The IRS is expecting to get lots of comments on a regulatory proposal guidance it is issuing today.
That’s because the proposal is to amend the regulations on tax-exempt social welfare organizations to exclude “candidate-related political activity.”
“This proposed guidance is a first critical step toward creating clear-cut definitions of political activity by tax-exempt social welfare organizations,” U.S. Department of the Treasury Assistant Secretary for Tax Policy Mark J. Mazur said in a news release. “We are committed to getting this right before issuing final guidance that may affect a broad group of organizations. It will take time to work through the regulatory process and carefully consider all public feedback as we strive to ensure that the standards for tax-exemption are clear and can be applied consistently.”
“This is part of ongoing efforts within the IRS that are improving our work in the tax-exempt area,” said IRS Acting Commissioner Danny Werfel. “Once final, this proposed guidance will continue moving us forward and provide clarity for this important segment of exempt organizations.”
According to the agencies, the IRS currently applies a “facts and circumstances” test to determine whether an organization is engaged in political campaign activities that do not promote social welfare. The proposal, they said, would reduce the need to conduct fact-intensive inquiries by replacing the test with more definitive rules.
The agency is also seeking comments on other aspects of the proposal, including on what proportion of a 501(c)(4) organization’s activities must promote social welfare.
Under the proposed guidelines, candidate-related political activity includes:
Grants and Contributions
Activities Closely Related to Elections or Candidates