Tuesday, May 29, 2012
In a series of almost identical determination letters, the IRS revoked the section 501(c)(4) tax-exempt status of five organizations with the stated purpose of identifying of women interested in potential leadership roles with a particular political party and the development of a political leadership training program for such women. The IRS noted that each of the organizations is the affiliate of a national organization that shares the same purpose. The IRS had previously recognized their exemptions but upon further study of their applications has now determined that these previous recognitions were in error because the groups primarily benefit private interests, specifically the interests of a particular political party and its candidates. The IRS explicitly relied on American Campaign Academy v. Commissioner, 92 T.C. 1053 (1989), noting that while that case involved section 501(c)(3) "the standard for determining what constitutes private benefit described in American Campaign Academy applies to both [section 501(c)(3) and section 501(c)(4)]". The rulings are 201221025, 201221026, 201221027, 201221028, and 201221029.
While the affected groups are, of course, not identified in the redacted rulings, the denial by the IRS last year of exemption for several similar training groups (see previous blog post) suggests these organizations may be related entities. The NY Times identified those groups as state affiliates of Emerge America, which identifies, trains, and encourages (Democratic) women to run for office. Interestingly, however, the more recent letters are much less redacted than the ones issued last year.
If these five organizations are in fact additional state affiliates of Emerge America, that would probably explain why the IRS choose to take a closer look at their applications even after the IRS had approved those applications. Then again, this activity may simply reflect the decision by the IRS to look more closely at section 501(c)(4) organizations more generally (see previous coverage of the IRS v. Tea Party dispute).