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Congress prohibits IRS from defining (c)(4) limits

Congress prohibits IRS from defining (c)(4) limits

Congress has continued the prohibition on the Internal Revenue Service defining the limits of political activity for 501(c)(4) social welfare organizations in a provision buried deep within the 2,232-page Omnibus Spending Bill for 2018.

It specifically provides that none of the funds made available by the Act may be used by the Department of Treasury, including the IRS, “to issue, revise, or finalize any regulation, revenue ruling, or other guidance not limited to a particular taxpayer relating to the standard which is used to determine whether an organization is operated exclusively for the promotion of social welfare for purposes of section 501(c)(4).”  (Div. E, Title I, Administrative Provisions for Department of Treasury, Section 125.)

Commentators have been divided on the portion of activity that can be considered political electioneering and still not disqualify an organization from (c)(4) status.  The IRS was not willing to state a limit in its proposed regulations on (c)(4) activity and Congress prohibited it from providing a definition prior to the 2016 election.  This prohibition until the end of this fiscal year will probably be an effective prohibition on a definition before the 2018 mid-year elections.  (See Ready Reference Page: “Is IRS Caving on Standard for Political Activity by (c)(4) Groups?”)

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