‘Tea party’ Means Politics

As the IRS looks to solve the problem it faced judging applications for tax-exempt status, I have a suggestion: If an organization uses the word “party” in its legal or business name when it applies for status as a (501)(c)(4) social-welfare organization, as was reportedly done by Tea Party entities, then the IRS should be required to find such an organization to be primarily political and therefore not eligible to be tax exempt as a (501)(c)(4) social welfare organization.

This should apply not only to organizations with “tea party” in their names but to any organization using the term “party” in its name. The word “party” in this context plainly means or refers to an organization dedicated to political activity.

Restriction of deceptive speech is allowed and even promoted as a public good, consistent with the First Amendment. And it appears deceptive for an organization to call itself a party, thereby projecting a primarily political brand that inevitably triggers political-action behaviors among the public and the group’s members, and then represent to the public and the IRS that the organization is not primarily political.

There is longstanding precedent for regulating corporate names for diverse public-interest purposes, such as mandating corporate use of the term “corporation” or “Inc.” or similar terms in an organization’s name to ensure adequate public notice of the nature of the entity.

The need for a law, regulation, or presumption against use of the word “party” in a social-welfare organization’s name underscores that IRS scrutiny of organizations with a “tea party” or “party” name was not only understandable but should be mandatory and result in prohibition of social-welfare status for groups calling and thereby styling themselves as akin to political parties.

In the alternative, Congress or the IRS should clarify that an applicant for exemption based on social-welfare status must remove the quintessentially political word—party—from the name of the purported social-welfare organization.

Bill August
Partner
Epstein & August
Boston