| Non-profit groups organized under Section 501(c)(3) of the Internal Revenue Code are prohibited from participating or intervening in any political campaign either in favor of or in opposition to any candidate for public office. Generally, this applies to religious organizations, including churches, charities, and educational institutions.
The scope of this prohibition includes endorsing any candidates, making campaign donations, fund raising, distributing statements or becoming involved in any other activities that may be beneficial or detrimental to a specific candidate. In addition, tax-exempt organizations may not engage in activities that encourage people to vote for or against a particular candidate on the basis of nonpartisan criteria.
The question of whether or not an organization has engaged in a prohibited political activity must be determined based on the facts and circumstances of each case. A debate or forum sponsored by a tax-exempt organization is permitted so long as its purpose is to educate voters. However, if the activity shows preference for or against any specific candidate, it is prohibited.
Remedies
If the Internal Revenue Service finds that a tax-exempt organization engaged in prohibited political activity, the organization could lose its tax-exempt status and be subject to an excise tax on the amount of money improperly spent on the campaign. If the IRS concludes that the tax-exempt organization has acted in flagrant violation of the law, it has the authority to make an immediate determination and assessment of tax. The IRS is also permitted to seek an injunction from a federal district court restraining an organization from making further political expenditures. In less serious situations, the IRS may require correction actions from the group.
The IRS strongly asserts that it makes law enforcement decisions on this issue without regard to political considerations. It follows strict procedures in selection tax-exempt organizations for audit and resolution of complaints about tax-exempt groups. The IRS stresses that it is career civil servants, not political appointees, who make decisions, thereby ensuring decisions that are fair and impartial.
When a tax-exempt organization loses its preferred status as the result of engaging in prohibited political activities, it is not only the organization that suffers. Any contributions made to that organization by individual donors are no longer deductible for federal income tax purposes. Copyright 2010 LexisNexis, a division of Reed Elsevier Inc. |