March 8, 2007 | Read Time: 1 minute
As the Internal Revenue Service continues its crackdown on charities that become involved in political campaigns, a Congressional report takes the tax agency to task for failing to explain clearly to nonprofit groups how to comply with the law.
The 1954 law that enacted the prohibition on charitable involvement in political campaigns — and subsequent IRS guidelines that interpret the law — “do not offer much insight into what activities are prohibited,” according to a report by the Congressional Research Service.
The report’s findings reinforce a longstanding complaint by charities that the law is hard to follow.
The problem, tax lawyers say, is that there is no clear line that defines when permitted activities, such as a “town hall” candidate forum or lobbying related to a group’s charitable mission, cross over into the prohibited action of actively supporting or opposing a particular candidate for office.
The issue has gained intensity since 2004, when the IRS began stricter enforcement of the ban.
Some of the charities that were investigated by the IRS said they had done nothing wrong. Among those groups was the National Association for the Advancement of Colored People, which became a subject of inquiry after its chairman made a speech critical of administration policies at the NAACP’s annual meeting. (The NAACP says the IRS cleared it of violating tax laws.)
After investigating 82 cases related to the 2004 elections, the IRS determined that 18 organizations did not violate the law.
The revenue service issued a written warning to 55 groups with relatively minor offenses, and proposed to revoke the tax-exempt status of three organizations.
In keeping with IRS policy, the agency declined to identify any of the groups.
The IRS has not yet issued a report on its investigations tied to the 2006 election.
