Revenooers Going Legit

Now that the Congress has latched on to how these blokes operate, when it comes to sub rosa taxation scrutiny of certain forms of non-profit organizations, along comes the IRS with new guidance regarding qualification requirements for “social welfare organizations,” otherwise known as those claiming exemption under Internal Revenue Code Section 501(c)(4).

Apparently not liking what they’re finding with respect to how such organizations operate under present law, the Revenooers propose to coin a new term:  “candidate-related political activity,” defining same as an activity which is NOT one promoting social welfare.

Got that, Tea Party?

“This is part of ongoing efforts within the IRS that are improving our work in the tax-exempt area,” quoth Acting IRS Commish Danny Werfel, recently.

Curiously these “ongoing efforts” have only recently popped up in an era in which Democrats don’t like what they’re seeing as they look around the political landscape.

Anyway, some of the indicia of “candidate-related political activity” which IRS will look askance at once they issue final guidance in this area, could be:

  • Communications that expressly advocate for a clearly identified political candidate or candidates of a political party
  • Communications that are made within 60 days of a general election (or within 30 days of a primary election) and clearly identify a candidate or political party
  • Grants to Section 527 political organizations and other tax-exempt organizations that conduct candidate-related political activities
  • Holding an event within 60 days of a general election (or within 30 days of a primary election) at which a candidate appears as part of the program

“This proposed guidance is a first critical step toward creating clear-cut

definitions of political activity by tax-exempt social welfare organizations,” says Treasury Assistant Secretary for Tax Policy Mark J. Mazur.

And speaking of definitions, a district court in Wisconsin, of all places, recently ruled that a tax-free housing (“parsonage”) allowance – a longstanding benefit enshrined in the Internal Revenue Code – is unconstitutional, and enjoined the government from enforcing it.  Get ready for a plea to the Supremes over this one.

A clergy person, under current law, can exclude from gross income the rental value of a home furnished to him or her, or the cost of utilities provided or, the rental allowance paid as compensation to the extent it’s used to rent or provide a home.

Whatever public good the Congress perceived in writing this law seems to have escaped the attention of the Freedom From Religion Foundation (a non-profit advocating the separation of church and state) which pressed this case.  And the court agreed, expressing the view that a reasonable observer would view this policy as an endorsement of religion.

CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.

Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno.  He can be reached at 831-7288, welcomes comments at jquinn@ashleyquinncpas.com, and invites readers to consider his other commentary at http://blog.nolo.com/taxes.

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