

Donor Disclosure: Will FEC’s Dismissal of Complaint Usher in More Secrecy in 2014?

With donors now allowed to give unlimited sums to Super PACs and other political advocacy groups, the biggest issue in campaign finance regulation is what such groups must disclose about their fundraising and spending, and when.  Some states have moved aggressively to bolster their disclosure rules, with a couple of states filing suit to force … Continue Reading

Nonprofits Operating in New York Must Disclose Donors, Itemize Spending for Election Advocacy and Issue Ads

Nonprofit groups raising money in New York are required by new rules to report nationwide spending on communications that support or oppose candidates and ballot initiatives, or that simply refer to candidates within certain periods before an election. When a group spends more than $10,000 on such communications in regard to New York state or local … Continue Reading

501(c)(4)s: Why all the fuss?

Obviously the IRS has spent a great deal of time trying to determine whether certain groups qualify for exemption under Section 501(c)(4) of the tax code. Why 501(c)(4) status matters so much is really about disclosure and not about tax revenue at all. Unlike contributions to Section 501(c)(3) organizations, contributions to 501(c)(4)s are not deductible … Continue Reading

Lessons Learned: How to Take 5 Successfully (or Not)

Last week, Lois Lerner, the now suspended Director of Exempt Organizations for the IRS, appeared before the House Oversight Committee. She gave a brief opening statement, in which she proclaimed that she had “not done nothing wrong” and that she had “not broken any laws.” Her lawyer had already informed the Committee that she would … Continue Reading

A Texas-Sized IRS Controversy? Governor Perry Vetoes Disclosure Legislation

It seems the IRS controversy has spilled into the states. Late last week Governor Rick Perry vetoed legislation that would have required the disclosure of high-level donors by many politically active organizations, including those exempt under Section 501(c)(4) of the Internal Revenue Code. After a Republican legislature passed the bill, there was a fevered internet grassroots … Continue Reading

IRS Fallout Continues: Where are we now?

It’s been less than three weeks since the IRS admitted to targeting applications for tax-exempt status filed by some conservative organizations. Much has happened since then on both the personnel front and with congressional oversight hearings. On the personnel front, the acting IRS commissioner (Steven Miller) resigned and the President named a new acting commissioner. The … Continue Reading

The Current IRS Firestorm over Conservative Political Nonprofits: Any Lessons for the Rest of the Tax-Exempt Community?

On May 10, 2013, the nonprofit tax bar – and much of the country – was rocked by reports that Lois Lerner, director of the Internal Revenue Service’s Exempt Organizations Division apologized for the Service’s inappropriate flagging of conservative political groups for additional review during the 2012 election season. She made this apology in response … Continue Reading

Even the Appearance of Corruption: Caution When Fundraising Around Major Legislation

It seems like it has been a while since Congress has passed major, substantive legislation. With gun control, immigration, and tax reform all on the front pages, it appears that legislation might be on the move. Thus, as legislation grinds through the process, it is worth remembering the need to keep legislative issues separate from … Continue Reading

Update: Maryland Passes Campaign Finance Reform—Expands Independent Expenditure Disclosures

In the closing hours of its session last week, the Maryland General Assembly passed the Campaign Finance Reform Act of 2013 and Governor O’Malley is expected to sign it soon. Even so, the changes do not take effect until after the 2014 state elections. The final version of the bill is largely unchanged from the … Continue Reading

Senate Hearing Illustrates Gridlock at Federal Level in Forcing Donor Disclosure; Utah is Latest State to Charge into the Vacuum

What happens when a donor sets up a corporation and uses it to contribute to a Super PAC, intending to hide his or her identity by having the corporation make the contribution? What about when a nonprofit social welfare organization, commonly called a 501(c)(4) organization, appears to spend millions on political ads but then reports much … Continue Reading

Public Policy and Politics: Compliance Tips for Your Nonprofit’s Advocacy and Electoral Efforts

On April 16, Ron Jacobs, Larry Norton, and Janice Ryan will host a program for nonprofits covering campaign finance, lobbying disclosure, and gift rule issues for trade associations, social welfare organizations, and charities. Perfect for those who have already seen our Political Law 101 session and want to learn answers to more advanced questions like: How … Continue Reading

A Super PAC for thee but not for me? Some states don’t allow for unlimited contributions to independent expenditure committees.

Independent expenditure committees (“Super PACs”) have become commonplace at the federal level and in a number of states as well. The legal reasoning behind Super PACs, as explained in the Speechnow case (and several other federal and state cases), is that since the Supreme Court has recognized the right of individuals and corporations to spend … Continue Reading

Think Your Advocacy Group is Not Subject to FEC Rules? Think Again.

A federal court last week ruled that a small nonprofit, formed under Wyoming law to advocate positions on various political issues, may have to include certain federally-mandated disclosures on its ads and fundraising appeals, and may even have to register and report as a federal political committee. The ruling is an important reminder that advocacy … Continue Reading

Senator Levin to Pursue 501(c)(4)s Engaged in Campaign Activity

In the recent press release announcing his retirement, Senator Carl Levin announced that he will use his last two years running the Permanent Subcommittee on Investigations (“PSI”) to “encourage” the IRS to provide aggressive oversight of tax-exempt groups that are primarily engaged in politics. The prospect of hearings could potentially expose the inner workings of … Continue Reading

Venable Hosts Webinar on Political Law Basics – February 27

We hope you will join us for a webinar on February 27 at 1:00, called Political Law 101. We will cover all the major topics you need to be thinking about as you ramp up for lobbying the new Congress and state legislatures, host site visits and other events, and prepare for the next election … Continue Reading

New York Pension Fund Sues Qualcomm to Force Disclosure of Political Spending

The New York State comptroller filed a lawsuit against Qualcomm on behalf of the New York State pension fund, a major Qualcomm shareholder and the country’s third largest public institutional investor, seeking access to the company’s records to determine how it is spending corporate funds in the political arena. According to the novel complaint, which … Continue Reading

NY Attorney General Proposes New Rules Requiring Nonprofit Groups to Disclose Political Donors

On December 11, New York’s attorney general revealed new regulations that would, if adopted, require nonprofit groups doing business in New York to disclose the percentage of total spending devoted to political activities in New York. The rules also would require groups that spend more than $10,000 to identify any donor giving $100 or more. Under the proposed … Continue Reading

Is my donation really anonymous?

Many “political” organizations have 501(c)(4) arms that claim to allow their donors to remain anonymous. Donors who don’t mind being disclosed often give to independent expenditure committees (“super PACs”), which publicly disclose all of their donors to state or federal officials. Those who prefer not to disclose their name, address, occupation, and employer will often … Continue Reading

Government Contractors Face Growing Risks from Laws Regulating Political Contributions

The landmark Supreme Court ruling in the Citizens United case paved the way for explosive growth in political spending during the 2012 election cycle.  However, for government contractors and their principals, a growing number of “pay-to-play” laws restrict political contributions and fundraising, and can result in severe penalties, including the loss of contracts. Venable has … Continue Reading
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