Thursday, March 10, 2011

The IRS is requested to investigate nonprofit political dealings

Here's another summary of a past NPTV story.  Check it out in its entirety here.

Congressional mid-term elections are just around the corner, and the IRS has been requested to launch investigations into the political campaign dealing of numerous major organizations with 501C4, C5 and C6 designations. This is the subject of those well laid out video presentation. The request was made to the IRS by Max Baccus, a Democrat from Montana and the chairman of the U.S. Senate Finance Committee.

Four primary areas of investigation

The IRS will be focusing their survey on 4 key areas with regard to the organizations in question. Were activities for their states tax-exempt objectives, or are dealings related to political campaigns their primary area of focus? Are they complying with proxy tax and notice requirements? Are their activities bases on the private interests of large contributors, or legislative lobbying? Do they provide extra benefits to significant donors? According to Grant Thornton LLP, organizations that are exempt from federal tax are prohibited from making political campaign dealings their prominent focus.

The nature of the tax law means that it limits the measure to which charitable organizations can get involved in the political arena. At this stage it is unknown how exactly the IRS will conduct its survey, but it is likely that 501C3 organizations will be the subject of investigation as well in the future due to increasing media attention and pressure from congress. Be sure to check out this video about this interesting development in the nonprofit sector.

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