A letter from the IRS on prohibited political activity

Dear Candidates,

During this election season, the Internal Revenue Service (IRS) wants to remind candidates of the Federal law that prohibits organizations exempt from tax under Internal Revenue Code section 501(c)(3) from participating in campaigns for or against the election of candidates to public office.

The IRS is asking you and your staff to familiarize yourselves with the rules charitable organizations must follow with respect to political activity. With this knowledge, you can help ensure that your contacts with charitable organizations do not fall under this ban and you do not inadvertently jeopardize the tax-exempt status of a charitable organization.

Organizations described in section 501(c)(3) that are exempt from federal income tax are prohibited from directly or indirectly participating or intervening in any political campaign on behalf of, or in opposition to, any candidate for public office. Charities, educational institutions and religious organizations, including churches, are among those tax-exempt organizations restricted by this prohibition.

Examples of prohibited political activities include:

• Endorsing any candidate,
• Making donations to a candidate’s campaign,
• Engaging in fund-raising,
• Distributing statements, or
• Becoming involved in any other activities that may be beneficial or detrimental to any candidate.

Certain activities may not be prohibited. Tax-exempt organizations can engage in advocacy for or against issues and, to a limited extent, ballot initiatives or other legislative activities. They also may encourage people to participate in the electoral process by sponsoring debates or forums to educate voters, distribute voter guides, or conduct voter registration or get-out-the-vote drives as long as none of these show a preference for or against a certain candidate or party.

For example, a charitable organization may invite political candidates to speak in their capacity as candidates if the organization takes steps to ensure that:

• It provides an equal opportunity to other political candidates seeking the same office,
• It does not indicate any support of or opposition to any candidate, and
• No political fund-raising occurs in conjunction with the speech.

The prohibition on political campaign activity applies only to tax-exempt charitable organizations, not to the activities of individuals in their private capacity. The political campaign activity prohibition is not intended to restrict free expression on political matters by leaders of charitable organizations, including churches, speaking for themselves, as individuals. Nor are leaders prohibited from speaking about important issues of public policy. However, for their organization to remain tax-exempt under section 501(c)(3), leaders cannot make partisan comments in official organization publications or at official organization functions, including church publications and functions.

If the IRS finds a section 501(c) (3) organization has engaged in prohibited campaign activity, the organization could lose its tax-exempt status and it could be subject to an excise tax on the amount of money spent on that activity.

For more detailed information, including IRS Revenue Ruling 2007-41 that outlines a number of scenarios to help charities and churches understand the ban on political campaign activity and actions that may arise, see our web site at http://www.irs.gov/eo.