Abstract

http://ssrn.com/abstract=991129
 
 

Footnotes (137)



 


 



Grasping Smoke: Enforcing the Ban on Political Activity by Charities


Lloyd Hitoshi Mayer


Notre Dame Law School

July 8, 2010

First Amendment Law Review, Vol. 6, p. 1, 2007
Notre Dame Legal Studies Paper No. 07-38

Abstract:     
The rule that charities are not allowed to intervene in political campaigns has now been in place for over fifty years. Despite uncertainty about the exact reasons for Congress' enactment of it, skepticism by some about its validity for both constitutional and public policy reasons, and continued confusion about its exact parameters, this rule has survived virtually unchanged for all of those years. Yet while overall noncompliance with the income tax laws has drawn significant scholarly attention, few scholars have focused on violations of this prohibition and the IRS' attempts to enforce it.

This Article focuses on the elusive issue of how extensive is noncompliance with this prohibition and how could the IRS improve its enforcement in this area. The limited data available about the extent of noncompliance indicates that while violations involving extensive expenditures or high profile activities are relatively rare, minor and probably mostly inadvertent violations may be much more widespread than current IRS enforcement figures would indicate. Such violations should be of concern because they risk creating a culture of noncompliance, they may harm the public's trust in both the violating charities and the charitable sector as a whole, and they may have significant effects on the outcome of political campaigns because of the public's generally high regard for charities. To address these violations, the Treasury Department and the IRS should adopt three strategies. First, the IRS should reduce its reliance on third-party complaints by pro-actively looking in publicly available information for possible violations, including by reviewing websites, media reports, and state campaign finance filings. Second, the Treasury Department should adopt an approach that has generally worked in other tax contexts by clarifying the vague boundaries of the prohibition through creating safe harbors for the most common election-related activities, while retaining the current facts and circumstances approach as an anti-abuse rule. Third and finally, the IRS should continue to fully utilize the flexibility of the existing penalty regime to tailor penalties to match violations, issuing only "warning tickets" for first time, apparently unintentional violators while reserving financial penalties and revocation of tax-exempt status for repeat and intentional violators.

Number of Pages in PDF File: 41

Keywords: Charity, Tax-Exempt Organization, Political, Election, IRS, Tax Compliance, Tax Enforcement

JEL Classification: K34, L39

Accepted Paper Series


Download This Paper

Date posted: June 4, 2007 ; Last revised: July 8, 2010

Suggested Citation

Mayer, Lloyd Hitoshi, Grasping Smoke: Enforcing the Ban on Political Activity by Charities (July 8, 2010). First Amendment Law Review, Vol. 6, p. 1, 2007; Notre Dame Legal Studies Paper No. 07-38. Available at SSRN: http://ssrn.com/abstract=991129

Contact Information

Lloyd Hitoshi Mayer (Contact Author)
Notre Dame Law School ( email )
P.O. Box 780
Notre Dame, IN 46556-0780
United States
574-631-8057 (Phone)
574-631-4197 (Fax)

Feedback to SSRN


Paper statistics
Abstract Views: 1,668
Downloads: 159
Download Rank: 104,480
Footnotes:  137

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.360 seconds