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struggle4progress

(119,400 posts)
Sat Sep 7, 2024, 05:09 PM Sep 7

How to lose your 501(c)(3) tax-exempt status (without really trying)

It’s easy for a 501(c)(3) organization to maintain its tax exempt status – and can be just
as easy to lose it.

Organizations recognized as exempt from federal income tax under this section of the
Internal Revenue Code include private foundations as well as churches, educational
institutions, hospitals, and many other types of public charities.

A 501(c)(3) organization can maintain its tax-exempt status if it follows the rules
affecting these six areas: private benefit/inurement, lobbying, political campaign activity,
unrelated business income (UBI), annual reporting obligation, and operation in
accordance with stated exempt purpose ...

All 501(c)(3) organizations are prohibited from participating in any political campaign on
behalf of (or in opposition to) any candidate running for public office. The prohibition
applies to all campaigns at the federal, state and local levels ...

https://www.irs.gov/pub/irs-tege/How%20to%20Lose%20Your%20Tax%20Exempt%20Status.pdf

5 replies = new reply since forum marked as read
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How to lose your 501(c)(3) tax-exempt status (without really trying) (Original Post) struggle4progress Sep 7 OP
Restriction of political campaign intervention by Section 501(c)(3) tax-exempt organizations struggle4progress Sep 7 #1
If it was that easy to lose a 501(c)(3) status why haven't those churches that preach in2herbs Sep 7 #2
Because they don't violate the regulation as written. Igel Sep 7 #4
501(c)(4) are non profits that can lobby. surfered Sep 7 #3
The loophole: surfered Sep 7 #5

struggle4progress

(119,400 posts)
1. Restriction of political campaign intervention by Section 501(c)(3) tax-exempt organizations
Sat Sep 7, 2024, 05:11 PM
Sep 7

... Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes...

https://www.irs.gov/charities-non-profits/charitable-organizations/restriction-of-political-campaign-intervention-by-section-501c3-tax-exempt-organizations

in2herbs

(3,027 posts)
2. If it was that easy to lose a 501(c)(3) status why haven't those churches that preach
Sat Sep 7, 2024, 05:18 PM
Sep 7

politics from the pulpit lost theirs?

Igel

(35,875 posts)
4. Because they don't violate the regulation as written.
Sat Sep 7, 2024, 05:44 PM
Sep 7

That's what matters (with precedent as an overlay).

Can my church denounce policies by a president? (Assuming I was actually in a church.)

Does that involve "private benefit/inurement, lobbying, political campaign activity, unrelated business income (UBI), annual reporting obligation, and operation in accordance with stated exempt purpose"?

In the absence of a campaign, no. And even then, probably still no. Even if it were during a campaign, an organization can still advocate for a cause: You're a 501(c)(3) that's advocated for carbon reduction for 5 years and a now that a candidate's in favor of it, advocate on. Just don't endorse and say vote for Candidate A; let that hang in the air. There's legislature pending? Sure. Just don't contact your legislator and, you know, actually lobby.

Abortion? Keeping out of our kitchens and garages--or uterus or bedrooms--and not push to ban something by act or encumbrance? Sure, it's okay to say, "Mind your own damn business!"

A lot of organizations have GOTV drives--targeting their members, who share like views (presumably). And it's okay to say to vote for the person--whoever that may be (wink-wink/nudge-nudge)--that you think best supports your values.

Some confuse advocacy with lobbying, including trying to change public opinion. This strikes me as mission-creep for the purpose of trying to silence others: If the majority view is X, it's easy to say that not-X is lobbying and to be banned. Rights protect minorities.

surfered

(1,924 posts)
5. The loophole:
Sat Sep 7, 2024, 05:49 PM
Sep 7

Per the IRS - In general, no organization may qualify for section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation (commonly known as lobbying). A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status.

Per Surfered - There is a lack of enforcement in this area.

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