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Patricia O'Connell
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Wiley Rein’s Eric Wang Discusses Debate over IRS Proposal for Nonprofit Political Organizations

CQ Roll Call
February 11, 2014

Eric Wang, special counsel in Wiley Rein’s Election Law & Government Ethics Practice, was quoted in a February 6 article in CQ Roll Call about the debate over a U.S. Internal Revenue Service (IRS) proposal that would limit political activity by nonprofit organizations with a 501(c)4 tax-exempt status.

For more than 50 years, the IRS has granted tax-exempt status to groups predominantly focused on social welfare, but some say that loophole has been exploited in the years since the United States Supreme Court issued its landmark Citizens United v. Federal Election Commission decision, which allows corporations, trade associations, and labor unions to spend unlimited general treasury funds on independent expenditures on behalf of federal candidates.  The new IRS rules would limit “candidate-related activity”—defined as campaign advertising, donations, voter registration and get-out-the-vote drives, issue advocacy within 30 or 60 days of an election that mentions a candidate, hosting a candidates’  debate or forum within those time periods, and distributing voting guides—for groups applying for 501(c)4 status. 

Mr. Wang noted that the 501(c)4 groups in question are not the only organizations that enjoy tax-exempt status even while engaging in political activity.  Section 527 organizations, which include official campaign groups, are also tax-exempt.  “I compare it to the 527 groups, which are overt political groups, and they’re tax-exempt as well,” said Mr. Wang. “If there’s this perception that political groups are getting an undeserved tax subsidy, then that debate has to be extended to 527s as well.”