Sunday, March 11, 2012

Recently There Are Concerns By and About the IRS and Its Oversight of Political Organizations In This Election Year

With American politics (sadly) as polarizing as ever, the 2012 election is heating up amid new concerns from the United States Internal Revenue Service (IRS) that political organizations wanting 501(c)(4) charity status from the IRS truly fit that type of organization's legal/operations description (in contrast to 527 entities which are political organizations, or, for your information, say, the more common 501(c)(3) charitable organization that provides services or items pertaining to a cause or issue)).

I do not typically write about 501(c)(4)'s but the times being what they are I thought it was not just pertinent current event discussion, but a good example of how the IRS attempts to oversee nonprofit organizations (of each and all kinds).  The IRS' concern is not to insert government's hand, (as you will read, below, has been suggested) but rather to conduct its tasked oversight (as has been required by law, over all charities) to be certain that the American people are receiving welfare from the organizations that Americans (through the IRS) have given charitable status (which allows them to legally collect tax free contributions).  If these organizations seeking charitable status are not providing welfare to the community, that is fine, but they then will be categorized as the appropriate entity and not allowed to raise tax free dollars.  This is not new.  This has been the rule and law for tens and tens of years.

Many political organizations wishing to acquire or retain their 501(c)(4) charitable status also collect donations without reporting from whom or where the donations came and how much those donations were.  The IRS is not saying whether it is investigating any organizations for this reason.  501(c)(4)'s are being tight lipped, too.  Conversely, watchdogs are crying 'foul' over the IRS's historic reservation to get too critical of 501(c)(4)'s and the requirement that these specific organizations be providing welfare to the community at large (or even just be able to describe what charitable welfare activity, service, or product they provide).  Watchdogs claim that the right these political organizations have to raise tax free dollars without having to provide any true charitable service is not just unfair, but leading to a lack of real welfare programs in a wake of many dollars being raised tax free.  The IRS historically has not been interested in getting involved in overseeing political organizations too terribly much as it is a tricky rope to walk (being the federal government - both the entity politics shapes, but too, the organization responsible for overseeing filing, organizational reporting, accounting, etc.).

Below, the following articles demonstrate what is going on, right now, amid these issues, concerns, and responsibilities:

IRS Getting Sleeves Dirty With 501(c)(4)'s

A Democracy Deficit At Americans Elect? (an example of an organization recently changing to the 501(c)(4) status and the fallout)

Politics, Money and Taxes (a look back at how this issue was shaping up, already, in 2011 for three specific organizations)

IRS May Make Political Groups Pay Dearly for Keeping Donors Secret -- And Out Them

Strategies for Creating and Operating 501(c)(3)'s, 501(c)(4)'s, and PACs

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