James F. McDonough
Of Counsel
732-568-8360 jmcdonough@sh-law.comKey Contacts
Back
One of the many controversies in Washington, D.C. is the dispute arising out of the Internal Revenue Service’s extensive review of applications of exempt organizations using the names with words such as “Tea Party,” “Patriots” and “We The People.” I spent some time explaining to a client how the review process between the IRS and the Tea Party organizations are conducted. More importantly, I explained why the review is important.
An organization is taxable for federal income tax purposes unless it qualifies under a particular subsection of section (“§”) 501 of the Internal Revenue Code. The organization submits an Application For Recognition of Exemption Under Section 501( c)(3) of the Internal Revenue Code on Form 1023. Organizations that serve charitable and educational purposes are eligible for exempt status. Political organizations are treated differently and are governed by different rules. The operative word in this analysis is “educational” because educating the public on an issue could also be construed as being political or attempting to influence voters and elections.
The regulations in this area provide guidance to what is acceptable as “educational.” It states:
An organization may be educational even though it advocates a particular position or viewpoint so long as it presents a sufficiently full and fair exposition of the pertinent facts in order to permit individuals or the public to form an independent opinion or conclusion.
When is an organization educational under §501 (c)(3) and what are there limits on what an organization may advocate on issues involving public policy? I posed this question to a client who became uneasy with the prospect of charities acting as political organizations and influencing elections. This is the issue that appears lost in D.C. political theater.
There are controversial public policy issues such as gay and lesbian rights, prayer in schools, contraception and church medical plans. There are no shortage of cases where religious organizations clashed with the government lost tax exempt status. Bob Jones University, Synanon Church and the Church of Scientology are among the most notable.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Author: Jesse M. Dimitro
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Author: Jesse M. Dimitro
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Author: Scarinci Hollenbeck, LLC
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
Author: Dan Brecher
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
Author: Ronald S. Bienstock
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
Author: Patrick T. Conlon
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
IRS and the Tea Party
Author: James F. McDonough
One of the many controversies in Washington, D.C. is the dispute arising out of the Internal Revenue Service’s extensive review of applications of exempt organizations using the names with words such as “Tea Party,” “Patriots” and “We The People.” I spent some time explaining to a client how the review process between the IRS and the Tea Party organizations are conducted. More importantly, I explained why the review is important.
An organization is taxable for federal income tax purposes unless it qualifies under a particular subsection of section (“§”) 501 of the Internal Revenue Code. The organization submits an Application For Recognition of Exemption Under Section 501( c)(3) of the Internal Revenue Code on Form 1023. Organizations that serve charitable and educational purposes are eligible for exempt status. Political organizations are treated differently and are governed by different rules. The operative word in this analysis is “educational” because educating the public on an issue could also be construed as being political or attempting to influence voters and elections.
The regulations in this area provide guidance to what is acceptable as “educational.” It states:
An organization may be educational even though it advocates a particular position or viewpoint so long as it presents a sufficiently full and fair exposition of the pertinent facts in order to permit individuals or the public to form an independent opinion or conclusion.
When is an organization educational under §501 (c)(3) and what are there limits on what an organization may advocate on issues involving public policy? I posed this question to a client who became uneasy with the prospect of charities acting as political organizations and influencing elections. This is the issue that appears lost in D.C. political theater.
There are controversial public policy issues such as gay and lesbian rights, prayer in schools, contraception and church medical plans. There are no shortage of cases where religious organizations clashed with the government lost tax exempt status. Bob Jones University, Synanon Church and the Church of Scientology are among the most notable.