The IRS, as part of its June 24 report, offered an expedited safe-harbor option to organizations seeking recognition of exemption as social welfare entities (IRC § 501(c)(4) groups) that plan some political campaign activity: Make a certification and obtain recognition in two weeks. This option is being extended to 82 organizations that have had their applications pending for over 120 days.
The certification is that the organization will devote at least 60 percent of its time and spending on activities that promote social welfare and no more than 40 percent of its time and spending on political campaign activity (FS-2013-8). These thresholds apply for past, current, and future years. Solely for the purpose of determining eligibility for the expedited procedure, an organization “must count, among other things, any public communication identifying a candidate that occurred within 60 days prior to a general election or 30 days prior to a primary as political campaign intervention.”
This option was formalized in a memorandum from the Director, Exempt Organizations (EO), to the EO Determinations and Technical units, made public on June 28 (TE/GE-07-0613-08). The letter presenting this option to applicable exempt organizations is IRS form letter 5228. [23.5]
Commentary: This option will cause more confusion rather than solve the application backlog problem. If the word primarily means that 49 percent of time and spending is permissible for political campaign activity by these organizations, then why the ratcheting down of the percentage? Some will assume that primarily means a 40 percent maximum; that will probably carry over to other aspects of exempt organizations law. Shaving off 9 percentage points is arbitrary; it will lead to social welfare organizations operating under two different sets of allowable political activity rules, and even more turmoil in interpreting these rules.
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