September 01, 2023

Can my tax-exempt organization engage in political campaign activities?

With the campaign trail set to kickoff in the upcoming months, many tax-exempt organizations may be asking themselves whether or not they can get involved, and to what extent. The Internal Revenue Code strictly prohibits certain tax-exempt organizations from participating in political campaign activities. For example, Section 501(c)(3) organizations are prohibited from Attempting to influence legislation@ or participating in Any political campaign on behalf of (or in opposition to) any candidate for public office.@ 26 U.S.C. ‘ 501(c)(3). This is not to say that 501(c)(3) organizations must avoid all political activity.

So long as no particular legislation or individual candidate is expressly endorsed or opposed, 501(c)(3) organizations may participate in and/or host permissible political activities such as public forums, nonpartisan public opinion polls, nonpartisan voter registration drives, etc. The IRS has offered the following as an example of a political activity that does not result in the loss of tax-exempt status:

AB, a section 501(c)(3) organization that promotes community involvement, sets up a booth at the state fair where citizens can register to vote. The signs and banners in and around the booth give only the name of the organization, the date of the next upcoming statewide election, and notice of the opportunity to register. No reference to any candidate or political party is made by the volunteers staffing the booth or in the materials available at the booth, other than the official voter registration forms which allow registrants to select a party affiliation.@ Rev. Rul. 2007-41.

While these activities will not result in the organization=s loss of its tax-exempt status, they may subject the organization to tax liability. Therefore, it is important to proceed with caution and consult tax professionals, including accountants, prior to undertaking these endeavors.

Most other exempt organizations, which are listed under Section 501(c), are permitted to participate in political campaign activities so long as they are not the organization=s primary function. However, again, carrying on political activities may subject the organization to tax liability. Lastly, Section 527 organizations are the only tax-exempt organizations that are actually expected to engage in political activities. These organizations are subject to their own specific tax rules.

Because drawing these distinctions in the tax code can be difficult, we recommend that any tax-exempt organization consult an attorney before engaging in activities that are even semi-political. Unfortunately, we have seen too often how loss of tax-exempt status can prove detrimental to both new and existing organizations.

If you are looking to start a tax-exempt organization and/or have questions about an existing organization, get in touch with one of our attorneys who will help you navigate through this process.

Contact Revis, Hervas & Goldberg P.A.

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