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IRS Notice of Proposed Rulemaking for Section 501(c)(4) Organizations: Expanding the Scope of "Political" Activities

November 27, 2013

The Internal Revenue Service (IRS) issued a notice of proposed rulemaking yesterday afternoon that would expand the scope of activities by a section 501(c)(4) organization considered to be “political” under IRS regulations.1 This announcement is the beginning of a debate at the IRS on how to more precisely define political activity and limit the amount that tax-exempt
organizations can spend on it. It will be many months (if not longer) before the IRS issues any final new rules and unlikely for any rulemaking to apply to any activity in 2014.

Key points about the IRS notice for you to consider:

  • 501(c)(4)s Only. At this point, the proposed rulemaking would only affect section 501(c)(4) organizations. It does not modify the scope or definition of political activity for section 501(c)(3) organizations or section 527 organizations. Moreover, it does not change the rules for labor organizations under section 501(c)(5) or trade associations under 501(c)(6).
  • No Guidance on Permissible Amount of Political Activity. The notice does not provide any further guidance on exactly how much political activity is permissible. It only seeks comment on this topic.
  • “Candidate-Related Political Activity” Excluded From Social Welfare. The proposed changes state that a section 501(c)(4) organization’s social welfare purpose “does not include direct or indirect candidate-related political activity.” Accordingly, any candidate-related political activity could not be the primary purpose of a section 501(c)(4) organization. Instead, a section 501(c)(4) organization would need to make sure that it has other primary activities – including lobbying and educational activities.
  • “Candidate-Related Political Activity” Defined. The proposed rulemaking would more precisely define and, as a result, expand the scope of political activities. The proposed definition of “candidate-related political activity” would include:
    • Express advocacy communications;
    • Issue advocacy communications within 30 days of a primary election or 60 days of a general election that refer to a clearly identified candidate on the ballot or a political party;
    • Any independent expenditures or electioneering communications reported to the Federal Election Commission;
    • Contributions to candidates, political parties, PACs or other political committees organized under section 527;
    • Transfers to other section 501(c) organizations that engage in candidate-related political activity;
    • Voter registration or GOTV activities;
    • Member communications on behalf of a candidate;
    • Voter guides;
    • Hosting or conducting an event at which a candidate appears as part of the program within 30 days of a primary or 60 days of a general election; and,
    • Volunteer activity when done under the organization’s direction or supervision.

Accordingly, all of these activities would be within the scope of political activities when conducted by a section 501(c)(4) organization.

  • No Lobbying Public Officials in the Time Period Before an Election. As a result of the new definition of “candidate-related political activity,” any grassroots lobbying communications that identify a public official who is also a candidate on the ballot would no longer be considered lobbying in the 30 days before a primary election or 60 days before a general election. Instead, these communications would be political activity.
  • “Public Communications” Broadly Defined. An issue advocacy communication that would be included as candidate-related political activity would include a communication distributed via broadcast, cable, satellite, Internet, newspaper, magazines, other periodicals, other forms of paid advertising or “otherwise reaches, or is intended to reach, more than 500 persons.”
  • Excluding Transfers to Other 501(c)s. A transfer of funds to another section 501(c) organization would not be considered to be candidate-related political activity if the recipient organization certifies that it does not engage in such activity and the contributor does not know or have reason to know that the representation is inaccurate or unreliable. Similarly, transferred amounts would be excluded if the funds are subject to restriction that they will not be used for candidate-related political activity.

If you have questions on the proposed rulemaking or would like to discuss further, please contact Mike Wittenwyler or Wendy Richards.

1 See Reg-134417-13. The official document is scheduled to be published in the Federal Register on Friday, November 29, 2013, and will be available online at: http:/

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