“ASAE opposes expanding the definition of candidate-related political activity by tax-exempt organizations to include candidate forums and issue-related communications sent out close to elections. Recent efforts to restrict political activity by 501(c)(4) social welfare groups would regulate far more speech and advocacy than is warranted and could create a chilling effect on the role nonprofit organizations play in fostering civic engagement and democracy. ASAE also opposes any extension of new restrictions on 501(c)(4) political activity to trade associations and professional societies.” -ASAE Board Approved Position Statement #1
An issue that may have implications for associations is the IRS’s expected release of new 501(c)(4) political activity rules. Treasury's first draft of nonprofit political activity rules was released in 2013 but drew intense criticism from groups across the political spectrum. While the earlier rules applied only to 501(c)(4) organizations, IRS Commissioner John Koskinen has confirmed that the agency plans on broadening the new rule to apply to 527 political groups, 501(c)(6) trade associations, labor unions, and other tax-exempt organizations.
A key concern for many tax-exempt organization's, including ASAE, will center on how the IRS chooses to define political activity. In the initial rulemaking, the IRS expanded the definition of candidate-related political activity to include activities such as candidate forums or meet-and-greets, voter registration, and even legislative alerts sent within 60 days of an election. ASAE said in its comments to the IRS that this expanded definition amounted to a clear restriction on speech.
The omnibus spending and tax package passed by Congress in December 2015 included a major win for associations on this issue. A provision was included that would prohibit the IRS from issuing a final rule governing the political activities of 501(c)(4) nonprofit organizations. This likely ends the IRS's attempts to restrict nonprofit political activity under the current administration.
ASAE is helping to lead a coalition to address the Federal Election Commission’s prior-approval requirement for trade associations. The Prior Approval Reform Coalition is working to achieve legislation to amend the Federal Election Campaign Act to eliminate the requirement that trade associations have prior approval from member companies before soliciting their eligible employees. The coalition believes the requirement is inequitable and restricts First Amendment rights. In addition, ensuring compliance with the regulation is costly and burdensome.
In July 2016, the House passed an amendment that would rescind the prior-approval requirement. The coalition is working on a Senate strategy.
Donor Identity Legislation
In June 2016, the House passed legislation that would prevent the IRS from gathering donor names from tax-exempt groups. The bill, called the Preventing IRS Abuse and Protecting Free Speech Act, was introduced by Rep. Peter Roskam (R-IL) and would prohibit the IRS from asking tax-exempt organizations to disclose the names and addresses of individuals who have donated $5,000 or more in one year. The IRS currently collects this information on Schedule B of the Form 990 return filed by most tax-exempt organizations.
The White House and House Democrats oppose the bill, which they say would reduce transparency and enable foreign groups to give money to tax-exempt political organizations to influence elections.