Source: http://www.nlrg.com/trusts-estates-wills-and-tax-law-legal-research-copy/bid/76700/TAX-LAW-UPDATE-Tax-Exempt-Organizations-Political-Activities
Timestamp: 2020-05-25 12:27:22
Document Index: 343910103

Matched Legal Cases: ['§ 1', '§ 1', '§ 1', '§ 1', '§ 501', '§ 501', '§ 1', '§ 501', '§ 501']

TAX LAW UPDATE: Tax-Exempt Organizations: Political Activities
Posted by Gale Burns on Tue, Apr 3, 2012 @ 12:04 PM
The Regulations state that "[a]n organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in section 501(c)(3)." Treas. Reg. § 1.501(c)(3)-1(c)(1). In addition, the Regulations say that "[a]n organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt purpose." Id. The Regulations warn that "[a]n organization is not operated exclusively for one or more exempt purposes if its net earnings inure in whole or in part to the benefit of private shareholders or individuals." Id. § 1.501(c)(3)-1(c)(2). Furthermore, "[a]n organization is not operated exclusively for one or more exempt purposes if it is an action organization." Id. § 1.501(c)(3)-1(c)(3)(i) (emphasis added). An organization is an "action organization" if (1) a substantial part of its activities is attempting to influence legislation by propaganda or otherwise; or (2) it participates or intervenes, directly or indirectly, in any political campaign on behalf of or in opposition to any candidate for public office; or (3) it has the following two characteristics: (a) its main or primary objective or objectives may be attained only by legislation or a defeat of proposed legislation; and (b) it advocates, or campaigns for, the attainment of such main or primary objective or objectives as distinguished from engaging in nonpartisan analysis, study, or research and making the results thereof available to the public. Id. § 1.501(c)(3)-1(c)(3)(ii)B(iv).
In a very recent administrative decision, the IRS ruled that a nonprofit health-care organization would not jeopardize its tax-exempt status under § 501(c)(3) by creating and operating a PAC that qualifies as a § 501(c)(4) "social welfare organization." I.R.S. Priv. Ltr. Rul. ("PLR") 2011-27-013 (July 8, 2011). In rendering its decision in PLR 2011-27-013, the IRS ruled that the health-care organization would not be violating the prohibition under § 1.1501(c)(3)‑1(3)(c) against participating or intervening in a political campaign. The IRS noted that the PAC, which was to be created merely as an incidental part of the activities of the § 501(c)(4) social welfare organization, would be operated independently of the § 501(c)(3) health-care organization and that it would administer its own affairs separately.