Will Proposed IRS Rules for 501(c)4 Groups Really Make a Difference?

On the Tuesday before Thanksgiving, a joint press release from the Treasury Department and the Internal Revenue Service revealed that they are proposing new standards for 501(c)4 organizations. This move comes after accusations in the spring of 2013 that the IRS was unfairly targeting Tea Party nonprofits for audits of their political activity.

The rules for 501(c)4 “social welfare” organizations have long been nebulous. It is clear that they can only retain their tax-exempt status under certain conditions, and that they are intended to work for the “common good,” not for specific political parties or candidates. The current Tax Code states, “To be operated exclusively to promote social welfare, an organization must operate primarily to further the common good and general welfare of the people of the community (such as by bringing about civic betterment and social improvements).”

But the language of the rules — working primarily for social welfare — has never been adequately defined.  

The Real Story Behind 501(c)(4)s and 527s — Part I

by Kellye

Due to the current IRS controversy, 501(c)(4) groups have become a topic of conversation in the media again. What exactly is a 501(c)(4) organization? How does it differ from other 501(c) organizations, in particular, a 501(c)(3) charitable organization? How does it differ from a political 527 organization?

The original intent of the tax law that Congress passed that was incorporated into section 501(c) of the IRS code over 75 years ago was to give federal tax-exempt status to non-profit organizations which weren’t political groups. In particular, the law stated that organizations desiring 501(c)(4) status had to be “operated exclusively for the promotion of public welfare.” However, in 1959 the IRS decided to loosen this requirement (without the consent of Congress) and allow 501(c)(4) groups to engage in political activity, as long as that political activity wasn’t the group’s primary purpose. Many of these 501(c)(4) groups became political in the 1960s not long after the IRS made that decision.

Big Money in Education Part IV

by Anita

About a year ago I met a young woman who had attended a for-profit culinary school (for -profit schools are very expensive). She had been living at home with her parents while attending the school. When her father lost his job and had to move the family out of state in order to find work, she did not have the resources to stay behind and finish culinary school. Without completing her course of study, she couldn’t get a job at a real restaurant; instead, she ended up working in fast food. She cried as she told of the burden of the heavy debt and wondered how she would ever be able to pay her loans back considering her low income.

Her story was my introduction to the potential problems of for-profit schools. However, as I found out, she is not alone in her debt problem. Many young people (and some older, as well) have taken on large amounts of debt in order to attend college and improve their chances of getting a good job.

The True Identity Behind Super PACs

by Anita

Who are the top Super PAC donors? According to rootstrikers.org, there have been 26 donors (so far) who have given almost 50% of all Super PAC money.  Who knows how many are giving secretly to the 501(c)4  “social welfare organizations”?  Here is a link to a post on the Rootstrikers blog that shows the names and occupations of those 26 donors (be sure to click on the image in the blog post to enlarge it):

http://www.rootstrikers.org/the_true_identity_behind_superpacs

You may notice that the Koch brothers aren’t in this graphic.

According to Szelena Gray at Rootstrikers, the graphic deals with Presidential Super PACs, and the Koch brothers primarily donate to Congressional races.

Also, John Lesko writes in a comment:

Meeting With Senator John Cornyn’s Staff Member

by Barb

Citizen’s Meeting at John Cornyn’s Dallas Office 8/15/12

1. Our Group’s Direct Request to our Senator through Collin McLochlin, deputy regional director.

Please support an amendment overturning the Citizens United ruling because Money in politics via campaign contributions through lobbyists and other groups is corroding our democracy. And, the Citizen’s United ruling exacerbates this corrosion by allowing unlimited indirect campaign contributions to super PACs and social welfare organizations. The public and shareholders will not know who is behind the ads and information because donors can be anonymous if donating through the social welfare organizations. But, the candidate who is being supported will know who dropped all the money to get them into office, sooner or later, as the corporations and super rich come knocking for the political return on their investment through that candidate.

2. Paraphrased answers from Collin McLochlin.