March 12, 2009 | Read Time: 2 minutes
A new ruling by the Internal Revenue Service could have broad implications for charity Web sites, nonprofit tax and technology experts say.
The IRS ruled that a local chapter of a national charity violated the prohibition against politicking by including the political-campaign materials of an affiliated advocacy group on its Web site, even though the materials appeared on discrete pages and the advocacy group paid all associated costs.
Marcus S. Owens, a Washington lawyer specializing in nonprofit issues, says the ruling ignores critical court decisions that say charities can wall off the political activities of their related advocacy groups through such means as cost-sharing.
“The IRS set out a sweeping position here, and provides no boundaries for its analysis,” says Mr. Owens, who is a former chief of the IRS’s tax-exempt division.
He says, for example, that if the IRS bars the sharing of Web space between charities and related advocacy groups, it could also end the long-standing practice of office sharing, with the affiliated group paying for its portion of the costs.
At issue in the ruling was whether the organization improperly participated in a political campaign because its banner, logo, and other indications of ownership appeared on Web pages that included the advocacy group’s endorsements of candidates for political office.
As is its policy, the IRS did not identify the organizations involved (Technical Advice Memorandum 200908050).
The ruling said that the advocacy organization had maintained a separate Web site for several years, but that after repeated technical troubles, the local group’s Web-site manager said the best corrective action was for the local group to house the advocacy group’s Web pages on its Web site.
The Web pages were designed as a subset of the local group’s site, and the advocacy group paid for its share of the space.
But the IRS determined that the Web pages of the two groups were “virtually indistinguishable” from one another, and thus the local organization was itself considered to have distributed the political materials contained on the advocacy group’s pages.
