48 Pages Posted: 18 Sep 2013
Date Written: 2012
Although a wide variety of organizations may qualify as tax-exempt public charities, reform is needed to ensure that hate groups masquerading as educational organizations do not receive preferential tax treatment. Since 1986, the Internal Revenue Service has utilized a methodology test to determine when advocacy of a particular viewpoint may be deemed educational so as to qualify the underlying organization as a public charity. Because the Service has been reluctant to apply the test rigorously, however, a number of hate groups have been able to obtain charitable status under the guise of operating as legitimate educational organizations.
This article contends that application of the methodology test must be more robust to prevent hate groups from receiving federal subsidies in the form of certain tax advantages. Additionally, the article proposes reforms designed to limit hate groups’ ability to operate as public charities while ensuring that educational organizations advocating hate-neutral minority viewpoints may continue to receive the tax benefits associated with charitable status.
Suggested Citation: Suggested Citation
Reed, Alex, Subsidizing Hate: A Proposal to Reform the Internal Revenue Service's Methodology Test (2012). Fordham Journal of Corporate and Financial Law, Vol. 17, p. 824, 2012. Available at SSRN: https://ssrn.com/abstract=2327298