the irs

the irs

Al Franken -- IRS Scandal

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U.S. Sen. Al Franken, and six other Democratic senators last year urged IRS Commissioner Donald Shulman to investigate social-welfare organizations that get involved in politics, an indication of political concern on the left over the IRS tax-treatment given to politically active groups. One of the seven senators — Michael Bennett of Colorado — issued a press release alongside the letter complaining about Republican operatives Al Franken - IRS Scandal Groups like the New Hampshire Citizens Alliance for Action NHCAA have engaged in candidate-specific partisan left wing politicking under the cover of the same tax exempt status that Shaheen finds so dangerous to an open political process. A process suppressed by the IRS' own admission, while the Senior Senator Jeanne Shaheen from New Hampshire was prompting them to act, and finger pointing at conservative 501(c)(4)s along the way. http://www.usnews.com/opinion/blogs/b... Ask Al Franken why he sent the IRS Letter? Did he target Conservative groups? Al Franken Dear Commissioner Shulman:We write to inquire if the Internal Revenue Service ("IRS") is investigating or intends to investigate whether groups designated as "social welfare" organizations, and thus receiving tax and other advantages under section 501(c)(4) of the Internal Revenue Code (IRC), 26 U.S.C. § 501(c)(4), are improperly engaged in a substantial or even a predominant amount of campaign activity. In section 501(c)(4), Congress created a tax preference for social welfare organizations because the nation benefits greatly from their social welfare activities. It is contrary to the letter and the spirit of the statute for political organizations formed primarily to advocate for a political candidate or to run attack ads against other candidates to take advantage of section 501(c)(4). Under the IRC and IRS regulations, section 501(c)(4) organizations are required to primarily engage in the promotion of social welfare to obtain tax exempt status. Section 501(c)(4) establishes tax-exempt status for nonprofits "operated exclusively for the promotion of social welfare . . . ." 26 U.S.C. § 501(c)(4). IRS regulations state that a nonprofit operates "exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare for the people of the community." 26 U.S.C. § 501 (c)(4), 26 C.F.R. § 1.501(c)(4)-1(a)(2)(i) (emphasis added). The regulations require that a social welfare organization "is one which is operated primarily for the purpose of bringing about civic betterments and social improvements." Id.Even more to the point is what the regulations say about campaign activities: "The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office." Id. § 1.501(c)(4)-1(a)(2)(ii). This standard is clear, and it appears to preclude the formation of 501(c)(4) organizations for campaign-related purposes.Courts have interpreted section 501(c)(4) to prohibit a group organized under that section from engaging in more than an insubstantial amount of campaign activity. Courts have consistently found that the presence of a single substantial non-exempt purpose precludes exempt status, regardless of the number or importance of the exempt purposes. See Contracting Plumbers Coop. Restor. Corp. v. U.S., 488 F.2d 684, 686 (2d. Cir. 1973); see also American Ass'n of Christian Sch. Vol. Emp. v. U.S., 850 F.2d 1510, 1516 (11th Cir. 1988). The IRS is tasked with applying this strict statutory interpretation of 501(c)(4) by the courts.IRS regulations, however, appear more permissive than the statute as interpreted by the courts. For example, the IRS authorizes section 501(c)(4) social welfare organizations to engage in federal election activities, including electioneering communications, as long as such activities do not constitute the "primary" activity ...