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Covington’s Election & Political Law expertise extends to tax-exempt and not-for-profit organizations. Our experience includes advising on issues arising from the complex interplay between applicable Federal Election Commission (FEC) rules and the different, and evolving, tax rules under the Internal Revenue Code. Our clients include Section 527 political organizations (including PACs and Super PACs), as well as other tax-exempt and not-for-profit entities that desire to participate in the federal, state or local electoral process.
Covington regularly advises Section 527 political organizations and other tax-exempt and not-for-profit organizations -- as well as individual directors, officers and fiduciaries -- in a wide variety of sophisticated tax matters specific to entities participating in the electoral process. Our work in this area includes both advising on the creation and operation of such organizations to ensure they are in compliance with the applicable laws and representing clients before the Internal Revenue Service. We have particular expertise in issues relating to the ability of 501(c)(4) social welfare organizations and 501(c)(6) trade associations to engage in permissible election activities, and in issues relating to affiliations among tax-exempt entities, such as affiliated groups consisting of 501(c)(3) charitable, social welfare and Section 527 organizations. We also regularly counsel clients on the restrictions on legislative activities, public disclosure requirements, the unrelated business income tax and the income tax imposed on 501(c) organizations that engage in taxable political activities.
Advising a self-regulatory body on its government affairs activities, including advising on the tax treatment of these activities.
Providing political law and tax advice to a highly publicized bi-partisan advocacy campaign. Covington devised a unique organizational structure to help accommodate the group’s political goals.
Advise state Super PACs in multiple states on campaign finance and tax-exempt organizations law issues.
Advise high-net-worth individuals on the vetting of political contributions and tax issues related to their support for tax-exempt groups.
We advised a potential Presidential candidate on the pros and cons of forming one or more tax-exempt entities to promote public policy objectives in the run-up to the election.
We advised the board of trustees of a nationally recognized charitable organization with respect to the possible effects on the organization’s tax-exemption of the perceived candidacy of the organization’s president in a federal election.
We have advised numerous tax-exempt organizations regarding “issue advocacy” campaigns during election years.
July 25, 2016, Inside Political Law
The Internal Revenue Service (IRS) recently issued two private letter rulings (PLRs) that may be interesting for tax-exempt organizations that engage in political activity. In the first ruling, the IRS held that a company could not deduct payments made to charity under a PAC matching contribution program as an “ordinary and necessary business expense.” While … ...
July 13, 2016, Inside Political Law
In December 2015, we informed readers of the new requirement for 501(c)(4) social welfare organizations to notify the IRS upon formation. Enforcement of the requirement was delayed until the IRS was able to issue an appropriate form. The IRS recently announced that 501(c)(4) organizations may now register on the IRS website. We respond to common … Continue ...
January 19, 2016, Inside Political Law
Under a new law, each 501(c)(4) organization will have to notify the IRS of the intent to operate as a 501(c)(4) organization; however, such notice will not be due until at least 60 days after regulations are issued implementing the notification procedures. As reported in Inside Political Law on December 22, 2015, The Protecting Americans … Continue Reading
December 22, 2015, Inside Political Law
Under recent legislation, newly-created and certain existing 501(c)(4) social welfare organizations must file a notice with the IRS. In the past, social welfare organizations were not required to submit an application (Form 1024) to the IRS to be recognized as a tax-exempt organization but could “self-declare” exempt status, as long as the organization operated ...
April 17, 2015, Inside Political Law
The U.S. House of Representatives this week passed a bill to provide gift tax certainty to individuals who make gifts to 501(c)(4) social welfare organizations, 501(c)(5) labor unions, and 501(c)(6) trade associations. The bill, H.R. 1104 (the “Fair Treatment for All Gifts Act”), was approved with bipartisan support on a voice vote. It now goes … Continue ...
June 24, 2014, Inside Political Law
Two items in last week’s news highlight that federal tax law remains an important consideration in the lead up to the 2014 and 2016 elections. First, the IRS released a letter that denied the application of the Arkansans for Common Sense, a now defunct liberal group, for classification as a 501(c)(4) social welfare organization. The … Continue Reading
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February 26, 2014, Inside Political Law
Earlier today, IRS Commissioner John Koskinen, in his first appearance before the House Appropriations subcommittee on Financial Services and General Government Oversight, stated that final regulations governing political activity by 501(c)(4) social welfare organizations are unlikely to be completed before the November elections. His statement seems to differ ...
November 27, 2013, Inside Political Law
Yesterday evening the Treasury and the IRS released, sooner than expected, proposed regulations that could fundamentally change the playing field for 501(c)(4) organizations active in politics. The proposed regulations will be published in the Federal Register on Friday, November 29. The pre-publication version is here. Highlights The proposed regulations ...
July 16, 2013, Inside Political Law
Twenty House Democrats yesterday introduced proposed legislation that, if enacted in its current form, would amend the Federal Election Campaign Act of 1971 to: Require corporations and labor unions which “submit regular, periodic reports” to their shareholders and members to include certain detailed information concerning their political spending. That ...
June 26, 2013, Inside Political Law
The IRS on Tuesday issued its eagerly anticipated 30-day report summarizing its initial review and assessment of “what went wrong” in connection with the IRS’s use of inappropriate criteria to screen exemption applications from Tea Party groups seeking recognition that they are 501(c)(4) social welfare organizations. We had previously blogged on this here and ...