ADF Alliance Alert

The new letter from the Tax Exempt and Government Entities Division, dated April 18, 2008, is here. It begins:

This letter outlines goals with respect to the Political Activities Compliance Initiative for the 2008 election cycle. This is the third election cycle in which EO has employed a focused approach toward political campaign intervention by section 501(c)(3) organizations. For 2008, existing goals for the program will continue:
• Educate the public and the relevant community, and provide guidance, on the prohibition on political campaign intervention by section 501(c)(3) organizations.
• Maintain a meaningful enforcement presence in this area.

Current procedures will remain in place through this cycle. These procedures provide important taxpayer and consistency safeguards and advance the examination process. Thus, for example, EO will continue to use the PACI Referral Committee and a project coordinator. As in the past, this committee of career civil servants with extensive EO tax law experience will continue to determine which cases to pursue, and the project coordinator will help ensure consistency. While existing processes will not change, additional direction is warranted in some areas, as noted below.

It also includes this notable section:

Cases Involving Issue Advocacy and Potential Campaign Intervention
While Revenue Ruling 2007-41 identifies several factors to analyze in determining whether an issue advocacy communication results in political campaign intervention, and illustrates their application through examples 14, 15 and 16, the IRS has encountered a number of cases with varied fact patterns not directly covered by those examples. EO must be prepared to face taxpayer challenges, which may lead to court, regarding IRS published positions on issue advocacy, whether the fact patterns involved match the examples provided in the Revenue Ruling or present novel facts and circumstances.

EO must look carefully at organizations that advocate particular positions on issues but also may be providing information about specific candidates and their positions on these same issues. For example, there are instances involving issue advocacy carried out through single issue pamphlets described as “voter guides.” While these single-issue pamphlets do not on their face provide information on specific candidates or elections, that should not end the inquiry. To determine whether a communication is permissible issue advocacy or prohibited political campaign intervention, consideration must be given to the context in which it is distributed, and to whether the manner of distribution and other facts and circumstances surrounding the communication tips the scale in one direction or another. Distribution of a communication that on its face appears to satisfy the requirements of a permitted issue advocacy communication may become impermissible campaign intervention if it is accompanied by a statement, or an action, that ties a position articulated in the communication to a particular candidate or election.

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