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IRS rules concerning non-profit groups to be rewritten

On Behalf of | Jun 3, 2014 | IRS Issues

As the controversy concerning IRS proposed rules concerning 501(c)(4) organizations has not gone away, the Internal Revenue Service is now planning on revising these rule changes. The proposed rules ignited a storm almost from the very beginning. When the proposed rules were originally made available for publication, there were more than 140,000 public comments submitted. This is the most comments ever for any draft federal regulation.

The concern was that the new rules would be used to punish certain non-profit groups based upon perceived political affiliation. The IRS had already been accused of scrutinizing specific non-profit groups unfairly and this was one of the reasons the new rules brought such great attention.

The chairman of the House Oversight and Government Reform Committee called this a “flawed IRS rule.” He pointed out both liberal and conservative advocates for the First Amendment were critical of the rules.

So-called “social welfare organizations are given a 501(c)(4) classification by the IRS. So long as politics is not the primary goal of the group, these organizations are allowed to provide donations to political causes. These organizations are tax-exempt and also not required to reveal the name of donors.

However, the proposed rules would require these organizations to disclose donation information and communications that have been made with political candidates. Voter registration drives would also need to be revealed. This prompted the American Civil Liberties Union to note that voter registration drives can be nonpartisan. It would also place impediments in the way of organizations good-faith efforts to educate voters on various issues.

 As Atlanta tax attorneys we understand the concerns regarding IRS rules. It’s important that any tax audits of individuals or organizations be done fairly. Unfortunately, not all taxpayers understand their options when it comes to actions taken by the IRS.

Source: CBS News, “After controversy, IRS to revise rule changes for tax-exempt political groups,” Stephanie Condon, May 23, 2014