In the wake of the U.S. Supreme Court’s landmark decision in Citizens United v. Federal Election Commission , which permits corporations to spend unlimited funds on the production and distribution of political advertisements for (or against) candidates running for public office, the Internal Revenue Service has seen a dramatic rise in the formation of nonprofit organizations that engage in political activities. However, many of these newly formed nonprofit organizations are not electing to be tax-exempt under Section 527 of the Internal Revenue Code of 1986 as amended the section specifically intended for political organizations. Instead, in an effort to keep the identity of donors anonymous, many groups are electing tax-exempt status under the social welfare organizations provision of Section 501(c)(4), which lacks the donor disclosure requirements of Section 527.
Allegations have been made that the IRS is subjecting certain political nonprofit organizations, such as various Tea Party groups that have applied for tax-exempt status under the IRC’s Section 501(c)(4) to heightened scrutiny due to their political campaign activities, despite the fact that other social welfare organizations have also historically engaged in such activities.
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