IRS Asking Social Welfare Groups About Political Ad Money

In a bid to require more complete disclosure of political campaign donations, the Internal Revenue Service has sent a detailed questionnaire to thirteen hundred self-declared tax-exempt organizations, National Public Radio reports.

The "Self-Declarers Questionnaire IRC 501(c)(4), (5) and (6) Organizations", as the document is called, was sent to 501(c)(4) social welfare groups, 501(c)(5) labor unions, and 501(c)(6) business associations — including many anonymously funded entities that spent millions of dollars on political campaign ads in 2012 — as a "compliance check," NPR reports. Targeted to organizations that claim they qualify for 501(c) designation but have never applied for exempt status, the questionnaire, the IRS told NPR, is meant "to help us understand" those groups and learn "how they satisfy their exemption requirements." Compliance is voluntary, an agency spokesperson added, but refusal could lead to an audit.

The nine-page document includes questions about the organizations' spending on "political campaign intervention"; spending on "radio, TV, newspaper, or other advertisements, or other media time or space" to support or oppose candidates, influence legislation, or engage in public advocacy; "revenue that was unrelated business income" by type (fundraising events, non-cash contributions, membership dues, etc.); and the number of individuals, tax-exempt groups, for-profit corporations, and other entities that contributed more than $50,000 a year. The document also requests information about compensation for officers, directors, trustees, and key employees.

Politically active 501(c)(4) social welfare groups, which claim they are not subject to the Federal Election Commission's donor disclosure requirements because they are not political action committees, were increasingly criticized in 2012 as undisclosed spending on political ads exploded. Sen. Carl Levin (D-MI), who chairs the Senate's Permanent Subcommittee on Investigations, has said that such groups "pretend to be acting in the social welfare but are instead engaging in partisan politics," despite IRS regulations limiting such involvement. "It is time," added Levin, "the IRS enforces the law, or at least its own regulation."

"I think the IRS doesn't know what to do with these organizations yet," Jason Torchinsky, an attorney with the conservative law firm Holtzman Vogel Josefiak, told NPR. "They're trying to figure out what to do."

Peter Overby. "IRS To 'Social Welfare' Groups: Show Me the Political Ad Money." National Public Radio 03/30/2013.