I notified Maryland Board of Elections more than once of my problems with election violations.  Besides this email I communicated by contact page on their website.

Me

To info.sbe@maryland.gov

Mar 29

To the SBE,

I am running for office in Maryland for two reasons.  One, that I am the best candidate for the job of Governor of Maryland.  The second is to highlight with the intention of following up after elections the abysmal system surrounding an election and how citizens and voters get their information.  I hear from everyone they go to Maryland ballot boxes not knowing most of the candidates and with almost no information on issues.  There is no avenue for open discussion on issues.  People new to Maryland are struck by the complete lack of free and fair elections or public engagement on state and local issues.

Cindy Walsh can win this election without media.  Building a network can be done without media's help.  I will change this election process either when I am elected governor or soon after as I continue to educate the public as to what free and fair elections involves.

Please look at the election websites that represent the State of Maryland elections to make sure they are not biased and/or failing to represent accurately the best of the candidates qualifications.

The Politics and Portal website is one that gives equal footing to all candidates in a clean representation of the candidates and easy access to their campaign websites.  This is a legitimate election website.  Ballotpedia and others have a goal of choosing candidates to highlight.

Please see as your duty as the State Board of Election to be oversight of election websites.  This is not an avenue open for personal edification.

Cindy Walsh

 

I communicated with Brown, Gansler, and Mizeur letting them know they were participating in election violations.

 

Me

To heather.mizeur@house.state.md.us

Mar 12

Heather,

 

I would appreciate if you would personally announce that ALL democratic candidates for governor be included in these 3 debates.  You are the progressive candidate and would not want to compromise 'free and fair' elections.

 

Thank you,

 

Cindy Walsh

 

As this newspaper article shows Cindy Walsh was forced to leave the forum with Anthony Brown and Heather Mizeur sitting on stage.  I shouted that I had met the requirements placed by the forum and that excluding me was illegal.  Brown was wrong to suggest the organizers said only the top candidates would be allowed on stage.  I have the emails that show this did not happen.  The level of coercion and intimidation was palpable as this forum was controlled by Brown.

 

 

Maryland Politics

Debate over who can participate precedes Thursday forum in Maryland’s governor’s race

By John Wagner May 30   Washington Post

The biggest drama at Thursday night’s Maryland gubernatorial forum started to play out before any of the candidates spoke.

After a stellar rendition of the national anthem, four hopefuls took the stage at an event put on by the Collective Empowerment Group, made up of Prince George’s County ministers. There were only three chairs.

Lt. Gov. Anthony G. Brown (D), Del. Heather R. Mizeur (D-Montgomery) and Charles County businessman Charles Lollar, a Republican, took their seats. Cindy Walsh of Baltimore, a little-known Democratic contender, stood awkwardly by until she was waved off the stage by organizers.

Around the same time, Del. Jolene Ivey (D-Prince George’s), who was sitting in the front row of the audience, sent a text message to a reporter saying she was supposed to be on stage, too, standing in for her running mate, Attorney General Douglas F. Gansler (D), who had a prior commitment in Western Maryland.

“Anthony said he wouldn’t come if I spoke in Doug’s place,” Ivey wrote. “Why do you think he’s scared of me?”

Brown campaign manager Justin Schall later disputed Ivey’s contention, saying the organizers had made it clear in an April letter inviting candidates to participate that only the those on the top of the ticket could be on stage.

“Regrettably, Jolene hasn’t been accurate about a lot of things lately, and this is just another reckless and irresponsible statement from the Gansler campaign that we’ve all come to expect,” Schall said.

Brown aides also suggested it was ironic that Gansler would skip a forum on a day that he launched a new television ad criticizing Brown for missing a televised debate.

 

 

 

 

 

 

 

 

 

 

Below you see the date I communicated with Maryland Courts about heading to Federal Court because of election irregularities.  I was inquiring about self-representing as I could not get a response for help from Maryland Attorney General’s Office.  I acknowledge communicating with the Maryland Justice department to pursue these violations in Maryland Court and receiving no help. 

 

 

Me

To pamela.ortiz@mdcourts.gov

May 20

 

Cindy Walsh for Governor of Maryland is moving to Federal Court with a civil lawsuit claiming election violations in Maryland governor's race.  I am preparing to move forward as a self-represent because none of the public justice avenues have acknowledged my complaints in the past.  This is my request to the state organization charged with making sure the public has the best legal representation.

 

Cindy Walsh



 

 

 

To:  Federal District Court of Washington; Lee Goodman, Chairman of Federal ElectionCommission

From:  Cindy Walsh for Governor of Maryland Democratic ticket

RE:  Open violations and election rigging throughout Maryland election system but extensively in Baltimore City.

 

To whom it concerns.

 

Included today is my initial request for justice to the Federal Elections Commission for relief for my campaign being completely censured in all media and major election forums.  I understand that private media has little responsibility for free and fair election and equal protection as regards elections, but the very least they should not be allowed to openly LIE about the major elements of an election race.  Most critical, 501c3/4s are not allowed to participate in elections in ways that damage a campaign and we all know----EXCLUDING A CANDIDATE FROM FORUMS AND DEBATES DOES JUST THAT.  This is why most 501c3/4 invite all candidates in a race to a forum.  The major university and public media coverage is the source of bias and all Baltimore City 501c3/4 ignore these laws.  THIS IS CRITICAL AS BALTIMORE CITY IS THE LARGEST VOTING BLOCK IN THE STATE.

When an FEC official denies my claim of election violation with this level of evidence to my case, there needs to be recourse and I am resubmitting my complaint to the Chair of the FEC.  I am as well moving forward to Federal Court in Washington to press this issue as a civil law suit damaging my campaign and the results of the democratic primary in Maryland.

Included in this packet to the Washington Federal District Court are all the requirements for initiating this lawsuit.  Since the Maryland primaries are at the end of June we need to move forward with due process.  Make no mistake, this is not a democratic or republican party issue as both parties are allowed to skirt election laws to the detriment of voters in both parties.

 

IV. Complainant's Recourse A complainant who disagrees with the Commission's dismissal of a complaint or who believes the Commission failed to act in a timely manner may file a petition in the U.S. District Court for the District of Columbia. In the case of a Commission dismissal, the petition has to be filed within 60 days after the date of the dismissal.  2 U.S.C. §437g(a)(8) [PDF].


_________________________________________________

1.501(c)(3)–1; Section 1.501(c)(3)-1(c)(3)(i); Section 1.501(c)(3)-1(c)(3)(iii);Rev. Rul. 86-95, 1986-2 C.B. 73

 

 

Exemption; public forums; congressional candidates. The

conduct of public forums involving qualified congressional

candidates in the manner described, by an organization otherwise

exempt under section 501(c)(3) of the Code, will not constitute

participation or intervention in any political campaign within the meaning of section 501(c)(3). Rev. Rul. 66-256 amplified.

 

ISSUE

 

Would the conduct of public forums involving qualified

congressional candidates by an organization otherwise described in section 501(c)(3) of the Internal Revenue Code, in the manner

described below, constitute participation or intervention in any

political campaign within the meaning of section 501(c)(3)?

 

FACTS

 

The organization is an educational membership organization

exempt from federal income tax under section 501(c)(3) of the

Code. As one of its programs, the organization monitors and

reports on legislative, judicial, administrative, and other

governmental activities and developments considered to be of

important interest to its members. The organization proposes to conduct a series of public forums. These forums will be conducted in congressional districts during congressional election campaigns. All legally qualified candidates for the House of Representatives from the congressional districts in question will be invited to participate in a forum.

The agenda at each of the forums will cover a broad range of

issues, including, but not limited to, those issues considered to be of important educational interest to the organization's

members. Questions to forum participants will be prepared and

presented by a nonpartisan, independent panel of knowledgeable

persons composed of representatives of the media, educational

organizations, community leaders, and other interested persons.

Each candidate will be allowed an equal opportunity to present his or her views on each of the issues discussed. The organization will select a moderator for each forum whose sole function will be limited to assuring that the general ground rules are followed. At both the beginning and end of each forum, the moderator will state that the views expressed are those of the candidates and not those of the organization and that the sponsorship of the forum is not intended as an endorsement of any candidate.

 

LAW AND ANALYSIS

 

Section 501(c)(3) of the Code provides for the exemption from

federal income tax of organizations organized and operated

exclusively for charitable or educational purposes, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting to influence legislation, (except as otherwise provided in section 501(h)), and which do not participate in, or intervene in (including the publishing or

distributing of statements), any political campaign on behalf of

any candidate for public office.

 

Section 1.501(c)(3)-1(c)(3)(i) of the Income Tax Regulations

states that an organization is not operated exclusively for one or more exempt purposes if it is an "action" organization. Section

 

1.501(c)(3)-1(c)(3)(iii) defines an "action" organization as an

organization that participates or intervenes, directly or

indirectly, in any political campaign on behalf of or in

opposition to any candidate for public office. The regulations

further provide that activities that constitute participation or

intervention in a political campaign on behalf of or in opposition to a candidate include, but are not limited to, the publication or distribution of written statements or the making of oral statements on behalf of or in opposition to such a candidate.

 

Rev. Rul. 66-256, 1966-2 C.B. 210, holds that a nonprofit

organization formed to conduct public forums at which lectures and debates on social, political, and international matters are

presented qualifies for exemption from federal income tax under

section 501(c)(3) of the Code.

 

Rev. Rul. 74-574, 1974-2 C.B. 160, holds that a section

501(c)(3) organization operating a broadcast station is not

participating in political campaigns on behalf of public

candidates by providing reasonable amounts of air time equally

available to all legally qualified candidates for election to

public office in compliance with the reasonable access provisions of the Communications Act of 1934, 47 U.S.C. Sec. 312(a)(7),(1982). Whether an organization is participating or intervening,directly or indirectly, in any political campaign on behalf of or in opposition to any candidate for public office depends upon all of the facts and circumstances of each case. For example, certain "voter education" activities conducted in a non-partisan manner may not constitute prohibited political activities under section 501(c)(3) of the Code. Other so-called "voter education" activities may be proscribed by the statute. Rev. Rul. 78-248, 1978-1 C.B. 154, contrasts several situations illustrating when an organization that publishes a compilation of a candidate's position or voting record has or has not engaged in prohibited political activities based on whether the questionnaire or voting guide in content or structure shows a bias or preference with respect to the views of a particular candidate.

 

See also Rev. Rul. 80-282, 1980-2 C.B. 178, that amplified Rev. Rul. 78-248 regarding the timing and distribution of voter education materials. The presentation of public forums or debates is a recognized method of educating the public.

 

See Rev. Rul. 66-256. Providing a forum for candidates is not, in and of itself, prohibited political activity.

 

See Rev. Rul. 74-574. However, a forum for candidates could be operated in a manner that would show a bias or preference for or against a particular candidate. This could be done, for example, through biased questioning procedures. On the other hand, a forum held for the purpose of educating and informing the voters, which provides fair and impartial treatment

of candidates, and which does not promote or advance one candidate over another, would not constitute participation or intervention in any political campaign on behalf of or in opposition to any candidate for public office. The facts and circumstances of this case establish that both the format and content of the proposed forums will be presented in a neutral manner. All legally qualified congressional candidates will be invited to participate in the forum. The questions will

be prepared and presented by a nonpartisan, independent panel.

The topics discussed will cover a broad range of issues of

interest to the public, notwithstanding that the issues discussed may include issues of particular importance to the organization's members. Each candidate will receive an equal opportunity to present his or her views on each of the issues discussed.

Finally, the moderator selected by the organization will not

comment on the questions or otherwise make comments that imply

approval or disapproval of any of the candidates. In view of

these facts, the organization will not be considered to be engaged in prohibited political activity. This conclusion is based on the totality of the circumstances described. The presence or absence of a particular fact here in other similar situations is not determinative of other cases but would have to be considered in light of all the surrounding factors in that case.

 

HOLDING

 

The conduct of public forums involving qualified congressional candidates in the manner described above, by an organization otherwise described in section 501(c)(3) of the Code, will not constitute participation or intervention in any political

campaign within the meaning of section 501(c)(3).

 

EFFECT ON OTHER REVENUE RULINGS

Rev. Rul. 66-256 is amplified.

_____________________________________________________

Rev. Rul. 2007-41, 2007-25 I.R.B. (June 18, 2007)

 

 

Organizations that are exempt from income tax under section 501(a) of

the Internal Revenue Code as organizations described in section 501(c)(3) may

not participate in, or intervene in (including the publishing or distributing of

statements), any political campaign on behalf of (or in opposition to) any

candidate for public office.

 

 

ISSUE

 

In each of the 21 situations described below, has the organization participated or intervened in a political campaign on behalf of (or in opposition to)

any candidate for public office within the meaning of section 501(c)(3)?

 

 

LAW

 

Section 501(c)(3) provides for the exemption from federal income tax of organizations organized and operated exclusively for charitable or educational purposes, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting to influence legislation (except as otherwise provided in section 501(h)), and which does not participate in, or intervene in (including the publishing or distributing of

statements), any political campaign on behalf of (or in opposition to) any candidate for public office.

 

 

Section 1.501(c) (3)-1(c)(3)(i) of the Income Tax Regulations states that an organization is not operated exclusively for one or more exempt purposes if it is an “action” organization.

 

 

Section 1.501(c)(3)-1(c)(3)(iii) of the regulations defines an “action” organization as an organization that participates or intervenes, directly or indirectly, in any political campaign on behalfof or in opposition to any candidate for public office. The term “candidate for public office” is defined as an individual who offers himself, or is proposed by others, as a contestant for an elective public office, whether such office be national, State, or local. The regulations further provide that activities that constitute participation or intervention in a political campaign on behalf of or in opposition to a candidate in

clude, but are not limited to, the publication or distribution of written statements or the making of oral statements on behalf of or inopposition to such a candidate. Whether an organization is participating or intervening, directly or indirectly, in any politicalcampaign on behalf of or in opposition to any candidate for public office depends upon all of the

facts and circumstances of each case. For example, certain "voter education" activities, including preparation and distribution of certain voter guides, conducted in a non-partisan manner may not constitute prohibited political activities under section 501(c)(3) of the Code. Other so-called "voter education" activities may be proscribed

by the statute.

 

 

Rev. Rul. 78-248, 1978-1 C.B. 154, contrasts several situations illustrating when an organization that publishes a compilation of candidate positions or voting records has or has not engaged in prohibited political activities based on whether the questionnaire used to solicit candidate positions or the voters guide itself shows a bias or preference in content or structure with respect to the views of a particular candidate.

 

See also Rev. Rul. 80-282, 1980-2 C.B. 178, amplifying Rev. Rul. 78-248 regarding the timing and distribution of voter education materials. The presentation of public forums

or debates is a recognized method of educating the public.

 

See Rev. Rul.66-256, 1966-2 C.B. 210 (nonprofit organization formed to conduct public forums at which lectures and debates on social, political, and international matters are presented qualifies for exemption from federal income tax under section 501(c)(3)). Providing a forum for candidates is not, in and of itself, prohibited political activity.

 

See Rev. Rul. 74-574, 1974-2 C.B. 160 (organization operating a broadcast station is not participating in political campaigns on behalf of public candidates by providing

reasonable amounts of air time equally available to all legally qualified candidates for election to public office in compliance with the reasonable access provisions of the Communications Act of1934). However, a forum for candidates could be operated in a manner that would show a bias or preference for or against a particular candidate. This could be done, for example, through biased questioning procedures. On the other hand, a forum held for the purpose of educating and informing the voters, which provides fair and impartial treatment of candidates, and which does not promote or advance one candidate over another, would not constitute participation or intervention in any political campaign on behalf of or in opposition to any candidate for public office.

 

 See Rev. Rul. 86-95, 1986-2 C.B. 73 (organization that proposes to educate voters by conducting a series of public forums in congressional districts during congressional election campaigns is not participating in a political campaign on behalf of any candidate due to the neutral form and content of its proposed forums).

 

ANALYSIS OF FACTUAL SITUATIONS

 

The 21 factual situations appear below under specific subheadings relating to types of activities. In each of the factual situations, all the facts and circumstances are considered in determining whether an organization’s activities result in political campaign intervention.  Note that each of these situations involves only one type of activity. In the case of an organization that combines one or more types of activity, the interaction among the activities may affect the determination of whether or not the organization is engaged in political campaign intervention.

Voter Education, Voter Registration and Get Out the Vote Drives Section 501(c)(3) organizations are permitted to conduct certain voter education activities (including the

presentation of public forums and the publication of voter education guides) if they are carried out in a non-partisan manner. In addition, section 501(c)(3) organizations may encourage people to participate in the electoral process through voter registration and get-out-the-vote drives, conducted in a non-partisan manner. On the other hand, voter education or registration activities conducted in a biased manner that favors(or opposes) one or more candidates is prohibited.

 

Situation 1. B, a section 501(c)(3) organization that promotes community involvement, sets up a booth at the state fair where citizens can register to vote.

The signs and banners in and around the booth give only the name of the organization, the date of the next upcoming statewide election, and notice of the opportunity to register. No reference to any candidate or political party is made by the volunteers staffing the booth or inthe materials available at the booth, other than the official voter registration forms which allow registrants to select a party affiliation. B is not engaged in political campaign intervention when it operates this voter registration booth.

 

 

Situation 2. C is a section 501(c)(3) organization that educates the public on environmental issues. Candidate G is running for the state legislature and an important element of her platform is challenging the environmental policies of the incumbent. Shortly before the election, C sets up a telephone bank to call registered voters in the district in which Candidate G is seeking election. In the phone conversations, C’s representative tells the voter about the importance of environmental issues and asks questions about the voter’s views on these issues. If the voter appears to agree with the incumbent’s position, C’s representative thanks the voter and ends the call. If the voter appears to agree with Candidate G’s position, C’s representative reminds the voter about the upcoming election, stresses the importance of voting in the election and offers to provide transportation to the polls. C is engaged in political campaign intervention when it conducts this get-out-the-vote drive. Individual Activity by Organization Leaders

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

 

Situation 3. President A is the Chief Executive Officer of Hospital J, a section 501(c)(3) organization, and is well known in the community. With the permission of five prominent

healthcare industry leaders, including President A, who have personally endorsed Candidate T, Candidate T publishes a full page ad in the local newspaper listing the names of the five leaders. President A is identified in the ad as the CEO of Hospital J. The ad states, “Titles and affiliations of each individual are provided for identification purposes only.” The ad is paid for by Candidate T’s campaign committee. Because the ad was not paid for by Hospital J, the ad is not otherwise in an official publication of Hospital J, and the endorsement is made by President A in a personal capacity, the ad

does not constitute campaign intervention by Hospital J.

 

 

Situation 4. President B is the president of University K, a section 501(c)(3) organization. University K publishes a monthly alumni newsletter that is distributed to all alumni of the university. In each issue, President B has a column titled “My Views.” The month before the election, President B states in the “My Views” column, “It is my personal opinion that Candidate U should be reelected.”

For that one issue, President B pays from his personal funds the portion of the

cost of the newsletter attributable to the “My Views”column. Even though he paid

part of the cost of the newsletter, the newsletter is an official publication of the

university. Because the endorsement appeared in an official publication of

University K, it constitutes campaign intervention by University K.

 

 

Situation 5.

 

 Minister C is the minister of Church L, a section 501(c)(3) organization and Minister C

is well known in the community. Three weeks before the election, he attends a press conference at Candidate V’s campaign headquarters and states that Candidate V

should be reelected. Minister C does not say he is speaking on behalf of Church L. His endorsement is reported on the front page of the local newspaper and he is identified in the article as the minister of Church L.  Because Minister C did not make the endorsement at an official church function, in an official church publication or otherwise use the church’s assets, and did not state that he was speaking as a representative of

Church L, his actions do not constitute campaign intervention by Church L.

 

 

Situation 6.

 

Chairman D is the chairman of the Board of Directors of M, a section 501(c)(3) organization that educates the public on conservation issues. During a regular meeting of Mshortly before the election, Chairman D spoke on a number of issues, including the importance of voting in the upcoming election, and concluded by stating, “It is important

that you all do your duty in the election and vote for Candidate W.” Because Chairman D’s remarks indicating support for Candidate W were made during an official organization meeting, they constitute political campaign intervention by M

.

Candidate Appearances

 

Depending on the facts and circumstances, an organization may invite political candidates to speak at its events without jeopardizing its tax-exempt

status. Political candidates may be invited in their capacity as candidates, or in

their individual capacity (not as a candidate). Candidates may also appear without an invitation at organization events that are open to the public. When a candidate is invited to speak at an organization event in his or her capacity as a political candidate, factors in determining whether the organization participated or intervened in a political campaign include the following:

 

• Whether the organization provides an equal opportunity to participate to political

candidates seeking the same office;

• Whether the organization indicates any support for or opposition to the candidate (including candidate introductions and communications concerning the candidate’s attendance); and

• Whether any political fundraising occurs. In determining whether candidates

are given an equal opportunity to participate, the nature of the event to which each candidate is invited will be considered, in addition to the manner of presentation. For example, an organization that invites one candidate to speak at its well attended annual

banquet, but invites the opposing candidate to speak at a sparsely attended general meeting, will likely have violated the political campaign prohibition, even if the manner of presentation for both speakers is otherwise neutral. When an organization invites several candidates for the same office to speak at a public forum, factors in determining whether the forum results in political campaign intervention include the following:

 

• Whether questions for the candidates are prepared and presented by an

independent nonpartisan panel,

 

• Whether the topics discussed by the candidates cover a broad range of issues

that the candidates would address if elected to the office sought and are of

interest to the public,

 

• Whether each candidate is given an equal opportunity to present his or her view

on each of the issues discussed,

 

• Whether the candidates are asked to agree or disagree with positions, agendas, platforms or statements of the organization, and

 

• Whether a moderator comments on the questions or otherwise implies approval

or disapproval of the candidates.

 

Situation 7

 

. President E is the president of Society N, a historical society that is a section 501(c)(3) organization. In the month prior to the election, President E invites the three Congressional candidates for the district in which Society N is located to address the members,one each at a regular meeting held on three successive weeks. Each candi

date is given an equal opportunity to address and field questions on a wide variety of topics from the members. Society N’s publicity announcing the dates for each of the candidate’s speeches and President E’s introduction of each candidate

include no comments on their qualifications or any indication of a preference for any c

andidate. Society N’s actions do not constitute political campaign intervention.

 

Situation 8.

 

The facts are the same as in Situation 7except that there are four candidates in the race rather than three, and one of the candidates declines the invitation to speak. In the publicity announcing the dates for each of the candidate’s speeches, Society N

includes a statement that the order of the speakers was determined at random and

the fourth candidate declined the Society’s invitation to speak. President E

makes the same statement in his opening remarks at each of the meetings

where one of the candidates is speaking. Society N’s actions do not constitute political campaign intervention.

 

Situation 9.

 

Minister Fis the minister of Church O, a section 501(c)(3) organization. The Sunday before the November election, Minister F invites Senate Candidate X to preach to her congregation during worship services. During his remarks, Candidate X states, “I am asking not only for your votes, but for your enthusiasm and dedication, for your willingness to go the extra mile to get a very large turnout on Tuesday.” Minister F

invites no other candidate to address her congregation during the Senatorial campaign. Because these activities take place during official church services, they are attributed to Church O. By selectively providing church facilities to allow Candidate X

to speak in support of his campaign, Church O’s actions constitute political campaign

intervention.

 

Candidate Appearances Where Speaking or Participating as a Non-Candidate

 

Candidates may also appear or speak at organization events in a non-candidate capacity. For instance, a political candidate may be a public figure who is invited to speak because he or she: (a) currently holds, or formerly held, public office; (b) is considered an expert in a non political field; or (c) is a celebrity or has led a distinguished military, legal, or public service career. A candidate may choose to attend an event that is open to the public, such as a lecture, concert or worship service. The candidate’s presence at an organization-sponsored event does not, by itself, cause the organization to be engaged in political campaign intervention. However, if the candidate is publicly recognized by the organization, or if the candidate is invited to speak, factors in determining whether the candidate’s appearance results in political campaign

intervention include the following:

 

• Whether the individual is chosen to speak solely for reasons other than

candidacy for public office;

 

• Whether the individual speaks only in a non-candidate capacity;

 

• Whether either the individual or any representative of the organization makes

any mention of his or her candidacy or the election;

 

• Whether any campaign activity occurs in connection with the candidate’s

attendance;

 

• Whether the organization maintains a nonpartisan atmosphere on the premises

or at the event where the candidate is present; and

 

• Whether the organization clearly indicates the capacity in which the candidate is

appearing and does not mention the individual’s political candidacy or the upcoming election in the communications announcing the candidate’s attendance at the event.

 

Situation 10.

 

Historical society P is a section 501(c)(3) organization. Society Pis located in the state capital. President G is the president of Society P

and customarily acknowledges the presence

of any public officials present during

meetings. During the

state gubernatorial race,

Lieutenant Governor Y

, a

candidate, attends a meeting of the

historical society. President G

acknowledges

the Lieutenant Governor’s presence in

his customary manner, saying, “We are

happy to have joining us this

evening Lieutenant Governor Y

.” President G

makes no reference in his welcome to

the Lieutenant Governor’s candidacy or

the election. Society P

has not engaged in political campaign intervention as a

result of President G

’s actions.

Situation 11

. Chairman H

is the chairman of t

he Board of Hospital Q

, a

section 501(c)(3) organization. Hospital Q

is building a new wing. Chairman H

invites Congressman Z

, the representative for the dist

rict containing Hospital Q

,

to attend the groundbreaking ceremony

for the new wing. Congressman Z

is

running for reelection at the time. Chairman H

makes no reference in her

introduction to Congressman Z’

s candidacy or the election. Congressman Z

also

makes no reference to his candidacy or t

he election and does not do any political

campaign fundraising while at Hospital Q

. Hospital Q

has not intervened in a

political campaign.

Situation 12

. University X

is a section 501(c)(3) organization. X

publishes

an alumni newsletter on a regular

basis. Individual alumni

are invited to send in

updates about themselves whic

h are printed in each edition of the newsletter.

8

After receiving an update

letter from Alumnus Q

, X

prints the following: “Alumnus

Q, class of ‘XX is running for mayor of Me

tropolis.” The newsletter does not

contain any reference to this election or to Alumnus Q

’s candidacy other than this

statement of fact. University X

has not intervened in a political campaign.

Situation 13

. Mayor G

attends a concert performed by Symphony S

, a

section 501(c)(3) organization, in City Pa

rk. The concert is free and open to the

public. Mayor G

is a candidate for reelection,

and the concert takes place after

the primary and before

the general election. During the concert, the chairman of

S

’s board addresses the crowd and says,

“I am pleased to see Mayor G

here

tonight. Without his support, these free

concerts in City Park would not be

possible. We will need his help if we w

ant these concerts to continue next year

so please support Mayor G

in November as he has suppor

ted us.” As a result of

these remarks, Symphony S

has engaged in political campaign intervention.

Issue Advocacy vs. Political Campaign Intervention

Section 501(c)(3) organizations may ta

ke positions on public policy issues,

including issues that divide candidates in

an election for public office. However,

section 501(c)(3) organizations must avoi

d any issue advocacy that functions as

political campaign interventi

on. Even if a statement

does not expressly tell an

audience to vote for or against a specif

ic candidate, an or

ganization delivering

the statement is at risk of violating t

he political campaign intervention prohibition

if there is any message favoring or

opposing a candidate. A statement can

identify a candidate not only by stating

the candidate’s name but also by other

means such as showing a picture of the

candidate, referring to political party

affiliations, or other distinct

ive features of a candidate’s

platform or biography.

All the facts and circumstances need to be considered to determine if the

advocacy is political campaign intervention.

Key factors in determining whether a

communication results in political

campaign intervention include the following:

• Whether the statement identifies one or

more candidates for a given public

office;

• Whether the statement expresses approv

al or disapproval for one or more

candidates’ positions and/or actions;

• Whether the statement is delivered

close in time to the election;

• Whether the statement makes refe

rence to voting or an election;

• Whether the issue addressed in t

he communication has been raised as an

issue distinguishing candidates for a given office;

• Whether the communication is part of an

ongoing series of communications by

the organization on the same issue that

are made independent

of the timing of

any election; and

9

• Whether the timing of the communication

and identification of the candidate are

related to a non-electoral event such as

a scheduled vote on specific legislation

by an officeholder who also happens to be a candidate for public office.

A communication is particularly at ri

sk of political campaign intervention

when it makes reference to candidates or

voting in a specific upcoming election.

Nevertheless, the communication must st

ill be considered in context before

arriving at any conclusions.

Situation 14

. University O

, a section 501(c)(3) organization, prepares and

finances a full page newspaper advertisement

that is published in several large

circulation newspapers in State V

shortly before an election in which Senator C

is

a candidate for nomination in a

party primary. Senator C

represents State V

in

the United States Senate. The advertisem

ent states that S.

24, a pending bill in

the United States Senate, would provi

de additional opportuni

ties for State V

residents to attend college, but Senator C

has opposed similar measures in the

past. The advertisement ends with the

statement “Call or

write Senator C

to tell

him to vote for S. 24.” Educational

issues have not been raised as an issue

distinguishing Senator C

from any opponent. S. 24 is scheduled for a vote in the

United States Senate befor

e the election, soon afte

r the date that the

advertisement is published in the news

papers. Even though the advertisement

appears shortly before the elec

tion and identifies Senator C

’s position on the

issue as contrary to O

’s position, University O

has not violated the political

campaign intervention prohibition becaus

e the advertisement does not mention

the election or the candidacy of Senator C

, education issues have not been

raised as distinguishing Senator C

from any opponent, and the timing of the

advertisement and the ident

ification of Senator C

are directly related to the

specifically ident

ified legislation University O

is supporting and appears

immediately before the Un

ited States Senate is sc

heduled to vote on that

particular legislation. The c

andidate identifie

d, Senator C

, is an officeholder who

is in a position to vote on the legislation.

Situation 15

. Organization R

, a section 501(c)(3) organization that

educates the public about the need for im

proved public education, prepares and

finances a radio advertisement urging an

increase in state funding for public

education in State X,

which requires a legislativ

e appropriation. Governor E

is

the governor of State X

. The radio advertisement is first broadcast on several

radio stations in State X

beginning shortly before an election in which Governor E

is a candidate for re-election. The adver

tisement is not part of an ongoing series

of substantially similar advocacy

communications by Organization R

on the same

issue. The advertisement cites num

erous statistics indicating that public

education in State X

is under funded. While the advertisement does not say

anything about Governor E

’s position on funding for public

education, it ends with

“Tell Governor E

what you think about our under-funded schools.” In public

appearances and campaign liter

ature, Governor E

’s opponent has made funding

of public education an issue in the

campaign by focusing on Governor E

’s veto of

10

an income tax increase the previous year to

increase funding of public education.

At the time the advertisem

ent is broadcast, no legislative vote or other major

legislative activity is

scheduled in the State X

legislature on state funding of

public education. Organization R

has violated the political campaign prohibition

because the advertisement identifies Governor E

, appears shortly before an

election in which Governor E

is a candidate, is not

part of an ongoing series of

substantially similar advocacy co

mmunications by Organization R

on the same

issue, is not timed to coincide with a non el

ection event such as a legislative vote

or other major legislative action on that

issue, and takes a position on an issue

that the opponent has used to disti

nguish himself from Governor E

.

Situation 16

. Candidate A

and Candidate B

are candidates for the state

senate in District W

of State X

. The issue of State X

funding for a new mass

transit project in District W

is a prominent issue in the campaign. Both

candidates have spoken out on the issue. Candidate A

supports funding the new

mass transit project. Candidate B

opposes the project and supports State X

funding for highway impr

ovements instead. P

is the executive director of C

, a

section 501(c)(3) organization that promot

es community development in District

W

. At C

’s annual fundraising di

nner in District W

, which takes place in the month

before the election in State X

, P

gives a lengthy speech about community

development issues including the transportation issues. P

does not mention the

name of any candidate or any political party

. However, at the conclusion of the

speech, P

makes the following statement, “For

those of you who care about

quality of life in District W

and the growing traffic congestion, there is a very

important choice coming

up next month. We need new

mass transit. More

highway funding will not make a differenc

e. You have the power to relieve the

congestion and improve your qual

ity of life in District W

. Use that power when

you go to the polls and cast your vote in

the election for your

state senator.” C

has violated the political campaign intervention as a result of P

's remarks at C

's

official function shortly befor

e the election, in which P

referred to the upcoming

election after stating a position on an i

ssue that is a prominent issue in a

campaign that distinguishes the candidates.

Business Activity

The question of whether an activity cons

titutes participation or intervention

in a political campaign may also arise in

the context of a business activity of the

organization, such as selling or renting

of mailing lists, the leasing of office

space, or the acceptance of paid political ad

vertising. In this context, some of the

factors to be considered in determining

whether the organization has engaged in

political campaign intervention include the following:

• Whether the good, service or facility is

available to candidates in the same

election on an equal basis,

11

• Whether the good, service, or facility is

available only to candidates and not to

the general public,

• Whether the fees charged to candidates

are at the organization’s customary

and usual rates, and

• Whether the activity is an ongoing activity

of the organization or whether it is

conducted only for a particular candidate.

Situation 17

. Museum K

is a section 501(c)(3) organization. It owns an

historic building that has a large hall su

itable for hosting dinners and receptions.

For several years, Museum K

has made the hall available

for rent to members of

the public. Standard fees are set for r

enting the hall based on the number of

people in attendance, and a number of di

fferent organizations have rented the

hall. Museum K

rents the hall on a first come,

first served basis. Candidate P

rents Museum K

’s social hall for a fundrai

sing dinner. Candidate P

’s campaign

pays the standard fee for the dinner. Museum K

is not involved in political

campaign intervention as a result of

renting the hall to Candidate P

for use as the

site of a campaign fundraising dinner.

Situation 18

. Theater L

is a section 501(c)(3) organization. It maintains a

mailing list of all of its subscri

bers and contributors. Theater L

has never rented

its mailing list to a th

ird party. Theater L

is approached by the campaign

committee of Candidate Q

, who supports increased funding for the arts.

Candidate Q

's campaign committee offers to rent Theater L

's mailing list for a fee

that is comparable to fees charged by

other similar organizations. Theater L

rents

its mailing list to Candidate Q

's campaign committee. Theater L

declines similar

requests from campaign committees

of other candidates. Theater L

has

intervened in a political campaign.

Web Sites

The Internet has become a widely used communications tool. Section

501(c)(3) organizations use their own w

eb sites to disseminate statements and

information. They also routinely link t

heir web sites to web sites maintained by

other organizations as a way of prov

iding additional information that the

organizations believe is useful

or relevant to the public.

A web site is a form of communication.

If an organization posts something

on its web site that favors or opposes

a candidate for public office, the

organization will be treated the same as if

it distributed printed material, oral

statements or broadcasts that

favored or opposed a candidate.

An organization has control over whet

her it establishes a link to another

site. When an organization establis

hes a link to another web site, the

12

organization is responsible for the consequences of establishing and maintaining

that link, even if the organization does not

have control over the content of the

linked site. Because the linked content

may change over time, an organization

may reduce the risk of political campai

gn intervention by monitoring the linked

content and adjusting the links accordingly.

Links to candidate-related material,

by themselves, do not necessarily

constitute political campaign intervention.

All the facts and circumstances must

be taken into account when assessing whet

her a link produces that result. The

facts and circumstances to be consider

ed include, but are

not limited to, the

context for the link on the organization’s

web site, whether all candidates are

represented, any exempt purpose served by

offering the link, and the directness

of the links between the organization’s web

site and the web page that contains

material favoring or opposing a

candidate for public office.

Situation 19

. M

, a section 501(c)(3) organization,

maintains a web site and

posts an unbiased, nonpartisan voter guide t

hat is prepared consistent with the

principles discussed in Rev. Rul. 78-

248. For each candidate covered in the

voter guide, M

includes a link to that candidate’s

official campaign web site. The

links to the candidate web sites are presented on a consistent neutral basis for

each candidate, with text saying “For more information on Candidate X

, you may

consult [URL].” M

has not intervened in a politic

al campaign because the links

are provided for the exempt purpose of

educating voters and are presented in a

neutral, unbiased manner that includes al

l candidates for a particular office.

Situation 20

. Hospital N

, a section 501(c)(3) organization, maintains a web

site that includes such information as medi

cal staff listings, directions to Hospital

N

, and descriptions of its specialty health

programs, major research projects, and

other community outreach pr

ograms. On one page of the web site, Hospital N

describes its treatment progr

am for a particular disease.

At the end of the page,

it includes a section of links to other w

eb sites titled “More Information.” These

links include links to other hospitals t

hat have treatment programs for this

disease, research organizations seeking

cures for that disease, and articles

about treatment programs. Th

is section includes a link to an article on the web

site of O

, a major national newspa

per, praising Hospital N

’s treatment program

for the disease. The page containing the article on O

’s web site contains no

reference to any candidate or election

and has no direct links to candidate or

election information. Elsewhere on O

’s web site, there is a page displaying

editorials that O

has published. Several of the

editorials endorse candidates in

an election that has not yet occurred. Hospital N

has not intervened in a political

campaign by maintaining t

he link to the article on O

’s web site because the link is

provided for the exempt purpose of educ

ating the public about Hospital N

’s

programs and neither the context for

the link, nor the relationship between

Hospital N

and O

nor the arrangement of the

links going from Hospital N

’s web

site to the endorsement on O

’s web site indicate that Hospital N

was favoring or

opposing any candidate.

 ____________________________________________________



Rev. Rul. 81-95, 1981-1 C.B. 332

What effect does engaging in political campaign activities

have on an organization that is exempt from federal income tax

under section 501(c)(4) of the Internal Revenue Code?

FACTS

The organization is primarily engaged in activities designed

to promote social welfare and is exempt from federal income tax

under section 501(c)(4) of the Code. In addition, it carries on

certain activities involving participation and intervention in

political campaigns on behalf of or in opposition to candidates

for nomination or election to public office. These political

activities take the form of both financial assistance and in-kind

services.

LAW

Section 501(c)(4) of the Code provides for the exemption

from federal income tax of organizations not organized for profit

but operated exclusively for the promotion of social welfare.

Section 1.501(c)(4)-1(a)(2)(i) of the Income Tax Regulations

provides that an organizations 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.

Section 1.501(c)(4)-1(a)(2)(ii) of the regulation provides

that 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.

Section 527(b) of the Code imposes a tax on the taxable

income of certain political organizations.

Section 527(f)(1) of the Code provides, in part, that if an

organization described in section 501(c) which is exempt from tax

under section 501(a) expends any amount during the taxable year

directly or indirectly for political activities described in

section 527(e)(2), then such amount shall be subject to tax under

subsection (b) as if the amount constituted political

organization taxable income.

Section 527(e)(2) of the Code describes the type of

political activities the expenditures for which will subject an

exempt organization to tax. These activities are influencing or

attempting to influence the selection, nomination, election, or

appointment of any individual to any Federal, state, or local

public office of office in a political organization, or the

election of Presidential or Vice-Presidential electors, whether

or not such individuals or electors are selected, nominated,

elected, or appointed.

ANALYSIS

In order to qualify for exemption under section 501(c)(4) of

the Code, an organization must be primarily engaged in activities

that promote social welfare. Although the promotion of social

welfare within the meaning of section 1.501(c)(4)-1 of the

regulations does not include political campaign activities, the

regulations do not impose a complete ban on such activities for

section 501(c)(4) organizations. Thus, an organization may carry

on lawful political activities and remain exempt under section

501(c)(4) as long as it is primarily engaged in activities that

promote social welfare.

For an example of an organization whose participation and

intervention in political campaigns bars its exemption under

section 501(c)(4), see Rev. Rul. 67-368, C.B. 194. That revenue

ruling holds that an organization whose primary activity is

rating candidates for public office does not qualify for

exemption under section 501(c)(4) because such activity does not

constitute the promotion of social welfare.

See also Rev. Rul. 67-71, 1967-1 C.B. 125, Rev. Rul. 74-574,

1974-2 C.B. 160, Rev. Rul. 76-456, 1976-2 C.B. 151, Rev. Rul.

78-248, 1978-1 C.B. 154, and Rev. Rul. 80-282, 1980-41 I.R.B. 7,

for other examples of what constitutes participation or

intervention in political campaigns.

Section 527 of the Code, which was added by Pub.L. 93-625,

January 3, 1975, 1975-1 C.B. 510, 515, and amended by Pub.L.

95-502, October 21, 1978, 1978-2 C.B. 393-395, affect the

treatment of political activities of exempt organizations. The

report of the Senate Finance Committee on Pub.L. 93-625

specifically indicates that the provisions of section 527(f)

apply to organizations that are exempt under section 501(c)(4).

It states:

"Exempt organizations which are not political

organizations.--Under present law, certain tax-exempt

organizations (such as sec. 501(c)(4) organizations) may

engage in political campaign activities. The bill generally

treats these organizations on an equal basis for tax

purposes with political organizations. Under the bill

organizations which are exempt under section 501(a) and are

described in section 501(c), that engage in political

activity, are to be taxed on their net investment income in

part as if they were political organizations...."

S.Rep.No.93-1358, 93d Cong., 2d Sess., 29 (1974), 1975-1

C.B. 517, 533.

HOLDING

Since the organization's primary activities promote social

welfare, its lawful participation or intervention in political



___________________________________________



1984 EO CPE Text

 

A. DEVELOPMENTS RELATING TO CHURCHES

1. Introduction

The Internal Revenue Service administration of the Internal Revenue Code

provisions recognizing religious organizations as exempt from federal income tax

is a matter of recurring interest to both the Service and the general public. In

recognition of this interest, the 1980, 1981, and 1983 Continuing Professional

Education texts contain discussions of the statutory and judicial bases for current

Service policy in the area. This discussion will not repeat that material but rather

will review particular developments occurring during 1983 that have an impact on

the matters discussed in the earlier CPE texts.

2. Recent Litigation

The preceding year saw the addition of several more court decisions to the

long line of precedents denying exemption and deductibility of contributions to

mail-order ministries and similar "churches" established for tax avoidance

purposes.

One of the more recent decisions, and one containing a particularly colorful

judicial response to the use of a church as a means of tax avoidance, is Miedaner v.

Commissioner, 81 T.C. No. 21 (Sept. 7, 1983). The case involves the taxation of

royalty income to, and the deductibility of contributions to, the Church of Physical

Theology, an organization described in the decision as nothing more than the alter

ego of the founder. The evidence in the case demonstrated that the Church's

founder had assigned the royalties from his book to the Church and that Church

funds were used primarily to pay the Miedaners' living expenses. Except for

nominal contributions (less than $100 total), all income to the Church came from

the Miedaners. Typically, their contributions to the Church equaled the amount of

expenses paid. Such expenses paid by the Church included dental bills, eyeglasses

purchase, piano refinishing, exercise equipment purchases, and the purchase of an

automobile radar detector. The Court concluded that the primary purpose of the

Church was to promote the founder's book and pay his personal expenses and those

of his wife. In its opinion, the Court described the scheme as "as transparent as a

clear day in the Rocky Mountains" and that the taxpayers "kept shouting religion,

religion, religion, but the Court kept hearing tax avoidance, tax avoidance, tax

avoidance."

Similarly, in a case involving the uniquely named Ecclesiastical Order of the

ISM of AM, Inc., the Tax Court found that an organization providing essentially a

commercial tax service did not qualify for exemption under IRC 501(c)(3) or for

classification as a church under IRC 509(a)(1) and IRC 170(b)(1)(A)(i). In its

opinion, reported as The Ecclesiastical Order of the ISM of AM, Inc. v.

Commissioner, 80 T.C. 833 (1983), the Court was careful to note that the

nontraditional or unorthodox nature of the organization's beliefs was not an issue

but that denial of exemption was based on the presence of a substantial nonexempt

purpose and activity, the provision of tax advice. In its opinion, the Court referred

to another recent decision, Bethel Conservative Mennonite Church v.

Commissioner, 80 T.C. 352 (1983).

In Bethel, the Court held that a church was not operated exclusively for

religious purposes during years in which it operated a medical aid plan for its

members. The plan expenditures accounted for 22 percent of the organization's

total disbursements and a substantial portion of the receipts. The medical plan was

funded by contributions from the congregation and restricted its benefits to the

congregation. While noting that the organization, without question, undertook

religious activities of a traditional nature, the Court stated that if a church engages

in a substantial nonexempt activity, it does not meet the operational test of IRC

501(c)(3) regardless of how substantial its religious or other exempt activities may

be. The medical plan in this case was operated for the private benefit of the church

members rather than for an exempt purpose.

There are a handful of deductibility cases that involve donations to "sham"

churches. These are Jenny v. Commissioner, 45 T.C.M. 440 (1983); Mendenhall

,

T.C.M. 1983-491; and Davis v. Commissioner, 81 T.C. 49 (1983).

Finally, two other court cases of relevance to the church area involve the

Church of Scientology of California and Bob Jones University. A discussion of

these cases has been included in the discussion of public policy and exempt status

in the CPE topic on private schools in this text.

3. Developments Relating to Church Examinations

Congress is currently considering several bills (H.R. 2172, H.R. 2977, and S.

1262) which would have the effect of amending IRC 7605(c), relating to the

examination of churches. The proposed "Church Audit Procedures Act of 1983"

(all three bills have the same name) would require that the Service "possess

evidence" that a church is engaging in an unrelated trade or business or is no longer

undertaking exempt activities before beginning an investigation. Churches would

have to be sent several notices outlining the nature of the investigation and the

evidence possessed by the Service. Church examinations would be required to be

completed within one year. The proposed legislation imposes a three year statute of

limitations whether or not a church had filed a return and would also permit a

church to seek a declaratory judgment on its exempt status upon notification by the

Service of intention to revoke exemption or assess income tax on unrelated

business taxable income. Churches would be permitted to obtain injunctions

restraining the Service from further undertaking any audit activity which the

churches claimed to be in violation of the new audit procedures. Hearings were

held September 30, 1983, on the Senate version of the legislation by the Senate

Finance Subcommittee on Oversight.

Church examinations were also the subject of a recent court decision. In

Church of World Peace, Inc. v. I.R.S., 715 F. 2d 492 (10th Cir. 1983), a church

attempted to prevent summary revocation of its exempt status through an

injunction preventing further examination and a declaratory judgment that the

Service was acting beyond its statutory and constitutional authority. The Service

had attempted to obtain information on the organization's exempt status by letter

but was unsuccessful. The organization then refused a written request to produce

specific books and records. The Service issued a letter proposing revocation and

holding that the organization had not exhausted its administrative remedies. The

Court of Appeals affirmed a District Court refusal to grant either a declaratory

judgment or an injunction on the basis that an adequate remedy at law existed

should the Service revoke the organization's exempt status. Dicta in the opinion

indicated that the Service could not summarily revoke the exempt status of a

church based solely on the organization's refusal to submit information.

4. Churches and Political Activities

IRC 501(c)(3) provides, in part, that organizations organized and operated

exclusively for religious purposes cannot participate in or intervene in (including

the publishing or distributing of statements) any political campaign on behalf of

any candidate for public office without jeopardizing their exempt status. The

regulations, in sections 1.501(c)-1(c)(3)(i) and 1.501(c)(3)-1(c)(3)(iii), further

define such proscribed political activity as the direct or indirect intervention or

participation in any political campaign on behalf of or in opposition to any

candidate for public office. The term "candidate for public office" means an

individual who offers himself, or is proposed by others, as a contestant for an

elective office, whether such office be national, state, or local. Activities which

constitute participation or intervention in a political campaign include, but are not

limited to, the publication or distribution of written or printed statements or the

making of oral statements on behalf of or in opposition to candidates.

The predecessors to IRC 501(c)(3) prevented religious organizations from

carrying on propaganda, or otherwise attempting, to influence legislation as a

substantial part of their activities if they wished to be exempt from income tax. The

present prohibition on political activities was included in IRC 501(c)(3) by

Congress in an amendment proposed by then Senator Lyndon Johnson in 1954.

Since the 1954 legislation prohibiting intervention in political campaigns, a

number of revenue rulings applicable to all IRC 501(c)(3 organizations have been

issued by the Service in order to clarify those activities which would constitute

such intervention.

In Rev. Rul. 67-71, 1967-1 C.B. 125, an organization supporting a particular

slate of candidates for an elected school board was found to be intervening in

political campaigns even though the exempt organization was attempting to

evaluate the professional, rather than partisan, qualifications of the respective

candidates.

In Rev. Rul. 74-574, 1974-2 C.B. 160, the Service determined that a

religious and educational broadcasting station was not intervening in political

campaigns when it made reasonable air time equally available (as then required by

the Federal Communications Act of 1934, 47 U.S.C. sect. 312(a)(7)) to all legally

qualified candidates for public office. The station, at the beginning and end of each

broadcast, stated that the views expressed were those of the candidate and not the

station.

Rev. Rul. 76-456, 1976-2 C.B. 151, concludes that an organization was not

intervening in political campaigns where the organization drafted a code of fair

campaign practices if it did not solicit the signing or endorsement of the code by

candidates for public office. The revenue ruling does state that, if the organization

solicits candidates to sign or endorse its code, it would be intervening in political

campaigns.

Rev. Rul. 78-248, 1978-1 C.B. 154, states that the facts and circumstances of

each case determine whether an organization is intervening in a political campaign.

Two examples are provided which describe situations in which intervention did not

occur. Both relate to organizations which provide a voters' guide on the positions

of the candidates on a wide variety of issues without any evidence, direct or

indirect, of preference among the candidates. Two examples of political

intervention are also provided. These examples describe voters' guides which

evidence a bias, either through the types of questions asked, or through the limited

subjects covered in the guide. Rev. Rul. 78-248 revoked Rev. Rul. 78-160, 1978-1

C.B. 153, which had taken a very strict approach to the types of activities an

organization could engage in without intervening in a political campaign.

Rev. Rul. 78-248 was amplified by Rev. Rul. 80-282, 1980-2 C.B. 178,

which stated that, in certain circumstances, a voters guide may be distributed,

without intervening in a political campaign, even though it identifies the

organization's position on the votes recorded in the voters guide. Factors indicating

that the guide did not constitute intervention in a political campaign included the

limited distribution of the guide to the publication's normal readership, inclusion of

individuals not running for reelection, and no express or implied endorsements in

the guide.

The case of Christian Echoes National Ministry, Inc. v. U. S., 470 F. 2d 849

(10th Cir. 1972), cert. denied, 414 U. S. 864 (1973), concerned political

intervention, not in the form of an endorsement of a specific candidate, but in the

form of attacks in publications and in broadcasts on candidates and incumbents

considered too liberal by the religious organization. The Court held that the

organization was not exempt under IRC 501(c)(3). The court also dismissed a

claim by the organization that the IRC 501(c)(3) prohibition on political activities

was an unconstitutional restriction on its freedom of speech. In doing so the court

stated:

In light of the fact that tax exemption is a privilege, a matter of

grace rather than right, we hold that the limitations contained in

section 501(c)(3) withholding exemption from nonprofit corporations

do not deprive Christian Echoes of its constitutionally guaranteed

right of free speech. The taxpayer may engage in all such activities

without restraint, subject, however, to withholding of the exemption

or, in the alternative, the taxpayer may refrain from such activities and

obtain the privilege of exemption. ... The Congressional purposes

evidenced by the 1934 and 1954 amendments are clearly

constitutionally justified in keeping with the separation and neutrality

principles particularly applicable in this case and, more succinctly, the

principle that government shall not subsidize, directly or indirectly,

those organizations whose substantial activities are directed toward

the accomplishment of legislative goals or the election or defeat or

particular candidates.

The Service is now engaged in a controversial and highly visible law suit

with potential constitutional impact in the areas of freedom of speech and the

establishment of religion. At issue is alleged political activity by churches and

church organizations exempt from federal income tax under IRC 501(c)(3).

Abortion Rights Mobilization, Inc. (ARM), along with several other

organizations and individuals, is suing the Secretary of the Treasury and the

Commissioner. It is the plaintiffs' position that the Service has knowingly

permitted the Roman Catholic Church and some of its affiliates to engage in

political activity on the issue of abortion; i.e., they allege that the Church has

endorsed candidates for public office, passed out campaign literature and otherwise

supported "pro-life" candidates in direct contravention of its exempt status under

IRC 501(c)(3) and without incurring censure from the Service. The plaintiffs state

that by permitting such activity, the Service has allowed a privilege to the Church

not accorded to other IRC 501(c)(3) organizations and, thus, has violated the

constitutional mandate for separation of church and state. The case is before the U.

S. District Court for the Southern District of New York.

In a preliminary motion the Service challenged the plaintiffs' standing to sue.

The Court, in Abortion Rights Mobilization, Inc. v. Regan, 552 Fed. Supp. 364

(S.D.N.Y. 1982), ruled against the Service. The case is currently in the discovery

stage. The standing issue in this case is similar to the issue being litigated in

Donald T. Regan et al. v. Inez Wright et al., 656 F. 2d 820 (D.D.C. 1981), S. Ct.

Docket 81-970. See a discussion of the Wright case in the CPE topic on private

schools in this text.

5. Conclusion

As the preceding discussion indicates, the topic of churches and federal

income tax exemption is one of great interest and great sensitivity. Both pending

litigation and pending legislation could have a dramatic impact on the Service's

administration of the Code provisions applicable to such religious organizations.

 __________________________________________



Tax-Exempt Organizations and the Internet (Part 1)

 

Date: 1/1/2000

As the internet becomes an increasingly important method for communicating with the world and conducting exempt-purpose activities, tax-exempt organizations are using the Internet more and more heavily. The wide array of uses for the Internet is generating an ever-growing list of tax questions for these organizations. The IRS and Treasury have recognized this development and announced in the winter of 1999 that they intend to solicit public comments on which questions are of concern and how they should be answered.

This article is organized by types of Internet-based activities that an organization may undertake. For each activity, it then presents and analyzes relevant tax issues. It also identifies other pertinent legal issues, especially intellectual property issues, that bear on the organization's capacity to undertake the activity. These non-tax issues can have very significant consequences. Therefore, tax-exempt organizations would be well advised to do a comprehensive legal review of any significant Internet activities that covers not only tax issues but all the legal ramifications of using this new medium.

The tax issues prompted by use of the Internet fall generally into four categories:

Effect on Exempt Status

Does the conduct of the activity affect the ability of the organization to meet the qualifications for tax exemption under the applicable Internal Revenue Code ("Code") provisions, e.g. section 501(c)(3)? If there is international participation in the activity, will other countries assert jurisdiction to tax income generated, and will they recognize a tax exemption for the organization?

 

Political Activity Content

Web site content that relates to political campaigns may also give rise to tax concerns. Char- itable, educational, religious, and other similar organizations that are exempt from tax under section 501(c)(3) may not intervene in any campaign for public office and remain exempt from federal income tax. The prohibition is absolute. In addition, section 4955 imposes a 10 percent excise tax on each expenditure a section 501(c)(3) organization makes to participate or intervene in a political campaign. Section 501(c)(4) organizations must limit their political activities, because direct or indirect partici7.25.3.18.1.3  (02-23-1999)
Public Discussion of Political Issues

 

·  An organization that operated a broadcasting station was not participating in political activities by providing reasonable air time equally available to all legally qualified candidates for election to public office in compliance with the Federal Communications Act of 1934. The organization neither endorsed a candidate nor any viewpoint expressed by a candidate. Rev. Rul. 74–574, 1974–2 C.B. 161.

pation or intervention in a political campaign does not constitute promotion of social welfare, and a section 501(c)(4) organization must be operated primarily for the promotion of social welfare. Treas. Reg. §1.501(c)(4)-1(a)(2). See, e.g., Rev. Rul. 81-95, 1981-1 C.B. 332 (organization provides financial assistance and in-kind services to political campaigns but not to an extent that would make the assistance its primary activity). Trade associations may engage in political activity without jeopardizing their tax-exempt status provided that their political activity promotes the interests of an entire line of business and does not provide a particular service to members. Treas. Reg. §1.501(c)(6)-1.

One special subcategory of tax-exempt organizations, section 527 political organizations, operates under converse rules that provide for tax exemption on income that is used for activities that are directly related to and support the process of influencing or attempting to influence the selection, nomination, election, or appointment of any individual to public office or office in a political organization. Treas. Reg. §1.527-2(c). Section 527 organizations are taxable on their non-exempt function income. Therefore, to the extent they receive income that they do not use in the same year for political campaign purposes, they will owe tax. These organizations, which are typically candidate committees and party organizations, will want their Web site content to promote candidates for office to maximize their tax benefits.

Political Campaign Intervention

The Service has provided some guidance over the years on how to identify political campaign intervention. For a summary of the guidance, and particularly the guidance relating to section 501(c)(3) organizations, see J. Kindell and J. Reilly, "Election Year Issues," Exempt Organizations Technical Instruction Program for FY93, 400. For example, section 501(c)(3) organizations may publish legislators' voting records or issue voter guides under certain circumstances without intervening in a political campaign. See, e.g., Rev. Rul. 78-248, 1978-1 C.B. 154, Situation 1 (publishing voting record with no editorial commentary or structure suggesting opinion on votes); Rev. Rul. 80-282, 1980-2 C.B. 178 (publishing voting record on select issues in regular newsletter without commenting on who is candidate for re-election or timing publication to affect election). Both section 501(c)(3) and 501(c)(4) organizations should be aware that it is unclear whether the IRS will treat advocacy with respect to certain issues that are closely identified with particular candidates as campaign intervention. Therefore, if an organization is considering using its Web site to advocate a position on an issue that is closely identified with a candidate for public office or has been publicized intensively in connection with an election, it should seek assistance from knowledgeable sources before using the Web site in this way.

Unlike the standards for permissible lobbying that apply to section 501(c)(3) organizations making an election under section 501(h), the standards for permissible campaign intervention consistent with exemption under section 501(c)(3) are not tied to expenditures. Therefore, any amount of political campaign activity represents a potential basis for revocation of exemption for a section 501(c)(3) organization, regardless of whether it is accomplished over the Web at little or no financial cost to the organization. Limiting the expenditure may reduce or eliminate liability for tax under section 4955, but the IRS retains the discretion to seek revocation in combination with tax under section 4955 or separate and apart from any tax owed under that section. Treas. Reg. §53.4955-1(a). Accordingly, tax-exempt organizations that are subject to tax-based restrictions on their political activities should ensure that any information posted on the organization's Web site on the organization's behalf that refers directly or indirectly to a candidate for public office be evaluated as possible campaign intervention. An individual is a candidate if he or she offers himself or herself or is proposed by others as a contestant for an elective public office at the national, state, or local level. See Treas. Reg. §§1.501(c)(3)-1(c)(3)(iii); 53.4945-3(a)(2).

Placing political content on a Web site can also have tax consequences for any private foundation that has provided a grant to support development or maintenance of the Web site. If a private foundation makes a grant to support intervention in a political campaign, it makes a taxable expenditure pursuant to 4945(d)(2) and owes a 10 percent excise tax on the expenditure. The connection between the Web site content and the private foundation grant will arise only if the private foundation grant is earmarked for use in connection with the Web site or the political campaign activities. See Treas. Reg. §§53.4945-3(a)(1); 53.4945-2(a)(5). A grant is earmarked "if the grant is given pursuant to an agreement, oral or written, that the grant will be used for specific purposes." Id.