IRS to Look At 501(c)(4) Groups
by Amanda Adams*, 12/12/2008
According to BNA Money and Politics ($$), "new lawsuits could prompt the Court to reconsider key principles of [campaign finance] regulation, officials and private attorneys said at the annual conference of the Council on Governmental Ethics Laws (COGEL)." This statement references the Citizens United case that is expected to be argued in front of the Supreme Court this spring. The case challenges Federal Election Commission (FEC) rules requiring disclosure of those paying for electioneering communications. Citizens United produced a film called Hillary: The Movie, as well as proposed television ads promoting the film.
The article suggests that the Supreme Court may also review SpeechNow.org's case which is "pending in the U.S. District Court for the District of Columbia and is on track to be heard by the U.S. Court of Appeals for the D.C. Circuit."
During the conference Ellen Weintraub, a Democratic FEC commissioner said, "If we can't regulate disclosure and we can't regulate express advocacy, we're really running out of things to regulate."
In a separate session at the COGEL conference, the decrease in campaign activity by Section 527 political groups was discussed. "The lull in this activity was caused by several factors, but one key was an enforcement crackdown on 527 groups by the FEC after the 2004 election, panelists agreed."
Others also considered the decline due to the increased activity from 501(c)(4) social welfare groups. These organizations do face some restrictions on their activities because of Internal Revenue Service (IRS) rules; political activities can not be the group's "primary purpose." According to Lois Lerner, director of IRS exempt organization branch, "the IRS has plans to examine compliance by Section 501(c)(4) groups but faces some hurdles in doing so." It will have to wait until next year, after the groups file tax returns and after their tax returns are reviewed.
