Ban on Political Activities: An Election-Year Warning for Charities

As the 2012 elections draw near, the IRS is once again increasing its oversight of the ban on political campaign activities by Sec. 501(c)(3) charitable organizations. The consequences of violations can be severe, including fines and possible revocation of the organization's tax-exempt status. Understanding and communicating to organization managers the rules discussed in this article will help CPAs ensure that clients do not jeopardize their tax-exempt status. It is crucial for CPAs to advise their exempt-organization clients about IRS guidance on what is and is not allowed in relation to political campaigns. A good place to start is Rev Rul. 2007-41, in which the IRS provides examples of acceptable and unacceptable campaign involvement. Organizations may invite candidates to speak at their official functions without fear of violating the prohibition on political intervention, as long as campaign activities do not occur at the function and the organization does not indicate any support of, or opposition to, the candidate.