I also think that the relevant law may involve some difficulties of interpretation.

----- Original Message -----
From: Bill Shaw [mailto:[log in to unmask]]
Sent: Friday, May 24, 2013 08:00 PM
To: [log in to unmask] <[log in to unmask]>
Subject: Internal Revenue ode 501 (c)(4) -- tax empt status for social welfare organizations

If these are the appropriate guidelines and the Tea Party falls within them,
sure, I defend the IRS.  If IRS has allowed others (left or right
organizations) to skate through the "social welfare dodge" unscathed, they
should be fired.  

=====================
-----Original Message-----
From: Academy of Legal Studies in Business (ALSB) Talk
[mailto:[log in to unmask]] On Behalf Of David Canarie
Sent: Friday, May 24, 2013 5:05 PM
To: [log in to unmask]
Subject: Re: Internal Revenue ode 501 (c)(4) -- tax empt status for social
welfare organizations

Bill--Are you defending the IRS actions?

Dave

On May 24, 2013, at 5:30 PM, "Bill Shaw"
<[log in to unmask]<mailto:[log in to unmask]>> wrote:

Can anyone imagine that Tea Party organizations seeking tax exempt status
might engage directly or indirectly in political campaigns?
Social Welfare Organizations

To be tax-exempt as a social welfare organization described in Internal
Revenue Code (IRC) section 501(c)(4), an organization must not be organized
for profit and must be operated exclusively to promote social welfare. The
earnings of a section 501(c)(4) organization may not
inure<http://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Inurement
-Section-501(c)(4)> to the benefit of any private shareholder or individual.
If the organization engages in an excess benefit
transaction<http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizati
ons/Intermediate-Sanctions> with a person having substantial influence over
the organization, an excise tax may be imposed on the person and any
managers agreeing to the transaction. See Introduction to IRC
4958<http://www.irs.gov/file_source/pub/irs-tege/eotopich02.pdf> for more
information about this excise tax. For a more detailed discussion of the
exemption requirements for section 501(c)(4) organizations, see IRC
501(c)(4)
Organizations<http://www.irs.gov/file_source/pub/irs-tege/eotopici03.pdf>.
For more information about applying for exemption, see Application for
Recognition of
Exemption<http://www.irs.gov/Charities-&-Non-Profits/Application-for-Recogni
tion-of-Exemption-1>.

To be operated exclusively to promote social welfare, an organization must
operate primarily to further the common good and general welfare of the
people of the community (such as by bringing about civic betterment and
social improvements). For example, an organization that restricts the use of
its facilities to employees of selected corporations and their guests is
primarily benefiting a private group rather than the community and,
therefore, does not qualify as a section 501(c)(4) organization. Similarly,
an organization formed to represent member-tenants of an apartment complex
does not qualify, because its activities benefit the member-tenants and not
all tenants in the community, while an organization formed to promote the
legal rights of all tenants in a particular community may qualify under
section 501(c)(4) as a social welfare organization. An organization is not
operated primarily for the promotion of social welfare if its primary
activity is operating a social
club<http://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Social-Act
ivity-and-Social-Welfare> for the benefit, pleasure or recreation of its
members, or is carrying on a business with the general
public<http://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Business
-Activities-and-Social-Welfare> in a manner similar to organizations
operated for profit link].

Seeking legislation germane to the organization's programs is a permissible
means of attaining social welfare purposes. Thus, a section 501(c)(4) social
welfare organization may further its exempt purposes through lobbying as its
primary activity without jeopardizing its exempt status. An organization
that has lost its section 501(c)(3) status due to substantial attempts to
influence legislation may not thereafter qualify as a section 501(c)(4)
organization. In addition, a section 501(c)(4) organization that engages in
lobbying may be required to either provide notice to its members regarding
the percentage of dues paid that are applicable to lobbying activities or
pay a proxy tax. For more information, see Lobbying
Issues<http://www.irs.gov/file_source/pub/irs-tege/eotopicp97.pdf> .

The promotion of social welfare does not include direct or indirect
participation or intervention in political
campaigns<http://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Polit
ical-Activity-and-Social-Welfare> on behalf of or in opposition to any
candidate for public office. However, a section 501(c)(4) social welfare
organization may engage in some political activities, so long as that is not
its primary activity. However, any expenditure it makes for political
activities may be subject to tax under section 527(f). For further
information regarding political and lobbying activities of section 501(c)
organizations, see Election Year
Issues<http://www.irs.gov/file_source/pub/irs-tege/eotopici02.pdf>,
Political Campaign and Lobbying Activities of IRC 501(c)(4), (c)(5), and
(c)(6)
Organizations<http://www.irs.gov/file_source/pub/irs-tege/eotopicl03.pdf>,
and Revenue Ruling
2004-6<http://www.irs.gov/uac/IRS-Issues-Guidelines-for-Tax-Exempt-Groups-En
gaged-in-Public-Advocacy>.