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IRS Cautions Exempt Organizations Against Political Activity

November 28, 2007

       
In a  November 19 release, IR 2007-190, the Internal Revenue Service (IRS) reminded exempt organizations that they are strictly prohibited from engaging in political campaign activity, including direct or indirect involvement in campaigns of political candidates. However, tax exempt organizations are not prohibited from advocating for or against issues and, to a limited extent, engaging in ballot initiatives or other legislative activities. Violation of the law can result in imposition of an excise tax or loss of exempt status. Steven T. Miller, Commissioner of IRS’ Tax Exempt and Government Entities Division, urged nonprofits and religious organizations to review existing IRS guidance on this topic, including the following resources:

IRS Revenue Ruling 2007-41, which outlines several scenarios, including those involving colleges and universities, to help charities and churches understand the prohibition on political campaign activity and apply the rules to real-world circumstances.

IRS Publication 1828, Tax Guide for Churches and Religious Organizations, which contains a discussion of the law affecting political campaign activity by churches and religious institutions; and

Reports on the Political Activity Compliance Initiative, PACI 2006, which follows the report on prohibited political campaign intervention in the 2004 election cycle.