The IRS recently proposed new rules concerning political activity by 501(c)(4) organizations (i.e., social welfare organizations). The proposed rules, which are currently subject to public comment, are intended to provide the organizations with guidance on political activities that will not be considered to promote social welfare. Under existing IRS rules, 501(c)(4) organizations may make expenditures for political campaign activities so long as such activities do not constitute the organization’s primary activity (generally they can spend up to half of their money on political activity). However, the existing rules do not specify what constitutes political activity.
A 501(c)(4) organization is tax-exempt and may receive anonymous donations of any size. Its primary purpose must be to further the common good and general welfare of the people of the community.
