Last week, the Commissioner of Internal Revenue Service, John Koskinen, spoke to the National Press Club on a variety of matters. One of the items he discussed was the proposed regulation changes to 501c4s.
As I mentioned earlier, the citizen commentary on this matter was unprecedented. As such, the IRS concluded they could not review it all in a timely matter for this year. However, he did not say that the matter was closed — only delayed:
“Another recommendation by the IG was that the Treasury Department and the IRS should provide clearer guidance on how to assess the permissibility of 501(c)(4) social welfare organizations’ activities. So last November, Treasury and the IRS issued proposed regulations that are designed to clarify the extent to which a 501(c)(4) organization can engage in political activity without endangering its tax-exempt status.
While I was not involved in the issuance of this draft proposal, because it happened before I was confirmed as Commissioner, I believe it is extremely important to make this area of regulation as clear as possible. Not only does that help the IRS properly enforce the law, but clearer regulations will also give a better roadmap to applicants, and will help those that already have 501(c)(4) status properly administer their organizations without unnecessary fears of losing their tax-exempt status.
During the comment period, which ended in February, we received more than 150,000 comments. That’s a record for an IRS rulemaking comment period. In fact, if you take all the comments on all Treasury and IRS draft proposals over the last seven years and double that number, you come close to the number of comments we are now beginning to review and analyze. It’s going to take us a while to sort through all those comments, hold a public hearing, possibly repropose a draft regulation and get more public comments. This means that it is unlikely we will be able to complete this process before the end of the year.”
Therefore, the IRS will continue to ponder the matter and revisit it — likely during another important election cycle. It is imperative to keep an eye on this, as the changes are onerous and unnecessary for the operation of 501c4s to educate and advocate.