By Isaiah Castilla
Counsel, Bolder Advocacy
In a March 27 letter to the IRS, Alliance for Justice called on the Service to issue an immediate clarification about the treatment of activities to influence executive and judicial appointments and nominations made in the recent Notice of Proposed Rulemaking (“NPRM”): Guidance for Tax-Exempt Social Welfare Organizations on Candidate-Related Political Activities.
The NPRM proposes to include executive and judicial appointees and nominees within the definition of “candidate.” By defining executive and judicial nominations as candidates, 501(c)(4) organizations would have to treat their efforts to influence those nominations as “political” and count that work as partisan political activity.
We vehemently oppose this proposal, as we indicated in thecomments we submitted to the IRS on February 27. Our letter, however, calls on the IRS to retract its justification for this erroneous position on executive and judicial branch nominees. The Service’s purported rationale was that this definition would have very little impact on organizations because efforts to influence executive and judicial branch nominees are already included as exempt function (or political) activity. There’s one problem – that’s untrue.
The truth is that in 1988, the IRS announced that it was seeking comments on whether activities to influence judicial nominations should be included in the definition of exempt function activity under IRC § 527 and that any future decision on this question would be implemented prospectively only (see Ann. 88-114, 1988-37 I.R.B. 26). To date, the IRS has never announced a resolution of this question.
We ask the IRS to retract its erroneous statement immediately. Otherwise, 501(c)(3)s and other tax-exempt organizations will be misled into believing they are currently subject to tax on their expenditures for attempts to influence judicial and executive branch nominations.
We’re anxiously awaiting the Service’s response. Click here to read AFJ’s letter.
More about nonprofit advocacy at www.bolderadvocacy.org