NAICU Washington Update

NAICU Comments on IRS Regulations

March 07, 2014

NAICU, along with members of the NAICU Secretariat and NAICU State Executive network, worked with the American Council on Education to submit comments to the IRS on the question of whether proposed limitations on the political activity of 501 (c)(4) nonprofit organizations should also be applied to 501 (c)(3) organizations, such as private nonprofit colleges and universities.

The proposed regulations, released in November, are generating significant media and public interest. The agency received over 143,000 comments from organizations on the left and right, Members of Congress and individual citizens.

The comments from higher education highlight the important role colleges and universities play in civic education, democratic participation and political discourse, and how that role could be stifled if the proposed regulations were applied to 501 (c)(3) organizations. The letter specifically notes that the Higher Education Act requires colleges and universities to make voter registration materials available to students. Additionally, campuses are regularly used as “town hall” venues, hosting, for example, nearly all the recent major presidential and vice presidential debates.

In general, the higher education community requests that the proposed 501 (c)(4) regulations not be extended to 501(c)(3)s, which are currently permitted to engage in nonpartisan voter education, voter registration, and get out the vote efforts. Under the proposed regulations, all such activities would be negatively impacted if not prohibited.

The letter also asks that the IRS maintain the “facts and circumstances” approach to considering nonprofit political activity, rather than creating a list of prohibited activities that could lead to limiting freedom of speech.

It is clear from the notice that the IRS wants to move to specific definitions of political activity, and away from allowing activities that could be “nonpartisan” or “neutral” to avoid “fact intensive mitigating circumstances.” This, unfortunately, could result in an overly simplified check list for determining whether a nonprofit has participated in political activity or not, rather than a thorough consideration of a nonprofit’s activities. Such a result would likely stifle certain informational and civic activities and lead to less participation in the democratic process for fear of being in violation of these rules.

It will take time for the Department of Treasury/IRS to consider all the comments received in response to the proposed nonprofit regulations. In the meantime, House Ways and Means Committee Chairman Dave Camp (R-MN) has introduced legislation to block the implementation of the regulations. Many believe that the proposed regulations will be substantially changed as a result of the large public response.

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