James F. McDonough
Of Counsel
732-568-8360 jmcdonough@sh-law.comFirm Insights
IRS Will Revise Rules Governing Nonprofit Groups’ Political Activity
Author: James F. McDonough
Date: June 5, 2014
Key Contacts
Back
The Internal Revenue Service (IRS) has announced that it will revise, without holding a public hearing, the proposed rules governing nonprofit groups’ involvement in politics. The rules, released last year, attempted to provide guidance for the political activity groups organized under section 501(c)(4) of the U.S. tax code could take without risking the loss of their tax exempt status or being required to disclose their donors. The 501(c)(4) groups have played a significant role in U.S. elections, spending more than $250 million on the 2012 election.
The tax laws provide that 501(c)(4) groups must be organized “exclusively” to promote social welfare, while the IRS regulations say social welfare must be their “primary” focus. This has led to conflicts over how to measure politics and primary purpose.
The regulations stemmed from the Tea Party controversy that occurred last summer. The IRS revealed that it exerted extra scrutiny of certain Tea Party groups seeking tax-exempt status, based on a serious of factors, including their names as well as actual conduct of political activity by other groups already qualified under (c)(4) and the description of the applicant’s activities under pending applications. As a result, the rules were created to provide guidelines for IRS employees in determining what activities were considered political involvement that would result in a group losing its tax-exempt status.
After the IRS released the new rules, it received in excess of 150,000 comments and objections to their breadth and violation of free speech rights. Many called for the IRS to start over, but the IRS’s recent announcement indicated they believe it will be more efficient to not hold public hearings until after the revised rules have been published. The IRS’s statement did not specify how extensive the revisions will be or when the new rules are expected to be released, but it has been speculated that the process will not be completed in 2014.
If you have any questions about the issues discussed above or would like to discuss other tax law matters, please contact me or a member of the award-winning Scarinci Hollenbeck Tax Practice Group. You can also find additional posts regarding the special tax concerns facing businesses on our blog, Tax, Trust, and Estate News.
- Practices: Tax and Trusts & Estates, Corporate Transactions & Business
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Breaking Down New Jersey’s “Mansion” Tax: What Buyers and Sellers Need to Know
For many years, the New Jersey Mansion Tax has been a significant consideration in high-value real estate transactions. Recent legislative changes, however, have substantially altered how the tax operates, including who is responsible for paying it and the amount owed in certain transactions. Whether you are purchasing, selling, or investing in New Jersey real estate, […]
Author: George McGowan
Estate Planning for Digital Assets Under New Jersey Law
As our personal and financial lives increasingly move online, estate planning must evolve to address a new category of property: digital assets. From email accounts and social media profiles to cryptocurrency and cloud-stored business records, these assets often carry both financial and sentimental value. Yet, without proper planning, they can become inaccessible—or even lost—upon incapacity […]
Author: Marc J. Comer
The Role of Representation and Warranty Insurance in M&A Transactions
In today’s mergers and acquisitions market, representation and warranty (R&W) insurance has become a common feature of deal negotiations. Once used primarily in larger transactions, R&W insurance is now frequently incorporated into middle-market deals as buyers and sellers look for efficient ways to allocate risk and close deals. When structured properly, R&W insurance can help […]
Author: George McGowan
You Just Received a Federal Grand Jury Subpoena in New Jersey: Now What?
Receiving a federal grand jury subpoena is not something most businesses or individuals anticipate. While it can be concerning, a federal grand jury subpoena does not necessarily mean that you are being accused of wrongdoing. It does, however, mean that a federal criminal investigation is underway and that federal prosecutors believe you may possess information […]
Author: George McGowan
Why Every Business Should Conduct an Annual Insurance Coverage Review
Most New Jersey business owners purchase insurance policies, file them away, and assume they are protected if a claim arises. Without a regular insurance coverage review, many companies discover gaps only after a lawsuit, cyberattack, property loss, or other significant event occurs. An annual insurance coverage review can help businesses identify potential risks, ensure their […]
Author: George McGowan
Demand Letters & Cease and Desist Letters: When to Send One (and When Not To)
Businesses and individuals often encounter situations where another party breaches a contract, fails to pay a debt, or continues harmful conduct. In many such disputes, a precisely drafted demand letter or cease-and-desist letter serves as a powerful legal tool. It can frequently resolve the dispute and avoid litigation. While demand or cease-and-desist letters can resolve […]
Author: George McGowan
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.