That's an opinion article.
There is the law that comes from congress.
There are so called rules written by the IRS.
LAW written and passed by congress trumps IRS rules. It always does. It always has. No one can just "rewrite" the law.
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The original statute passed by Congress requires 501(c)(4) organizations engaged exclusively in social welfare activities, said Rep. Elijah Cummings of Maryland. But in 1959, Treasury Department issued a regulation that requires these entities only to be primarily engaged in social welfare activities. As a result, many groups now believe they can spend up to 49% of their funds on campaign-related activities.
At the House Ways and Means Committee hearing Friday, Rep. Lloyd Doggett of Texas name-checked ODonnell and Citizens for Responsibility and Ethics in Washington (CREW) for their attention to this matter.
The IRS in 1959 without authority from Congress changed Congress intent in 501(c)(4) organizations, and they suddenly had to be primarily for social welfare, which meant from that day forward, IRS agents somewhere, Washington or Cincinnati or somewhere were going to have to evaluate how much politics a 501(c)(4) applicant was going to engage in, said ODonnell. And so, the real scandal here is not that the applications were delayed, but that they were ever approved.
"Exclusively" vs. "primarily": IRS law a "disaster waiting to happen" | NBC News
Who are you trying to kid? Obama rewrites the ACA almost every day. He makes up new laws and calls them "regulations."
Yep,
The last time I checked the congress suppose to make laws and regulations.
This seems like as good a point as any to get into the food fight. First a little background on the hierarchy of tax authority. Tax law is Title 26 of the United States Code (26 USC) a/k/a the Internal Revenue Code of 1986 (IRC). Citations are made either in the form of 26 USC 501(c)(4) or TC 501(c)(4) for Section 501(c)(4), for example. Baring a constitutional issue, the language of the Code Section is determinative, but arguments of the "intent of Congress" as indicated in the official JCT explanations of a law or the legislative history and record can be made in interpreting the statute.
Most tax legislation contains an enabling clause for the IRS to issue regulations to implement and explain the Code Section involved. These often include numerical examples to highlight possible variations in the application of the rules involved in the Code Section. For example, IRC 162 simply states "There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business," and continues with a number of special cases such as lobbying and political activity. The regs under IRC 162 defining "ordinary and necessary" business expenses run into the hundreds of pages. Treasury regulations are presumed to be correct and are binding as to law, unless a case is made that the regulations are inconsistent with the law itself. Code and regulations together are citeable authority and form the main body of tax law. The final determination of the meaning of Code sections is ultimately a judicial determination and a decision by the Supreme Court is the strongest authority of all. Appellate courts, Tax Court, Court of Claims, and District Courts are lesser judicial authority.
Additional citeable authority is guidance formally given by the IRS and published in the Internal revenue Bulletin (IRB) such as acqiescenses and non-acquiescenses to court decisions, Revenue Rulings and Revenue Procedures, General Counsel Memoranda, and so forth. Private Letter Rulings and Closing Agreements are binding only for the taxpayer directly involved.
Some information is often reported to indicate what the IRS thinking will be on an issue, which does not rise to the level of authority at all. This includes IRS publications, form design and instructions, and the Internal Revenue Manual (IRM). The Commissioner is only bound by official guidance issued.
So how does this apply to 501(c)(4)? The plain language of the Code requires that such an organization be operated as "exclusively" for social benefit purposes.
[quote="IRC 501(c)(4)(A)] Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes.[/quote]
A regulation issued in 1960 explains this as following:
[quote="CFR 1,501(c)(c)-1] §1.501(c)(4)-1 Civic organizations and local associations of employees.
(a) Civic organizations(1) In general. A civic league or organization may be exempt as an organization described in section 501(c)(4) if
(i) It is not organized or operated for profit; and
(ii) It is operated exclusively for the promotion of social welfare.
(2) Promotion of social welfare
(i) In general. An organization is operated
exclusively for the promotion of social welfare if it is
primarily engaged in promoting in some way the common good and general welfare of the people of the community. An organization embraced within this section is one which is operated primarily for the purpose of bringing about civic betterments and social improvements. A social welfare organization will qualify for exemption as a charitable organization if it falls within the definition of charitable set forth in paragraph (d)(2) of §1.501(c)(3)-1 and is not an action organization as set forth in paragraph (c)(3) of §1.501(c)(3)-1.
(ii) Political or social activities. The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. [/quote]
Emphasis mine. The implication in the Reg is that a 501(c)(4) cannot support or oppose any candidate for public office, but may participate in issue lobbying and other issue oriented political activity as long as it remains "primarily for the purpose of bringing about civic betterments and social improvements."
Currently there are no cases decided under this Code Section and Regulation.
References to the IRM may be helpful in determining the IRS position, but they have no binding authority over either the government or the taxpayer. I found no further guidance in the IRB on this issue.
So everything is pretty much a brief for one side's court case or the other. Nobody knows how a court will rule when one actually gets a real case, or what the ultimate outcome will be.
My opinion is that the Reg weakening the Code Section was ill-decided and the plain language of the Code should prevail. Absent this position, what qualifies as a threshold for losing exempt status under 501(c)(4) is an open question, and guidance is needed. Obviously the best solution would be for Congress to provide that guidance, which doesn't seem likely to happen. The IRS could revise Reg 1.501(c)(4)-1, but that also seems unlikely. So we are left waiting for a court case to wend it's decade-long route through the courts.
Enjoy. You know as much about it as I do if you have read this far!
