IRS HQ FOIA 1559 Full Production

Obtained by Judicial Watch, Inc.
via FOIA
To:
Sinno Suzanne; Haynes Patricia J; Lunger Richard; Flax Nikole C
Cc:
Barre Catherine M
Subject:
RE: Questions for hearing
Unless CI wants our help on the materiality piece, I'll stay out of that one --I would assume
anywhere there is no bright line makes it difficult to prove materiality in a criminal forum. If
you want us to do some bullets let us know.
Lois G. Lerner
Director of Exempt Organizations
From: Sinno Suzanne
Sent: Monday, April 08, 2013 12:06 PM
To: Haynes Patricia J; Lunger Richard; Flax Nikole C; Lerner Lois G
Cc: Barre Catherine M
Subject: Questions for hearing
This morning we reiterated to both Whitehouse and Graham's staff that Patty will be discussing criminal enforcement and
the referral process generally. She will not be discussing any substantive tax -exempt legal or administrative
issues. W hitehouse's staff came back with this:
The only caveat I might include is that Sen. Whitehouse may ask about issues at the intersection of criminal enforcement
and criminal tax rules (e.g., does the absence of a bright -line rule for political spending make it difficult t o prove that it is
a materially false statement when someone checks no on Q 15 on Form 1024 or other questions
relating to political
activity?)
Do we have a talking point to this question? Or should I go back to the staff with something?
Additionally, the staff said if we want to send them some friendly questions we would like Senator W hitehouse to ask
Patty, they will make sure he gets them. So please send me any suggestive questions you have.
Thank you,
Suzie
Suzanne R. Sinno, J.D., LL.M. (Tax)
Legislative Counsel
Office of Legislative Affairs
Internal Revenue Service
202-927-6922
202-622-5247 (fax)
Suzanne.R.Sinno@irs.gov
JW1559-000210
Obtained by Judicial Watch, Inc. via FOIA
From:
Fish David L
Sent:
Wednesday, September 19, 2012 11:02 AM
To:
Lerner Lois G
Subject:
FW: c4 history
Attachments:
Exclusively Standard 09-02-11.doc
Justin is around but haven't seen him in a while.

(c)(3) and (c)(4) regs.
In the meantime, the first couple pages gives the background of the
Both the (c)(3) and (c)(4) regs. have the "primarily" language, but the (c)(4) regs. lack the "will not be [exempt] if more
than an insubstantial part of its activities is not in furtherance of an exempt purpose." No explanation is provided.
From: Lowe Justin
Sent: Wednesday, March 21, 2012 12:03 PM
To: Fish David L
Subject: c4 history
This document is still very much a work in progress (various Counsel and IRS people have worked on it), but it gives
some insight into the state of things and what they should be.
JW1559-000211
(b)(5) DP
JW1559-000212
(b)(5) DP
JW1559-000213
(b)(5) DP
JW1559-000214
(b)(5) DP
JW1559-000215
(b)(5) DP
JW1559-000216
(b)(5) DP
JW1559-000217
(b)(5) DP
JW1559-000218
(b)(5) DP
JW1559-000219
(b)(5) DP
JW1559-000220
(b)(5) DP
JW1559-000221
(b)(5) DP
JW1559-000222
(b)(5) DP
JW1559-000223
(b)(5) DP
JW1559-000224
(b)(5) DP
JW1559-000225
(b)(5) DP
JW1559-000226
(b)(5) DP
JW1559-000227
From:
Paterson Troy D TIGTA <Troy.Paterson@tigta.treas.gov>
Sent:
Saturday, November 03, 2012 5:10 AM
To:
Lerner Lois G
Cc:
Paz Holly O
Subject:
RE: Responses
Lois and Holly,
Thank you for taking the time to respond to our questions and review the timeline.
Ill work with the team to determine
whether we have any follow -up questions. I appreciate it.
Troy
b(6) and b(7)(C)\pers...
From: Lerner Lois G [mailto:Lois.G.Lerner@irs.gov]
Sent: Friday, November 02, 2012 11:34 AM
To: Paterson Troy D TIGTA
Cc: Paz Holly O
Subject: Responses
Attached is our redlined version of the long time line you prepared. We have made changes
where we thought your folks didn't get it exactly right, and have added some comments for
your consideration. Also attached are my response to your three questions. Rather than be
repetitive, we have combined the response to questions 2 and 3 into one comprehensive
response. I am out of the country next week, but Holly can probably answer any questions
you may have in the meantime.
Lois G. Lerner
JW1559-000228
From:
Paz Holly O
Sent:
Friday, November 09, 2012 1:12 PM
To:
Lerner Lois G
Subject:
RE: Responses - TIGTA
Thanks.
From: Lerner Lois G
Sent: Friday,
November 09, 2012 11:33 AM
To: Paz Holly O
Subject: Re:
Responses - TIGTA
Nice
job. I'm oK with this
Lois G. Lerner-------------------------Sent from
my BlackBerry Wireless Handheld
From: Paz
Holly O
To: Lerner
Lois G
Subject: FW: Responses - TIGTA
JW1559-000229
Lois,
Troy had three questions in
response to our comments. Please see the questions and my draft answers
below. These have been reviewed and approved by Nan and Sharon, but I
wanted to see if you are comfortable with them. Troy is not pressing me
for the answers just yet so I think we'd be in a good place if we could respond
by the end of the day today.
Thanks,
Holly
1.
In the response
to questions 2 and 3, Lois states
(b)(5) DP
Does this mean that
(b)(5) DP
Were trying to determine
(b)(5) DP
JW1559-000230
(b)(5) DP
2.
On the May 14,
2012 entry on the timeline, the EO function changed the additional details
JW1559-000231
column to read
(b)(5) DP
(b)(5) DP
JW1559-000232
3.
On the May 2012
entry on the timeline, the EO function deleted our wording
(b)(5) DP
Is this
the case, or
(b)(5) DP
(b)(5) DP
From: Paterson Troy D TIGTA
[mailto:Troy.Paterson@tigta.treas.gov]
Sent: Tuesday, November 06,
JW1559-000233
2012 3:00 PM
To: Paz Holly O
Cc: Seidell Thomas F TIGTA;
Medina Cheryl J TIGTA
Subject: FW: Responses
Holly,
Thank
you again for taking the time to review and provide feedback on the 3 questions
we submitted and the long timeline. We have a few follow -up
questions.
1.
In
the response to questions 2 and 3, Lois states
(b)(5) DP
JW1559-000234
Does this
(b)(5) DP
mean that
(b)(5) DP
? Were trying to determine

.
(b)(5) DP
2.
On
the May 14, 2012 entry on the timeline, the EO function changed the additional
details column to read
(b)(5) DP
3.
On
the May 2012 entry on the timeline, the EO function deleted our wording
(b)(5) DP
JW1559-000235
(b)(5) DP
As
always, we appreciate the assistance and we look forward to your
response.
Troy
From: Lerner Lois G
[mailto:Lois.G.Lerner@irs.gov]
Sent: Friday, November 02, 2012 11:34
AM
Cc: Paz Holly
Subject: Responses
Attached is our redlined
JW1559-000236
version of the long time line you prepared. We have made changes where we
thought your folks didn't get it exactly right, and have added some comments for
your consideration. Also attached are my response to your three
questions. Rather than be repetitive, we have combined the response to
questions 2 and 3 into one comprehensive response.
I am out of the country
next week, but Holly can probably answer any questions you may have in the
meantime.
Lois G.
Lerner
Director of
Exempt Organizations
JW1559-000237
From:
Lerner Lois G
Sent:
Wednesday, November 14, 2012 12:53 PM
To:
Marks Nancy J; Paz Holly O
Cc:
Light Sharon P
Subject:
RE: Responses
Thanks Nan
Lois G. Lerner
From: Marks Nancy J
Sent: Wednesday, November 14, 2012 1:52 PM
To: Lerner Lois G; Paz Holly O
Cc: Light Sharon P
Subject: Re: Responses
I basically agree with Lois. Holly take another look at your notes to be sure we have our best recollection. Then assuming
that doesn't fill in any blanks I would respond (vet this for accuracy I'm relying on my recollection here) that
(b)(5) DP
-------------------------Sent using BlackBerry
From: Lerner Lois G
Sent: Wednesday, November 14, 2012 10:47 AM
To: Paz Holly O
Cc: Light Sharon P; Marks Nancy J
Subject: RE: Responses
(b)(5) DP
Lois G. Lerner
From: Paz Holly O
To: Lerner Lois G
JW1559-000238
(b)(5) DP
From: Lerner Lois G
To: Paz Holly O
I think you are being too cautious. I think we can say that
(b)(5) DP
--Nan--
thoughts?
Lois G. Lerner
From: Paz Holly O
To: Lerner Lois G
Lois,
Please see below. Let's discuss how you want to respond.
(b)(5) DP
Holly
From: Paterson Troy D TIGTA [mailto:Troy.Paterson@tigta.treas.gov]
To: Paz Holly O
Cc: Seidell Thomas F TIGTA; Medina Cheryl J TIGTA; Lerner Lois G
Holly,
Thank you again for the follow -up responses. In response to question #1, you mention that
(b)(5) DP
To be clear,
(b)(5) DP
JW1559-000239
(b)(5) DP
Troy
From: Paz Holly O [mailto:Holly.O.Paz@irs.gov]
Sent: Friday, November 09, 2012 2:14 PM
Troy,
Please see answers to your follow -up questions below. Please let me know if you have any further q uestions or if you
think a discussion would be helpful.
Holly
1.
In the response to questions 2 and 3, Lois states
(b)(5) DP
Does this mean
that
? W ere trying to
(b)(5) DP
determine
(b)(5) DP
(b)(5) DP
2.
On the May 14, 2012 entry on the timeline, the EO function changed the additional details column to read
(b)(5) DP
(b)(5) DP
JW1559-000240
(b)(5) DP
3.
On the May 2012 entry on the timeline, the EO function deleted our wording
(b)(5) DP
(b)(5) DP
. Is this the case, or
(b)(5) DP
(b)(5) DP
From: Paterson Troy D TIGTA [ mailto:Troy.Paterson@tigta.treas.gov ]
Sent: Tuesday, November 06, 2012 3:00 PM
To: Paz Holly O
Cc: Seidell Thomas F TIGTA; Medina Cheryl J TIGTA
Holly,
Thank you again for taking the time to review and provide feedback on the 3 questions we submitted and the long
timeline. We have a few follow -up questions.
1.
(b)(5) DP
Does this mean
(b)(5) DP
(b)(5) DP
2.
(b)(5) DP
3.
Is this the case, or
(b)(5) DP
(b)(5) DP
As always, we appreciate the assistance and we look forward to your response.
Troy
JW1559-000241
Cc: Paz Holly O
Subject: Responses
Attached is our redlined version of the long time line you pre pared. We have made changes
Lois G. Lerner
JW1559-000242
From:
Sinno Suzanne
Sent:
Wednesday, March 27, 2013 8:01 AM
To:
Flax Nikole C; Lerner Lois G; Barre Catherine M; Landes Scott S; Amato Amy
Subject:
FW: Hearing
Attachments:
IRS Invitation to Campaign Finance Hearing.pdf
Please let me know how you want me to proceed on this.
Thanks,
Suzie
From: Griffin, Ayo (Judiciary -Dem) [mailto:Ayo_Griffin@judiciary -dem.senate.gov]
Sent: Tuesday, March 26, 2013 7:44 PM
To: Sinno Suzanne
Subject: Hearing
Hi Suzanne,
I hope youre well. You may recall we met last su mmer during a couple of very helpful IRS briefings that you put
together for staff for several Senators relating to political spending by 501(c)(4) groups.
I wanted to get in touch because Sen. Whitehouse is convening a hearing in the Judiciary Subcommit tee on Crime and
Terrorism on criminal enforcement of campaign finance law on April 9, which I think you may have already have heard
about from Bill Erb at DoJ. One of the topics actually involves enforcement of tax law. Specifically, Sen. Whitehouse is
interested in the investigation and prosecution of material false statements to the IRS regarding political activity by
501(c)(4) groups on forms 990 and 1024 under 26 U.S.C. 7206.
Sen. Whitehouse would like to invite an IRS witness to testify on thes e issues. Could you please let me know if it would
be possible for you to provide a witness?
I sincerely apologize for the late notice. We had been hoping that a DoJ witness could discuss all of the topics that Sen.
Whitehouse was interested in cover ing at this hearing, but we were recently informed that they would not be able to
speak about enforcement of 7206 in this context.
I have attached an official invitation in case you require one two weeks prior to the hearing date (as DoJ does).
Perhaps we can discuss all of this on the phone tomorrow if you have time.
Thanks very much,
Ayo
________________________________
Ayo Griffin
Counsel
Subcommittee on Crime and Terrorism
Senator Sheldon Whitehouse, Chair
U.S. Senate Committee on the Judiciary
JW1559-000243
(202) 224 -5168
JW1559-000244
JW1559-000245
From:
Lerner Lois G
Sent:
Wednesday, March 27, 2013 12:31 PM
To:
Sinno Suzanne; Flax Nikole C; Barre Catherine M; Landes Scott S; Amato Amy
Subject:
RE: UPDATE - FW: Hearing
In looking at their testimony though, it's all about criminal prosecution of federal campaign
laws--so we're all talking apples and oranges. At the bottom line. in both instances, the issue
is whether a particular expenditure was political intervention. Whether there was a false
statement or fraud regarding an description of an alleged political expenditure that doesn't
say vote for or vote against is not realistic under current law. Everyone is looking for a magic
bullet or scapegoat--there isn't one. The law in this area is just hard.
Lois G. Lerner
From: Sinno Suzanne
To: Flax Nikole C; Lerner Lois G; Barre Catherine M; Landes Scott S; Amato Amy
Subject: UPDATE - FW: Hearing
I just spoke with Ayo. He told me that DOJ said the IRS does the initial investigations into violations of IRC section 7206
(fraud and false statements) and DOJ prosecutes IRS referrals.
DOJ said they have not gotten any referrals from the
IRS.
The Subcommittee is interested in an IRS witness to t estify on:
- the process of an investigation before a case is turned over to DOJ
- how a determination is made
- how different elements of the offense are interpreted under IRC section 7206
Please let me know your thoughts.
Thanks,
Suzie
From: Sinno Suzanne
To: Griffin, Ayo (Judiciary -Dem)
Subject: RE: Hearing
Ayo,
I do remember meeting with you on 501(c)(4)s last July and I hope you are well too.
Regarding the hearing, this is very short notice and I am not sure that we can properly prepare a witness in time and clear
testimony. I will need to check with the subject matter experts and get back to you.
What would be most helpful is if you can t ell me specifically what the Subcommittee wants the IRS to address, as we
cannot comment on any specific cases/taxpayers.
Are there questions that DOJ cannot answer that you want the IRS to
answer instead?
JW1559-000246
Feel free to call me directly at 927 -6922 if you would like to discuss over the phone.
Thank you,
Suzie
Legislative Counsel
202-927-6922
202-622-5247 (fax)
Sent: Tuesday, March 26, 201 3 7:44 PM
To: Sinno Suzanne
Subject: Hearing
Hi Suzanne,
I hope youre well. You may recall we met last summer during a couple of very helpful IRS briefings that you put
I wanted to get in touch because Sen. Whitehouse is convening a hearing in the Judiciary Subcommittee on Crime and
Sen. Whitehouse would like to invite an IRS witness to testify on these issues.
Could you please let me know if it would
Whitehouse was interested in covering at this hearing, but we were recently informed that they would not be able to
Thanks very much,
Ayo
________________________________
Ayo Griffin
Counsel
(202) 224 -5168
JW1559-000247
From:
Lerner Lois G
Sent:
To:
Flax Nikole C; Sinno Suzanne; Barre Catherine M; Landes Scott S; Amato Amy; Vozne
Subject:
Jennifer L
As I mentioned yesterday --there are several groups of folks from the FEC world that are
pushing tax fraud prosecution for c4s who report they are not conducting political activity
when they are(or these folks think they are). One is my ex-boss Larry Noble(former General
Counsel at the FEC), who is now president of Americans for Campaign Reform. This is their
latest push to shut these down. One IRS prosecution would make an impact and they
wouldn't feel so comfortable doing the stuff.
So, don't be fooled about how this is being articulated --it is ALL about 501(c)(4) orgs and
political activity
Lois G. Lerner
From: Flax Nikole C
Sent: Wednesday, March 27, 2013 1 :31 PM
To: Sinno Suzanne; Lerner Lois G; Barre Catherine M; Landes Scott S; Amato Amy; Vozne Jennifer L
Subject: RE: UPDATE - FW: Hearing
thanks - this is helpful. Can we regroup internally before we get back to the Hill?
So sounds like their intere st in 7206 is not 501c4 specific?
From: Sinno Suzanne
IRS.
The Subcommittee is interested in an IRS witness to testify on:
Please let me know your th oughts.
Thanks,
Suzie
JW1559-000248
From: Sinno Suzanne
Ayo,
What would be most helpful is if you can t ell me specifically what the Subcommittee wants the IRS to address, as we
cannot comment on any specific cases/taxpayers. Are there questions that DOJ cannot answer that you want the IRS to
answer instead?
Thank you,
Suzie
Legislative Counsel
202-927-6922
202-622-5247 (fax)
To: Sinno Suzanne
Subject: Hearing
Hi Suzanne,
Whitehouse was inte rested in covering at this hearing, but we were recently informed that they would not be able to
I have attached an official invitation in case you require one two weeks prior to the hearing date (as D oJ does).
JW1559-000249
Thanks very much,
Ayo
________________________________
Ayo Griffin
Counsel
U.S. Senate Commi ttee on the Judiciary
(202) 224 -5168
JW1559-000250
From:
Sinno Suzanne
Sent:
To:
Sinno Suzanne; Flax Nikole C; Lerner Lois G; Barre Catherine M; Landes Scott S; Amato
Subject:
Attachments:
Amy; Vozne Jennifer L
From: Sinno Suzanne
To: Flax Nikole C; Lerner Lois G; Barre Catherine M; Landes Scott S; Amato Amy; Vozne Jennifer L
The hearing is titled "Current Issues in Campaign Finance Law Enforcement."
I have attached the invitation.
They are interested in the investigation and prosecution of false statements (as defined under IRC section 7206) to the
IRS regarding political activity by 501(c)(4)s on forms 990 and 1024.
From: Flax Nikole C
So sounds like their interest in 7206 is not 501c4 specific?
From: Sinno Suzanne
IRS.
- the process of an investigation before a case is turned over to D OJ
Thanks,
Suzie
JW1559-000251
From: Sinno Suzanne
Ayo,
What would be most helpful is if you can tell me specifically what the Subcommittee wants the IRS to add ress, as we
answer instead?
Thank you,
Suzie
Legislative Counsel
202-927-6922
202-622-5247 (fax)
To: Sinno Suzanne
Subject: Hearing
Hi Suzanne,
Whitehouse was inte rested in covering at this hearing, but we were recently informed that they would not be able to
I have attached an official invitation in case you require one two weeks prior to the hearing date (as D oJ does).
JW1559-000252
Thanks very much,
Ayo
________________________________
Ayo Griffin
Counsel
U.S. Senate Commi ttee on the Judiciary
(202) 224 -5168
JW1559-000253
JW1559-000254
From:
Sinno Suzanne
Sent:
To:
Flax Nikole C; Vozne Jennifer L; Lerner Lois G; Barre Catherine M; Landes Scott S; Amato
Subject:
FW: Hearing
Amy
To: Sinno Suzanne
Hi Suzie,
Good talking with you. Thanks again for looking into this. As I said on the phone, Sen. Whitehouse has no intention of
asking about specific taxpayers or cases. His interest is really in the process of investigating these cases.
Questions
might relate to issues like:
1.
What might precipitate an IRS investigation of a case under 7206 for misrepresentations about political
activity?
2.
3.
What are the timing considerations that come into play with regard to, for example, return filing dates?
How does the IRS determine what rises to the level of a material misstatement with regard to political activity
under 7206?
4.
General information about the CI process; under what circumstances a referral would be made to DoJ or a
grand jury would be requested, etc.
I hope this is helpful.
Thanks,
Ayo
From: Sinno Suzanne [mailto:Suzanne.R.Sinno@irs.gov]
Ayo,
What would be most helpful is if you can tell me specifically what the Subcommittee wants the IRS to address, as we
answer instead?
JW1559-000255
Thank you,
Suzie
Legislative Counsel
202-927-6922
202-622-5247 (fax)
From: Griffin, Ayo (Judiciary -Dem) [mailto:Ayo_Griff in@judiciary-dem.senate.gov]
To: Sinno Suzanne
Subject: Hearing
Hi Suzanne,
together for staff for sev eral Senators relating to political spending by 501(c)(4) groups.
Terrorism on criminal enforcement of campaign finance law on April 9, whi ch I think you may have already have heard
interested in the investigation and prosecution of material false statements to the IRS re garding political activity by
be possible for you to provide a witn ess?
Thanks very much,
Ayo
________________________________
Ayo Griffin
Counsel
(202) 224 -5168
JW1559-000256
From:
Flax Nikole C
Sent:
To:
Sinno Suzanne; Lerner Lois G; Vozne Jennifer L
Subject:
yes, lets hold off right now
From: Sinno Suzanne
To: Flax Nikole C; Lerner Lois G; Vozne Jennifer L
oops. I just got your availability and scheduled a call for tomorrow at 10. I can obviously cancel.
From: Flax Nikole C
To: Sinno Suzanne; Lerner Lois G; Vozne Jennifer L
Subject: Re: UPDATE - FW: Hearing
Thanks - need to hold off a bit. I am ge tting feedback from folks.
From: Sinno Suzanne
Sent: Wednesday, March 27, 2013 02:09 PM Eastern Standard Time
To: Flax Nikole C; Lerner Lois G; Vozne Jennifer L
I can schedule a time for us to discuss before I go back to the hill.
Us 4? or do I need to invite others?
From: Flax Nikole C
From: Sinno Suzanne

IRS.
JW1559-000257
The Subcommittee is interested in an IRS witness to t estify on:
Thanks,
Suzie
From: Sinno Suzanne
Ayo,
answer instead?
Thank you,
Suzie
Legislative Counsel
202-927-6922
202-622-5247 (fax)
Sent: Tuesday, March 26, 201 3 7:44 PM
To: Sinno Suzanne
Subject: Hearing
Hi Suzanne,
JW1559-000258
Thanks very much,
Ayo
________________________________
Ayo Griffin
Counsel
(202) 224 -5168
JW1559-000259
From:
Flax Nikole C
Sent:
Thursday, March 28, 2013 1:34 PM
To:
Lerner Lois G; Paz Holly O; Kindell Judith E; Lowe Justin
Cc:
Grant Joseph H; Marks Nancy J
Subject:
FW: UPDATE - FW: Hearing
Attachments:
CC is going to work on something on 7206. Need EO to pull together something short (just a few pages) on c4 law,
including the 1024 and 990. I think Justin/Joe may have drafted testimony last year so adding him as we may have a
place to start. Pulling together a meeting Monday to discuss. Thanks
From: Flax Nikole C
Sent: Thursday, March 28, 2013 2:11 PM
To: Sterner Christopher B
Subject: FW: UPDATE - FW: Hearing
Chris - can you let me know when you have a minute to discuss?
pages on 7206 that we can use in this testimony.
We wanted to see if someone in cc could draft a few
W ill need it rather quickly, but just a few pages.
From: Sinno Suzanne
To: Flax Nikole C; Lerner Lois G; B arre Catherine M; Landes Scott S; Amato Amy
(fraud and false statements) and DOJ prosecutes IRS ref errals. DOJ said they have not gotten any referrals from the
IRS.
- how different eleme nts of the offense are interpreted under IRC section 7206
Thanks,
Suzie
From: Sinno Suzanne
Ayo,
JW1559-000260
answer instead?
Thank you,
Suzie
Legislative Counsel
202-927-6922
202-622-5247 (fax)
From: Griffin, Ayo (Judiciary-Dem) [mailto:Ayo_Griffin@judiciary -dem.senate.gov]
To: Sinno Suzanne
Subject: Hearing
Hi Suzanne,
Terrorism on criminal enforcement of ca mpaign finance law on April 9, which I think you may have already have heard
interested in the investigation and prosecution of mater ial false statements to the IRS regarding political activity by
Perhaps we can discuss all of this on the phone tomorrow i f you have time.
Thanks very much,
Ayo
________________________________
Ayo Griffin
Counsel
JW1559-000261
(202) 224 -5168
JW1559-000262
JW1559-000263
From:
Flax Nikole C
Sent:
To:
Sinno Suzanne; Lerner Lois G; Barre Catherine M; Landes Scott S; Amato Amy; Vozne
Subject:
Jennifer L
thanks much - monday is good - still working it
From: Sinno Suzanne
To: Flax Nikole C; Lerner Lois G; Barre Catherine M; Landes Scott S; Amato Amy; Vozne Jennifer L
The hill staffer just call ed and wanted to know our status. I told him we are working on it but we might not be able to get
back to him with a definitive answer till Monday.
He said if it is a timing issue, the Subcommittee is willing to consider pushing the hearing back. If we can't do the hearing
because it is a substantive issue, he wants to know as soon as possible so they can plan accordingly.
I told him I would try and get him an answer by Monday since tomorrow is Good Friday and folks are not as available.
From: Flax Nikole C
From: Sinno Suzanne
(fraud and false statements) and DOJ prosecutes IRS referra ls. DOJ said they have not gotten any referrals from the
IRS.
Thanks,
Suzie
JW1559-000264
From: Sinno Suzanne
Ayo,
answer instead?
Thank you,
Suzie
Legislative Counsel
202-927-6922
202-622-5247 (fax)
To: Sinno Suzanne
Subject: Hearing
Hi Suzanne,
about from Bill Erb at DoJ. One of the topics actually involves enforcement of tax law . Specifically, Sen. Whitehouse is
Sen. Whitehouse would like to invi te an IRS witness to testify on these issues.
I sincerely apologize for the late notice. We had been hoping that a DoJ witness could discuss all of the topics that Sen .
I have attached an official invitation in case you require one two weeks prior to t he hearing date (as DoJ does).
JW1559-000265
Thanks very much,
Ayo
________________________________
Ayo Griffin
Counsel
Senator Sheldon Whitehouse, Ch air
(202) 224 -5168
JW1559-000266
From:
Lowe Justin
Sent:
To:
Lerner Lois G; Paz Holly O; Kindell Judith E
Cc:
Grant Joseph H; Marks Nancy J
Subject:
I have the testimony from last May on (c)(4)s. It is 14 pages, but Ill cut it down and circulate both versions to you
shortly.
From: Flax Nikole C
To: Lerner Lois G; Paz Holly O; Kindell Judith E; Lowe Justin
Cc: Grant Joseph H; Marks Nancy J
including the 1024 and 990. I think Justin/Joe may have drafted testimony l ast year so adding him as we may have a
From: Flax Nikole C
From: Sinno Suzanne
IRS.
Thanks,
Suzie
From: Sinno Suzanne
JW1559-000267
Ayo,
answer instead?
Thank you,
Suzie
Legislative Counsel
202-927-6922
202-622-5247 (fax)
To: Sinno Suzanne
Subject: Hearing
Hi Suzanne,
together for staff for several Senators relating to po litical spending by 501(c)(4) groups.
Terrorism on criminal enforcement of campaign finance law on April 9, which I think you may have alre ady have heard
interested in the investigation and prosecution of material false statements to the IRS regarding political activity b y
speak about enfo rcement of 7206 in this context.
JW1559-000268
Thanks very much,
Ayo
________________________________
Ayo Griffin
Counsel
(202) 224 -5168
JW1559-000269
From:
Lerner Lois G
Sent:
Monday, April 01, 2013 11:00 AM
To:
Flax Nikole C
Subject:
FW: UPDATE - FW: Hearing
Attachments:
Draft (c)(4) Testimony 3-28-13.docx; miller_testimony_7.25[1].pdf; Draft_(c)
(4)_Testimony_5-3-12.doc
Importance:
High
This is the draft he put together --let me know if you'd like something specific. As to the
referrals to CI--I asked Nan Downing to put some stuff together, but was not limiting to c4 --as
I'm guessing there are none --did you want only c4?
Lois G. Lerner
From: Lowe Justin
To: Lerner Lois G; Paz Holly O; Kindell Judith E
Cc: Marks Nancy J
Here is some draft te stimony, compiled mostly from the (c)(4) stuff we worked on last May and Steves actual testimony
from July (also attached). The May testimony has some intro language that might come in handy.
From: Flax Nikole C
From: Flax Nikole C
From: Sinno Suzanne
JW1559-000270
I just spoke with Ayo. He told me that DOJ said t he IRS does the initial investigations into violations of IRC section 7206
IRS.
The Subcommittee is interested in an IRS witness to tes tify on:
Thanks,
Suzie
From: Sinno Suzanne
Ayo,
What would be most helpful is if you can tell me spe cifically what the Subcommittee wants the IRS to address, as we
answer instead?
Thank you,
Suzie
Legislative Counsel
202-927-6922
202-622-5247 (fax)
From: Griffin, Ayo (Judiciary-Dem) [mailto:Ayo_Griffin@judiciary -dem.senate.gov]
To: Sinno Suzanne
Subject: Hearing
Hi Suzanne,
I hope youre well. You may recall we met last summer during a couple of very helpful IRS briefings that y ou put
JW1559-000271
Terrorism on criminal enforcement of cam paign finance law on April 9, which I think you may have already have heard
interested in the investigation and prosecution of materi al false statements to the IRS regarding political activity by
Whitehouse was interested in covering at this hearing, but we were recently informed that t hey would not be able to
Thanks very much,
Ayo
________________________________
Ayo Griffin
Counsel
(202) 224 -5168
JW1559-000272
(b)(5) DP
JW1559-000273
(b)(5) DP
JW1559-000274
(b)(5) DP
JW1559-000275
(b)(5) DP
JW1559-000276
(b)(5)
JW1559-000277
(b)(5)
JW1559-000278
(b)(5)
JW1559-000279
(b)(5)
JW1559-000280
(b)(5)
JW1559-000281
(b)(5)
JW1559-000282
(b)(5)
JW1559-000283
(b)(5)
JW1559-000284
(b)(5)
JW1559-000285
(b)(5)
JW1559-000286
(b)(5)
JW1559-000287
(b)(5)
JW1559-000288
(b)(5)
JW1559-000289
(b)(5)
JW1559-000290
(b)(5) DP
JW1559-000291
(b)(5) DP
JW1559-000292
(b)(5) DP
JW1559-000293
(b)(5) DP
JW1559-000294
(b)(5) DP
JW1559-000295
(b)(5) DP
JW1559-000296
(b)(5) DP
JW1559-000297
(b)(5) DP
JW1559-000298
(b)(5) DP
JW1559-000299
(b)(5) DP
JW1559-000300
(b)(5) DP
JW1559-000301
(b)(5) DP
JW1559-000302
From:
Lerner Lois G
Sent:
To:
Flax Nikole C
Subject:
I would guess none
Lois G. Lerner
From: Flax Nikole C
To: Lerner Lois G
Yes, c4s. Thanks
Will take a look and get back to you.
From: Lerner Lois G
Sent: Monday, April 01, 2 013 12:00 PM Eastern Standard Time
To: Flax Nikole C
This is the draft he put together --let me know if you'd like something specific. As to the
Lois G. Lerner
From: Lowe Justin
To: Lerner Lois G; Paz Holly O; Ki ndell Judith E
Cc: Marks Nancy J
Here is some draft testimony, compiled mostly from the (c)(4) stuff we worked on last May and Steves actual testimony
from July (also attached). The May testimony has some intro languag e that might come in handy.
From: Flax Nikole C
JW1559-000303
From: Flax Nikole C
From: Sinno Suzanne

IRS.
Thanks,
Suzie
From: Sinno Suzanne
Ayo,
Are there questions that DOJ cannot an swer that you want the IRS to
answer instead?
Thank you,
Suzie
JW1559-000304
Legislative Counsel
202-927-6922
202-622-5247 (fax)
To: Sinno Suzanne
Subject: Hearing
Hi Suzanne,
I sincerely apologiz e for the late notice. We had been hoping that a DoJ witness could discuss all of the topics that Sen.
Thanks very much,
Ayo
________________________________
Ayo Griffin
Counsel
(202) 224 -5168
JW1559-000305
From:
Flax Nikole C
Sent:
Monday, April 01, 2013 12:57 PM
To:
Barre Catherine M; Landes Scott S; Sinno Suzanne
Cc:
Rose Nancy L; Lerner Lois G; Weber Richard
Subject:
RE: JUSTICE Oversight Testimony on Campaign Finance (FC-ALERTS:DOJ-0016-A)
Please loop in Chris Sterner as well.
From: Barre Catherine M
To: Landes Scott S; Sinno Suzanne
Cc: Rose Nancy L; Flax Nikole C; Lerner Lois G; Weber Richard
Subject: FW: JUSTICE Oversight Testimony on Campaign Finance ( FC-ALERTS:DOJ-0016-A)
Importance: High
Please coordinate any TEGE and CI comments with Nancy in counsel for response TOMORROW by 1:00 as noted
below.
Thanks.
From: LLR@treasury.gov [mailto:LLR@treasury.gov ]
To: Rochelle.Granat@treasury.gov ; Jason.Brown@treasury.gov; Margaret.Bailey@treasury.gov ;
Paula.Farrell@treasury.gov; Christian.Furey@treasury.gov ; Gordon.Canning@treasury.gov ;
Robert.Mahaffie@treasury.gov ; Barbara.Wiss@treasury.gov; Barre Catherine M; Rose Nancy L;
Cameron.Arterton@treasury.gov ; James.Mackie@treas ury.gov; Jessica.Hauser@treasury.gov; Zarlenga Lisa;
Kevin.Knopf@treasury.gov ; cynthia.clark@fincen.gov ; Patrick.Obrien@fincen.gov ; Mike.Maher@do.treas.gov ;
Jeffrey.Warner@treasury.gov; Andrea.Gacki@treasury.gov ; Kevin.OConnor@fincen.gov; Luke.Ballman@treasury.gov;
Barbara.Hammerle@treasury.gov; Marshall.Kofler@fms.treas.gov ; Marc.Seldin@fms.treas.gov ;
Thomas.Santaniello@fms.treas.gov
Cc: Luke.Harman@treasury.gov ; Adewale.Adeyemo@treasury.gov ; Alexander.Krulic@treasury.gov ;
Andrew.Woolf@treasury.gov; Barb.Bracy@treasury.gov; Brandon.Oliver@treasury.gov ; Brian.Egan@treasury.gov;
Brian.Peretti@treasury.gov; Brian.Sonfield@treasury.gov; Cara.Camacho@treasury.gov;
ExecSecProcessUnit@treasury.gov; Kathryn.Alvarez@treasury.gov ; leigh.williams@treasury.gov ; LLR@treasury.gov;
Michael.McRaith@treasury.gov ; Michelle.Ayers@treasury.gov ; DelmarR@oig.treas.gov; Patrick.Maloney@treasury.gov ;
Peter.Lee@treasury.gov; Priti.Agrawal@treasury.gov ; Counsel.Office@tigta.treas.gov ; Paul.Ahern@treasury.gov;
Catherine.Ahn@treasury.g ov; Gary.Sutton@treasury.gov; Brian.Townsend@treasury.gov ; Julia.Yoo@treasury.gov;
Lisa.Abraham@treasury.gov; Kathleen.Mellody@treasury.gov ; Colleen.McLoughlin@treasury.gov ;
Karen.Weber@treasury.gov; Anita.Blair@treasury.gov ; Benjamin.Mann@treasury.gov ;
Cathy.Higginbotham@treasury.gov ; Daniel.Ballard@treasury.gov; Darlene.Peterson@treasury.gov ;
Karen.Melanson@treasury.gov; Lisa.Pena@treasury.gov; Lorraine.Cole@treasury.gov; Mariam.Harvey@treasury.gov ;
Michael.Lewis@treasury.gov; Polly.Dietz@treasury.gov ; Robyn.East@treasury.gov; Scott.Canty@treasury.gov;
Thomas.Sharpe@treasury.gov; TOC@treasury.gov; Veronica.Marco@treasury.gov; Corwin Erik H; Goldstein Richard S;
Landes Scott S; McField Terri; Namrata.Mujumdar@treasury.gov; Sandra.Salstrom@treasury.gov ;
George.Bostick@treasury.gov; Bill.Bradley@fincen.gov ; lindsay.orlin@fincen.gov ; Melissa.Nasrah@treasury.gov;
Jennifer.Hershfang@treasury.gov ; Matthew.Tuchband@treasury.gov ; Stephanie.Petersen@treasury.gov;
Tyler.Hand@treasury.gov; llritems@fms.treas.gov; Tom.Longnecker@fms.treas.gov
Subject: JUSTICE Oversight Testimony on Campaign Finance (FC -ALERTS:DOJ-0016-A)
DEADLINE: 1:00 P.M. Wednesday, April 3, 2013
JW1559-000306
COMMENTS: Attached, for your review and comment, is Justice draft testimony on campaign financing
for an April 9th hearing before the Senate Judiciary Committees Subcommittee on Crime and
Terrorism.
PLEASE NOTE: Comments/edits must be approved by an official from your office at the Director level or
higher. If you are with a bureau of Treasury, please en sure that a Treasury policy official has approved the
comments/edits before sending them to LLR. Please submit comments on behalf of your office to
LLR@do.treas.gov . In responding to this email, please use the exact subject line of this e -mail and provide the
name of the policy official who approved the response. OMBs preference is specific edits, not general
comments. If you cannot meet the deadline, please e -mail LLR@do.treas.gov as far in advance of the deadline
as possible and be specific about when you could have comments. Except in extraordinary circumstances, if the
deadline has passed, the opportunity to comment has also passed.
JW1559-000307
From:
Hall Regeina D
Sent:
To:
Lerner Lois G; Downing Nanette M
Cc:
Marx Dawn R
Subject:
There were no C -4 referrals to SB and then to CI in the last couple of years that we are aware of.
Regeina Hall
EPR Area Manager
TEGE, Exempt Organizations, Exam
Desk 214.413-5404, Fax 214.413.5453
Cell 214.207.3605
From: Lerner Lois G
To: Downing Nanette M; Hall Regeina D
Cc: Marx Dawn R
Importance: High
Only need info on c4s that have been referred to BS and then to CI --are there any in the last
couple years?
Lois G. Lerner
From: Flax Nikole C
To: Lerner Lois G
Yes, c4s. Thanks
Will take a look and get back to you.
From: Lerner Lois G
Sent: Monday, April 01, 2013 12:00 PM Eastern Standard Time
To: Flax Nikole C
JW1559-000308
This is the draft he put together--let me know if you'd like something specific. As to the
Lois G. Lerner
Director of Exempt Organiza tions
From: Lowe Justin
To: Lerner Lois G; Paz Holly O; Kindell Judith E
Cc: Marks Nancy J
Here is some draft testimony, compiled mostly from the (c)(4) stuff we worked on last May and Steve s actual testimony
from July (also attached). The May testimony has some intro language that might come in handy.
From: Flax Nikole C
From: Flax Nikole C
From: Sinno Suzanne

IRS.
JW1559-000309
Thanks,
Suzie
From: Sinno Suzanne
Ayo,
testimony. I will need to check with the su bject matter experts and get back to you.
answer instead?
Thank you,
Suzie
Legislative Counsel
Office of Legislative Af fairs
202-927-6922
202-622-5247 (fax)
To: Sinno Suzanne
Subject: Hearing
Hi Suzanne,
JW1559-000310
I sincerely apologiz e for the late notice. We had been hoping that a DoJ witness could discuss all of the topics that Sen.
Thanks very much,
Ayo
________________________________
Ayo Griffin
Counsel
(202) 224 -5168
JW1559-000311
From:
Lowe Justin
Sent:
To:
Lerner Lois G
Subject:
RE: testimony
Attachments:
Draft (c)(4) Testimony 4-1-13.docx
Heres an updated, expanded version.
From: Lerner Lois G
To: Flax Nikole C
Cc: Lowe Justin
Subject: RE: testimony
We'll see what we can do
Lois G. Lerner
From: Flax Nikole C
To: Lerner Lois G
Cc: Lowe Justin
Subject: Re: testimony
I have not read it yet, but we need something on the

Also need something
(b)(5) DP
(b)(5) DP
Does that work?
From: Lerner Lois G
To: Flax Nikole C
Cc: Lowe Justin
Subject: testimony
Do you want me to ask Justin to add something regarding

(b)(5) DP
? Do you want a section that describes the
(b)(5) DP
?
Lois G. Lerner
JW1559-000312
(b)(5) DP
JW1559-000313
(b)(5) DP
JW1559-000314
(b)(5) DP
JW1559-000315
(b)(5) DP
JW1559-000316
(b)(5) DP
JW1559-000317
(b)(5) DP
JW1559-000318
(b)(5) DP
JW1559-000319
(b)(5) DP
JW1559-000320
(b)(5) DP
JW1559-000321
From:
Cook Janine <Janine.Cook@irscounsel.treas.gov>
Sent:
To:
Lerner Lois G; Paz Holly O
Cc:
Brown Susan D
Subject:
FW: JUSTICE Oversight Testimony on Campaign Finance (FC-ALERTS:DOJ-0016-A)
Attachments:
DOJ-0016-A-1.docx
Importance:
High
Lois/Holly,
Understand you have this too with comments requested tomorrow by 1:00.
Susan and I are going to look at here; whos
looking at over there in case we want to touch base on anything?
Thanks.
Robert.Mahaffie@treasury.gov ; Barbara.Wiss@treasury.gov; Barre Catherine M; Rose Nancy L; Arterton Cameron;
James.Mackie@treasury.gov ; Hauser Jessica - OTP; Zarlenga Lisa (OTP); Knopf Kevin - OTP; cynthia.clark@fincen.gov ;
Patrick.Obrien@fincen.gov ; Mike.Maher@do.treas.gov ; Jeffrey.Warner@treasury.gov; Andrea.Gacki@treasury.gov ;
Kevin.OConnor@fincen.gov ; Luke.Ballman@treasury.gov ; Barbara.Hammerle@treasury.gov ;
Marshall.Kofler@fms.treas.gov ; Marc.Seldin@fms.treas.gov ; Thomas.Santaniello@fms.treas.gov
Andrew.Woolf@treasury.gov; Barb.Bracy@treasury.gov ; Brandon.Oliver@treasury.gov ; Brian.Egan@treasury.gov;
Brian.Peretti@treasury.gov; Brian.Sonfield@treasury.gov; Cara.Camacho@treasury.g ov;
Peter.Lee@treasury.gov; Priti.Agrawal@treasury.gov; Counsel.Office@tigta.treas.gov ; Paul.Ahern@treasury.gov;
Catherine.Ahn@treasury.gov ; Gary.Sutton@treasury.gov; Brian.Townsend@treasury.gov ; Julia.Yoo@treasury.gov;
Landes Scott S; McField Terri; Namrata.Mujumdar@treasury.gov; Sandra.Salstrom@treasury.gov ; Bostick George - OTP;
Bill.Bradley@fincen.gov; lindsay.orlin@fincen.gov ; Melissa.Nasrah@treasury.gov ; Jennifer.Hershfang@treasury.gov ;
Matthew.Tuchband@treasury.gov; Stephanie.Petersen@treasury.g ov; Tyler.Hand@treasury.gov; llritems@fms.treas.gov ;
Tom.Longnecker@fms.treas.gov
Subject: JUSTICE Oversight Te stimony on Campaign Finance (FC -ALERTS:DOJ-0016-A)
for an April 9th hearing before the Senate Judiciary Committe es Subcommittee on Crime and
Terrorism.
JW1559-000322
higher. If you are with a bureau of Treasury, please ensure that a Treasury policy official has approved the
JW1559-000323
(b)(5) DP
JW1559-000324
(b)(5) DP
JW1559-000325
(b)(5) DP
JW1559-000326
(b)(5) DP
JW1559-000327
(b)(5) DP
JW1559-000328
(b)(5) DP
JW1559-000329
From:
Lerner Lois G
Sent:
To:
Cook Janine; Paz Holly O
Cc:
Brown Susan D
Subject:
Lois--this is a second draft --I commented on first as well
Lois G. Lerner
From: Cook Janine [mailto:Janine.Cook@irscounsel.treas.gov]
Cc: Brown Susan D
Subject: FW: JUSTICE Oversight Testimony on Campaign Finance (FC -ALERTS:DOJ-0016-A)
Importance: High
Lois/Holly,
Understand you have this too with comments requested tomorrow by 1:00.
Susan and I are going to look at here; whos
looking at over there in case we want to touch base on anything?
Thanks.
From: LLR@treasury.gov [mailto:LLR@treasury.gov]
Robert.Mahaffie@treasury.gov ; Barbara.Wiss@treasury.gov; Barre Catherine M; Rose Nancy L; Arterton Cameron;
James.Mackie@treasury.gov ; Hauser Jessica - OTP; Zarlenga Lisa (OTP); Knopf Kevin - OTP; cynthia.clark@fincen.gov ;
Patrick.Obrien@fincen.gov ; Mike.Maher@do.treas.gov ; Jeffrey.Warner@treasury.gov; Andrea.Gacki@treasury.g ov;
Kevin.OConnor@fincen.gov ; Luke.Ballman@treasury.gov ; Barbara.Hammerle@treasury.gov ;
Marshall.Kofler@fms.treas.gov ; Marc.Seldin@fms.treas.gov ; Thomas.Santaniello@fms.treas.gov
Brian.Peretti@treasury.gov; Brian.Sonfield@treasury.gov; Cara.Camacho@treasury.go v;
Peter.Lee@treasury.gov; Priti.Agrawal@treasury.go v; Counsel.Office@tigta.treas.gov ; Paul.Ahern@treasury.gov;
Catherine.Ahn@treasury.gov ; Gary.Sutton@treasury.gov; Brian.Townsend@treasury.gov ; Julia.Yoo@treasury.gov;
Cathy.Higginbot ham@treasury.gov; Daniel.Ballard@treasury.gov; Darlene.Peterson@treasury.gov ;
Landes Scott S; McField Terri; Namrata.Mujumdar@treasury.gov; Sandra.Salstrom@treasury.gov ; Bostick George - OTP;
JW1559-000330
Bill.Bradley@fincen.gov ; lindsay.orlin@fincen.gov ; Melissa.Nasrah@treasury.gov ; Jennifer.Hershfang@treasury.gov ;
Matthew.Tuchband@treasury.gov; Stephanie.Petersen@treasury.gov ; Tyler.Hand@treasury.gov; llritems@fms.treas.gov ;
Tom.Longnecker@fms.treas.gov
Subject: JUSTICE Oversight Testimony on Campaign Finance (FC-ALERTS:DOJ-0016-A)
for an April 9th hearing before the Senate Judiciary Committees Subcommittee on Crime an d
Terrorism.
comments/edits before sendin g them to LLR. Please submit comments on behalf of your office to
JW1559-000331
From:
Lerner Lois G
Sent:
To:
Flax Nikole C
Subject:
Attachments:
Hot off the presses --New version with additional stuff
JW1559-000332
(b)(5) DP
JW1559-000333
(b)(5)
JW1559-000334
(b)(5)
JW1559-000335
(b)(5)
JW1559-000336
(b)(5)
JW1559-000337
(b)(5)
JW1559-000338
(b)(5)
JW1559-000339
(b)(5)
JW1559-000340
(b)(5)
JW1559-000341
From:
Paz Holly O
Sent:
To:
Lerner Lois G
Cc:
Marks Nancy J
Subject:
FW: Responses
Importance:
High
(b)(5) DP
From: Paz Holly O
Sent: Monday, November 19, 2012 4:39 PM
Troy,
Your reading of our response to quest ion #1 is correct.
(b)(5) DP
Holly
To: Paz Holly O
Holly,
Thank you again for the follow -up responses. In response to question #1, you mention
(b)(5) DP
(b)(5) DP
Troy
JW1559-000342
Cc: Seidell Thomas F TIGTA; Medina Cheryl J TIGTA; Le rner Lois G
Troy,
Please see answers to your follow -up questions below. Please let me know if you have any further questions or if you
Holly
1.
(b)(5) DP
2.
(b)(5) DP
JW1559-000343
3.
(b)(5) DP
To: Paz Holly O
Holly,
1.
(b)(5) DP
Does this mean

b(3)\6103
2.
On the May 14, 2012 entry on the timel ine, the EO function changed the additional details column to read
(b)(5) DP
3.
(b)(5) DP
As always, we appreciate the assistance and we look forward to your response.
Troy
JW1559-000344
Cc: Paz Holly O
Subject: Responses
Lois G. Lerner
JW1559-000345
From:
Weber Richard <Richard.Weber@ci.irs.gov>
Sent:
To:
Lerner Lois G
Subject:
Re: JUSTICE Oversight Testimony on Campaign Finance (FC-ALERTS:DOJ-0016-A)
Pls add Patty Haynes to the emails.
From: Lerner Lois G [ mailto:Lois.G.Lerner@irs.gov]
To: Barre Catherine M; Flax Nikole C; Weber Richard; Sterner Christopher B
Cc: Landes Scott S; Sinno Suzanne; Lowe Justin
A couple comments added.
Lois G. Lerner
JW1559-000346
From:
Haynes Patricia J <Patricia.Haynes@ci.irs.gov>
Sent:
To:
Barre Catherine M; Lerner Lois G; Weber Richard
Cc:
Sinno Suzanne; Flax Nikole C; Vozne Jennifer L
Subject:
Re: Hearing
Cathy,
I can pretty much work around anything but would like to avoid 2 -3pm if possible.
From: Barre Catherine M [ mailto:Catherine.M.Barre@irs.gov ]
To: Lerner Lois G; Weber Richard; Haynes Patricia J
Cc: Sinno Suzanne; Flax Nikole C; Vozne Jennifer L
Looping in Patty
To: Lerner Lois G; Weber Richard
Subject: Hearing
I spoke to the Senator W hitehouse staff tonight and gave him the bullet points on the blackletter law I thought irs could
address at a hearing (application process; 990 filing and timing of review; referrals generally; 7206). He indicated that the
committee would find such testimony helpful.
We agreed that we wo uld endeavor to set a time for a conference call on Tuesday to accomplish 2 things:
1) to have the substantive experts give a better overview of what IRS could discuss (and for you to correct anything I
messed up on that tonight) and
2) as a courtesy to our IRS witness, particularly given the short timing, to have a candid discussion about the types of
questions he expected the Chairman to raise with the IRS witness and for the IRS to let him know what we thought we
could and couldnt answer (or what we thought we could answer but that would be sensitive from a tax administration
perspective to share in an open hearing).
He was reasonable and appreciative. Although he understands the IRS wont answer hypotheticals or discuss any
particular taxpayer, the fact pattern they are mulling is an entity holding itself out as a c4 that checks a box on an irs form
indicating that it has no political activity. The same entity then files with the FEC detailing expenditures related to a
campaign. I expect him to ask tomorrow on the call whether
(b)(5) DP
. I think that is a fair game question for the hearing as well unless you dispose of it otherwise
tomorrow.
My schedule tomorrow is difficult and I will join the call if I am able but I dont want to hold back the group given the
timing Suzie, please dont schedule around me.
Lois and Rich, what time works for you tomorrow to talk to the staff so we (Suzie) can send him some good windows of
time? Nikole/Jennifer, would you like to be on the call if so, please let us know good times?
Thanks.
JW1559-000347
Cathy
JW1559-000348
From:
Lowe Justin
Sent:
Tuesday, April 02, 2013 9:07 AM
To:
Lerner Lois G
Subject:
RE: Testimony
Attachments:
Okay, here is a redline against the version prepared yesterday afternoon.
-----Original Message ----From: Lerner Lois G
To: Lowe Justin
Subject: RE: Testimony
Not a problem--thanks
Lois G. Lerner
-----Original Message ----From: Lowe Justin
To: Lerner Lois G
Subject: Testimony
Hmm, thought the bb would have an electronic copy of the testimony that I could work from, but it doe sn't. So can't get
you the cut version tonight, but will first thing tomorrow.
JW1559-000349
(b)(5) DP
JW1559-000350
(b)(5) DP
JW1559-000351
(b)(5) DP
JW1559-000352
(b)(5) DP
JW1559-000353
(b)(5) DP
JW1559-000354
(b)(5) DP
JW1559-000355
(b)(5) DP
JW1559-000356
Subject:
Meeting with Senator Whitehouse's staff to discuss upcoming hearing
Location:
Call in: 888-331-8226 ACCESS CODE: 4532324
Start:
Tue 4/2/2013 2:00 PM
End:
Tue 4/2/2013 3:00 PM
Show Time As:
Tentative
Recurrence:
(none)
Meeting Status:
Not yet responded
Organizer:
Sinno Suzanne
Required Attendees:
Lerner Lois G; Weber Richard; Haynes Patricia J; Flax Nikole C; Vozne Jennifer L; Barre
Catherine M
When: Tuesday, April 02, 2013 3:00 PM -4:00 PM (GMT -05:00) Eastern Time (US & Canada).
Where: Call in: 888 -331-8226 ACCESS CODE: 4532324
Note: The GMT offset above does not reflect daylight saving time adjustments.
*~*~*~*~*~*~*~*~*~*
Senate Judiciary Subcommittee on Crime and Terrorism is having a hearing on April 9, 2013, entitled, "Current Issues in
Campaign Finance Law Enforcement". The IRS will be testifying.
Today, Chairman Whitehouse's staff would like to discuss:
1) What the IR S can discuss at the hearing (application process; 990 filing and timing of review; referrals generally; 7206)
2) The types of questions the hill staff expects the Chairman to raise with the IRS witness
3) What the IRS can and cant answer (or what we thi nk we can answer but that would be sensitive from a tax
administration perspective to share in an open hearing)
JW1559-000357
From:
Lerner Lois G
Sent:
Tuesday, April 02, 2013 12:02 PM
To:
Biss Meghan R; Kindell Judith E
Subject:
FW: Hearing
Lois G. Lerner
From: Sinno Suzanne
Sent: Tuesday, April 02, 2013 10:28 AM
To: Lerner Lois G;
b(6) and b(7)(C)\personal inf...
Thanks Lois! I have already talked to
b(6) and b(7)(...
about this earlier today.
Sending out a calendar inv ite shortly for 3 -4.
From: Lerner Lois G
To: Flax Nikole C; Barre Catherine M; Weber Richard
Cc: Sinno Suzanne; Vozne Jennifer L;
I can do anytime from 2-4. Have to leave at 4:30. Have put

can hold the time.
b(6) and b(7)(C)\p...
--my secretary on so she
Lois G. Lerner
From: Flax Nikole C
To: Barre Catherine M; Lerner Lois G; Weber Richard
Cc: Sinno Suzanne; Vozne Jennifer L
Subject: Re: Hearing
I would like to join, but schedule is also tough tomorrow - I can try to miss other meetings if possible - let me know the
options. Thanks
To: Lerner Lois G; Weber Richard
Subject: Hearing
JW1559-000358
I spoke to the Senator W hitehouse staff tonight and gave him the bullet points on the blackletter law I thought irs could
address at a hearing (application process; 990 filing and timing of review; referrals generally; 7206).
committee would find such testimony helpf ul.
He indicated that the
We agreed that we would endeavor to set a time for a conference call on Tuesday to accomplish 2 things:
1) to have the substantive experts give a better overview of what IRS could discuss (and for you to correct anything I
messed up on that tonigh t) and
2) as a courtesy to our IRS witness, particularly given the short timing, to have a candid discussion about the types of
questions he expected the Chairman to raise with the IRS witness and for the IRS to let him know what we thought we
could and couldnt answer (or what we thought we could answer but that would be sensitive from a tax administration
perspective to share in an open hearing).
He was reasonable and appreciative. Although he understands the IRS wont answer hypotheticals or discuss any
particular taxpayer, the fact pattern they are mulling is an entity holding itself out as a c4 that checks a box on an irs fo rm
indicating that it has no political activity. The same entity then files with the FEC detailing expenditures rel ated to a
campaign. I expect him to ask tomorrow on the call whether
(b)(5) DP
I think that is a fair game question for the hearing as well unless you dispose of it otherwise
tomorrow.
My schedule tomorrow is difficult and I will join the call if I am able but I dont want to hold back the group given the
timing Suzie, please dont schedule around me.
Lois and Rich, what time works for you tomorrow to talk to the staff so we (Suzie) can send him some good windows of
time? Nikole/Jennifer, would you like to be on the call if so, please let us know good times?
Thanks.
Cathy
JW1559-000359
From:
Lerner Lois G
Sent:
To:
Subject:
FW: Draft (c)(4) Testimony 4-2-13.docx
Attachments:
Lois G. Lerner
From: Lerner Lois G
To: Flax Nikole C; Barre Catherine M; Sinno Suzanne
Cc: Lowe Justin
Subject: Draft (c)(4) Testimony 4 -2-13.docx
Here's our take on the testimony --we left some stuff in brackets to give you a fuller picture, but
we are assuming you'll want it shorter. As to the referral process, this is the usual process
during an exam--not sure about the other possibilities discussed yesterday as we have no
experience with the m. Let us know if you need more.
JW1559-000360
(b)(5) DP
JW1559-000361
(b)(5) DP
JW1559-000362
(b)(5) DP
JW1559-000363
(b)(5) DP
JW1559-000364
(b)(5) DP
JW1559-000365
(b)(5) DP
JW1559-000366
(b)(5) DP
JW1559-000367
From:
Lerner Lois G
Sent:
To:
Subject:
Attachments:
DOJ-0016-A-1.docx
Importance:
High
Lois G. Lerner
From: Lerner Lois G
Importance: High
Lois G. Lerner
JW1559-000368
(b)(5) DP
JW1559-000369
(b)(5) DP
JW1559-000370
(b)(5) DP
JW1559-000371
(b)(5) DP
JW1559-000372
(b)(5) DP
JW1559-000373
(b)(5) DP
JW1559-000374
From:
Paz Holly O
Sent:
To:
Lerner Lois G
Subject:
TIGTA report
Attachments:
201210022-Discussion Draft_Report (IRS comments).doc
Attached is a version of the discussion draft that contains our comments as discussed yesterday.
JW1559-000375
(b)(5) DP; (b)(3)/6103
JW1559-000376
(b)(5) DP; (b)(3)/6103
JW1559-000377
(b)(5) DP; (b)(3)/6103
JW1559-000378
(b)(5) DP; (b)(3)/6103
JW1559-000379
(b)(5) DP; (b)(3)/6103
JW1559-000380
(b)(5) DP; (b)(3)/6103
JW1559-000381
(b)(5) DP; (b)(3)/6103
JW1559-000382
(b)(5) DP; (b)(3)/6103
JW1559-000383
(b)(5) DP; (b)(3)/6103
JW1559-000384
(b)(5) DP; (b)(3)/6103
JW1559-000385
(b)(5) DP; (b)(3)/6103
JW1559-000386
(b)(5) DP; (b)(3)/6103
JW1559-000387
(b)(5) DP; (b)(3)/6103
JW1559-000388
(b)(5) DP; (b)(3)/6103
JW1559-000389
(b)(5) DP; (b)(3)/6103
JW1559-000390
(b)(5) DP; (b)(3)/6103
JW1559-000391
(b)(5) DP; (b)(3)/6103
JW1559-000392
(b)(5) DP; (b)(3)/6103
JW1559-000393
(b)(5) DP; (b)(3)/6103
JW1559-000394
(b)(5) DP; (b)(3)/6103
JW1559-000395
(b)(5) DP; (b)(3)/6103
JW1559-000396
(b)(5) DP; (b)(3)/6103
JW1559-000397
(b)(5) DP; (b)(3)/6103
JW1559-000398
(b)(5) DP; (b)(3)/6103
JW1559-000399
(b)(5) DP; (b)(3)/6103
JW1559-000400
(b)(5) DP; (b)(3)/6103
JW1559-000401
(b)(5) DP; (b)(3)/6103
JW1559-000402
(b)(5) DP; (b)(3)/6103
JW1559-000403
(b)(5) DP; (b)(3)/6103
JW1559-000404
(b)(5) DP; (b)(3)/6103
JW1559-000405
(b)(5) DP; (b)(3)/6103
JW1559-000406
(b)(5) DP; (b)(3)/6103
JW1559-000407
(b)(5) DP; (b)(3)/6103
JW1559-000408
(b)(5) DP; (b)(3)/6103
JW1559-000409
(b)(5) DP; (b)(3)/6103
JW1559-000410
(b)(5) DP; (b)(3)/6103
JW1559-000411
(b)(5) DP; (b)(3)/6103
JW1559-000412
(b)(5) DP; (b)(3)/6103
JW1559-000413
(b)(5) DP; (b)(3)/6103
JW1559-000414
(b)(5) DP; (b)(3)/6103
JW1559-000415
(b)(5) DP; (b)(3)/6103
JW1559-000416
(b)(5) DP; (b)(3)/6103
JW1559-000417
(b)(5) DP; (b)(3)/6103
JW1559-000418
(b)(5) DP; (b)(3)/6103
JW1559-000419
(b)(5) DP; (b)(3)/6103
JW1559-000420
(b)(5) DP; (b)(3)/6103
JW1559-000421
(b)(5) DP; (b)(3)/6103
JW1559-000422
(b)(5) DP; (b)(3)/6103
JW1559-000423
(b)(5) DP; (b)(3)/6103
JW1559-000424
(b)(5) DP; (b)(3)/6103
JW1559-000425
(b)(5) DP; (b)(3)/6103
JW1559-000426
(b)(5) DP; (b)(3)/6103
JW1559-000427
(b)(5) DP; (b)(3)/6103
JW1559-000428
(b)(5) DP; (b)(3)/6103
JW1559-000429
(b)(5) DP; (b)(3)/6103
JW1559-000430
(b)(5) DP; (b)(3)/6103
JW1559-000431
From:
Lerner Lois G
Sent:
To:
Sinno Suzanne
Subject:
Yep--just ours
Lois G. Lerner
From: Sinno Suzanne
Sent: Tuesday, April 02, 2013 2:14 PM
To: Lerner Lois G
Subject: RE: JUSTICE Oversight Testimony on Campaign Finance (FC -ALERTS:DOJ-0016-A)
Just wanted to confirm - this is just TEGEs comments not CIs?
From: Lerner Lois G
Subject: FW: JUSTICE Oversight T estimony on Campaign Finance (FC -ALERTS:DOJ-0016-A)
Importance: High
Lois G. Lerner
JW1559-000432
From:
Lerner Lois G
Sent:
To:
Kindell Judith E; Biss Meghan R
Subject:
Attachments:
DOJ-0016-A-1 with CCTEGE comments.docx
Lois G. Lerner
To: Lerner Lois G; Brown Susan D
Cc: Judson Victoria A
FYI, here is what we are sending forward from CC:TEGE. We didnt use as light of a touch as you did, but still restrained
ourselves. We included your edit as well.
To: Cook Janine; Brown Susan D
Importance: High
This is the comment I sent on the version you are reviewing
Lois G. Lerner
From: Lerner Lois G
Cc: Landes Scott S; Sinno Suzanne
Importance: High
It seems to assume that all c 4,5, and 6 secret political committees, but keeping in mind it is
their testimony--not ours--I only have one c omment.
JW1559-000433
Lois G. Lerner
Importance: High
Please coordinate any TEGE and CI comments with Nancy in counsel for response TOMORROW by 1:00 as noted
below.
Thanks.
To: Rochelle.Granat@treasury.gov; Jason.Brown@treasury.gov; Margaret.Bailey@treasury.gov;
Paula.Farrell@treasury.gov; Christian.Furey@treasury.gov; Gordon.Canning@treasury.gov;
Robert.Mahaffie@treasury.gov; Barbara.Wiss@treasury.gov; Barre Catherine M; Rose Nancy L;
Cameron.Arterton@treasury.gov; James.Mackie@treasury.gov; Jessica.Hauser@treasury.gov; Zarlenga Lisa;
Kevin.Knopf@treasury.gov; cynthia.c lark@fincen.gov; Patrick.Obrien@fincen.gov; Mike.Maher@do.treas.gov;
Jeffrey.Warner@treasury.gov; Andrea.Gacki@treasury.gov; Kevin.OConnor@fincen.gov; Luke.Ballman@treasury.gov;
Barbara.Hammerle@treasury.gov; Marshall.Kofler@fms.treas.gov; Marc.Seldin@fms. treas.gov;
Cc: Luke.Harman@treasury.gov; Adewale.Adeyemo@treasury.gov; Alexander.Krulic@treasury.gov;
Andrew.Woolf@treasury.gov; Barb.Bracy@treasury.gov; Brandon.Oliver@treasury.gov; Brian.Egan@treasury.gov;
ExecSecProcessUnit@treasury.gov; Kathryn.Alvarez@treasury.gov; leigh.williams@treasury.gov; LLR@treasury.gov;
Michael.McRaith@treasury.gov; Michelle.Ayers@treasury.gov; DelmarR@oig.treas. gov; Patrick.Maloney@treasury.gov;
Peter.Lee@treasury.gov; Priti.Agrawal@treasury.gov; Counsel.Office@tigta.treas.gov; Paul.Ahern@treasury.gov;
Catherine.Ahn@treasury.gov; Gary.Sutton@treasury.gov; Brian.Townsend@treasury.gov; Julia.Yoo@treasury.gov;
Lisa.Abraham@treasury.gov; Kathleen.Mellody@treasury.gov; Colleen.McLoughlin@treasury.gov;
Karen.Weber@treasury.gov; Anita.Blair@treasury.gov; Benjamin.Mann@treasury.gov;
Cathy.Higginbotham@treasury.gov; Daniel.Ballard@treasury.gov; Darlene.Peterson@treasury.go v;
Karen.Melanson@treasury.gov; Lisa.Pena@treasury.gov; Lorraine.Cole@treasury.gov; Mariam.Harvey@treasury.gov;
Michael.Lewis@treasury.gov; Polly.Dietz@treasury.gov; Robyn.East@treasury.gov; Scott.Canty@treasury.gov;
Thomas.Sharpe@treasury.gov; TOC@treasur y.gov; Veronica.Marco@treasury.gov; Corwin Erik H; Goldstein Richard S;
Landes Scott S; McField Terri; Namrata.Mujumdar@treasury.gov; Sandra.Salstrom@treasury.gov;
George.Bostick@treasury.gov; Bill.Bradley@fincen.gov; lindsay.orlin@fincen.gov; Melissa.Nasr ah@treasury.gov;
Jennifer.Hershfang@treasury.gov; Matthew.Tuchband@treasury.gov; Stephanie.Petersen@treasury.gov;
Terrorism.
JW1559-000434
JW1559-000435
(b)(5) DP
JW1559-000436
(b)(5) DP
JW1559-000437
(b)(5) DP
JW1559-000438
(b)(5) DP
JW1559-000439
(b)(5) DP
JW1559-000440
(b)(5) DP
JW1559-000441
From:
Lerner Lois G
Sent:
To:
Daly Richard M; Marks Nancy J
Cc:
Paz Holly O
Subject:
FW: TIGTA report
Attachments:
Importance:
High
If you have the chance, please take a quick look to be sure we haven't missed anything.
Lois G. Lerner
-----Original Message ----From: Paz Holly O
To: Lerner Lois G
Subject: TIGTA report
JW1559-000442
(b)(5) DP; (b)(3)/6103
JW1559-000443
(b)(5) DP; (b)(3)/6103
JW1559-000444
(b)(5) DP; (b)(3)/6103
JW1559-000445
(b)(5) DP; (b)(3)/6103
JW1559-000446
(b)(5) DP; (b)(3)/6103
JW1559-000447
(b)(5) DP; (b)(3)/6103
JW1559-000448
(b)(5) DP; (b)(3)/6103
JW1559-000449
(b)(5) DP; (b)(3)/6103
JW1559-000450
(b)(5) DP; (b)(3)/6103
JW1559-000451
(b)(5) DP; (b)(3)/6103
JW1559-000452
(b)(5) DP; (b)(3)/6103
JW1559-000453
(b)(5) DP; (b)(3)/6103
JW1559-000454
(b)(5) DP; (b)(3)/6103
JW1559-000455
(b)(5) DP; (b)(3)/6103
JW1559-000456
(b)(5) DP; (b)(3)/6103
JW1559-000457
(b)(5) DP; (b)(3)/6103
JW1559-000458
(b)(5) DP; (b)(3)/6103
JW1559-000459
(b)(5) DP; (b)(3)/6103
JW1559-000460
(b)(5) DP; (b)(3)/6103
JW1559-000461
(b)(5) DP; (b)(3)/6103
JW1559-000462
(b)(5) DP; (b)(3)/6103
JW1559-000463
(b)(5) DP; (b)(3)/6103
JW1559-000464
(b)(5) DP; (b)(3)/6103
JW1559-000465
(b)(5) DP; (b)(3)/6103
JW1559-000466
(b)(5) DP; (b)(3)/6103
JW1559-000467
(b)(5) DP; (b)(3)/6103
JW1559-000468
(b)(5) DP; (b)(3)/6103
JW1559-000469
(b)(5) DP; (b)(3)/6103
JW1559-000470
(b)(5) DP; (b)(3)/6103
JW1559-000471
(b)(5) DP; (b)(3)/6103
JW1559-000472
(b)(5) DP; (b)(3)/6103
JW1559-000473
(b)(5) DP; (b)(3)/6103
JW1559-000474
(b)(5) DP; (b)(3)/6103
JW1559-000475
(b)(5) DP; (b)(3)/6103
JW1559-000476
(b)(5) DP; (b)(3)/6103
JW1559-000477
(b)(5) DP; (b)(3)/6103
JW1559-000478
(b)(5) DP; (b)(3)/6103
JW1559-000479
(b)(5) DP; (b)(3)/6103
JW1559-000480
(b)(5) DP; (b)(3)/6103
JW1559-000481
(b)(5) DP; (b)(3)/6103
JW1559-000482
(b)(5) DP; (b)(3)/6103
JW1559-000483
(b)(5) DP; (b)(3)/6103
JW1559-000484
(b)(5) DP; (b)(3)/6103
JW1559-000485
(b)(5) DP; (b)(3)/6103
JW1559-000486
(b)(5) DP; (b)(3)/6103
JW1559-000487
(b)(5) DP; (b)(3)/6103
JW1559-000488
(b)(5) DP; (b)(3)/6103
JW1559-000489
(b)(5) DP; (b)(3)/6103
JW1559-000490
(b)(5) DP; (b)(3)/6103
JW1559-000491
(b)(5) DP; (b)(3)/6103
JW1559-000492
(b)(5) DP; (b)(3)/6103
JW1559-000493
(b)(5) DP; (b)(3)/6103
JW1559-000494
(b)(5) DP; (b)(3)/6103
JW1559-000495
(b)(5) DP; (b)(3)/6103
JW1559-000496
(b)(5) DP; (b)(3)/6103
JW1559-000497
(b)(5) DP; (b)(3)/6103
JW1559-000498
From:
Kindell Judith E
Sent:
To:
Sinno Suzanne
Cc:
Lerner Lois G; Biss Meghan R; Marx Dawn R
Subject:
RE: Senate Judiciary CRIME Subcommittee Hearing on Campaign Finance Investigation
scheduled for 4/9.
Attachments:
rr2004_6.pdf; rr2007-41.pdf; fs-06-17.pdf
Attached are the revenue rulings along with the fact sheet that was the basis for Rev. Rul. 2007 -41 (it has some plain
discussion that is helpful). You can also find these on our web site at the following locations:
http://www.irs.gov/file_source/pub/irs -tege/rr2004_6.pdf
http://www.irs.gov/file_source/pub/irs -tege/rr2007-41.pdf
http://www.irs.gov/uac/Election -Year-Activities-and-the-Prohibition-on-Political-Campaign-Intervention-for-Section501(c)(3)-Organizations
JW1559-000499
FS-2006-17, February 2006
Media Relations Office

www.IRS.gov/newsroom
Page 1
Washington, D.C.
Media Contact: 202.622.4000

Public Contact: 800.829.1040
Election Year Activities and the Prohibition on Political Campaign

Intervention for Section 501(c)(3) Organizations
The Internal Revenue Service (IRS) is releasing this fact sheet to provide information to
help section 501(c)(3) organizations stay in compliance with the federal tax law. Many of
the types of political intervention activities addressed in the fact sheet were those that came
under scrutiny during the 2004 election cycle. The contents reflect the IRS interpretation of
tax laws enacted by Congress, Treasury regulations, and court decisions. The information
is not comprehensive, however, and does not cover every situation. Thus, it is not intended
to replace the law or be the sole source of information. The resolution of any particular
issue may depend on the specific facts and circumstances of a given taxpayer.
With the 2006 campaign season approaching, the IRS is launching enhanced education
and enforcement efforts, based on the findings and analysis of the 2004 election cycle. The
IRS is providing this fact sheet to help ensure that charities have enough advance notice of
the types of problems that have occurred seen, the legal strictures against engaging in
political activities and how to avoid these problems.
The IRS considers this fact sheet a living document, one that will be revised to take into
account future developments and feedback. This fact sheet is the beginning of the IRS
effort to increase the educational material available to the community. The IRS encourages
comments which may be submitted to the IRS at the following addresses:
1111 Constitution Avenue, NW
Washington, DC 20224
Attn: SE:T:EO:CEO
-ortege.eo.ceo@irs.gov
Churches should also see Publication 1828, Tax Guide for Churches and Religious
Organizations.
Election Year Activities and the Prohibition on Political Campaign Intervention for
Section 501(c)(3) Organizations
During election campaigns, many churches, universities, hospitals, social service providers,
and other section 501(c)(3) organizations are uncertain about the extent to which they can
discuss issues of importance in the campaigns or interact with candidates for public office.
They are also uncertain about the role they can play in encouraging citizens to register and
JW1559-000500
Page 2
vote. This fact sheet is intended to help organizations understand what they can and
cannot do when an election campaign is under way.
The Prohibition on Political Campaign Intervention

Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely
prohibited from directly or indirectly participating in, or intervening in, any political campaign
on behalf of (or in opposition to) any candidate for elective public office. The prohibition
applies to all campaigns including campaigns at the federal, state and local level. Violation
of this prohibition may result in denial or revocation of tax-exempt status and the imposition
of certain excise taxes. Those section 501(c)(3) organizations that are private foundations
are subject to additional restrictions that are not described in this fact sheet.
What is Political Campaign Intervention?

Political campaign intervention includes any and all activities that favor or oppose one or
more candidates for public office. The prohibition extends beyond candidate
endorsements. Contributions to political campaign funds or public statements of position
(verbal or written) made by or on behalf of an organization in favor of or in opposition to any
candidate for public office clearly violate the prohibition on political campaign intervention.
Distributing statements prepared by others that favor or oppose any candidate for public
office will also violate the prohibition. Allowing a candidate to use an organizations assets
or facilities will also violate the prohibition if other candidates are not given an equivalent
opportunity. Although section 501(c)(3) organizations may engage in some activities to
promote voter registration, encourage voter participation, and provide voter education, they
will violate the prohibition on political campaign intervention if they engage in an activity that
favors or opposes any candidate for public office. Certain activities will require an
evaluation of all the facts and circumstances to determine whether they result in political
campaign intervention.
Voter Education, Voter Registration and Get-Out-the-Vote Drives

Section 501(c)(3) organizations are permitted to conduct certain voter education activities
(including the presentation of public forums and the publication of voter education guides) if
they are carried out in a non-partisan manner. In addition, section 501(c)(3) organizations
may encourage people to participate in the electoral process through voter registration and
get-out-the-vote drives, conducted in a non-partisan manner. On the other hand, voter
education or registration activities conducted in a biased manner that favors (or opposes)
one or more candidates is prohibited.
Example 1: B, a section 501(c)(3) organization that promotes community involvement, sets
up a booth at the state fair where citizens can register to vote. The signs and banners in
and around the booth give only the name of the organization, the date of the next upcoming
statewide election, and notice of the opportunity to register. No reference to any candidate
or political party is made by the volunteers staffing the booth or in the materials available at
the booth, other than the official voter registration forms which allow registrants to select a
party affiliation. B is not engaged in political campaign intervention when it operates this
voter registration booth.
JW1559-000501
Page 3
Example 2: C is a section 501(c)(3) organization that educates the public on environmental

issues. Candidate G is running for the state legislature and an important element of her
platform is challenging the environmental policies of the incumbent. Shortly before the
election, C sets up a telephone bank to call registered voters in the district in which
Candidate G is seeking election. In the phone conversations, Cs representative tells the
voter about the importance of environmental issues and asks questions about the voters
views on these issues. If the voter appears to agree with the incumbents position, Cs
representative thanks the voter and ends the call. If the voter appears to agree with
Candidate Gs position, Cs representative reminds the voter about the upcoming election,
stresses the importance of voting in the election and offers to provide transportation to the
polls. C is engaged in political campaign intervention when it conducts this get-out-the-vote
drive.
Individual Activity by Organization Leaders

The political campaign intervention prohibition is not intended to restrict free expression on
political matters by leaders of organizations speaking for themselves, as individuals. Nor
are leaders prohibited from speaking about important issues of public policy. However, for
their organizations to remain tax-exempt under section 501(c)(3), leaders cannot make
partisan comments in official organization publications or at official functions of the
organization. To avoid potential attribution of their comments outside of organization
functions and publications, organization leaders who speak or write in their individual
capacity are encouraged to clearly indicate that their comments are personal and not
intended to represent the views of the organization.
Example 3: President A is the Chief Executive Officer of Hospital J, a section
501(c)(3) organization, and is well known in the community. With the permission of
five prominent healthcare industry leaders, including President A, who have
personally endorsed Candidate T, Candidate T publishes a full-page ad in the local
newspaper listing the names of the five leaders. President A is identified in the ad as
the CEO of Hospital J. The ad states, Titles and affiliations of each individual are
provided for identification purposes only. The ad is paid for by Candidate Ts
campaign committee. Because the ad was not paid for by Hospital J, the ad is not
otherwise in an official publication of Hospital J, and the endorsement is made by
President A in a personal capacity, the ad does not constitute campaign intervention
by Hospital J.
Example 4: President B is the president of University K, a section 501(c)(3)
organization. University K publishes a monthly alumni newsletter that is distributed to
all alumni of the university. In each issue, President B has a column titled My
Views. The month before the election, President B states in the My Views column,
It is my personal opinion that Candidate U should be reelected. For that one issue,
President B pays from his personal funds the portion of the cost of the newsletter
attributable to the My Views column. Even though he paid part of the cost of the
newsletter, the newsletter is an official publication of the university. Because the
endorsement appeared in an official publication of University K, it constitutes
campaign intervention by University K.
JW1559-000502
Page 4
Example 5: Minister C is the minister of Church L, a section 501(c)(3) organization

and Minister C is well known in the community. Three weeks before the election, he
attends a press conference at Candidate Vs campaign headquarters and states that
Candidate V should be reelected. Minister C does not say he is speaking on behalf
of Church L. His endorsement is reported on the front page of the local newspaper
and he is identified in the article as the minister of Church L. Because Minister C did
not make the endorsement at an official church function, in an official church
publication or otherwise use the churchs assets, and did not state that he was
speaking as a representative of Church L, his actions do not constitute campaign
intervention by Church L.
Example 6: Chairman D is the chairman of the Board of Directors of M, a section 501(c)(3)
organization that educates the public on conservation issues. During a regular meeting of M
shortly before the election, Chairman D spoke on a number of issues, including the
importance of voting in the upcoming election, and concluded by stating, It is important that
you all do your duty in the election and vote for Candidate W. Because Chairman Ds
remarks indicating support for Candidate W were made during an official organization
meeting, they constitute political campaign intervention by M.
Candidate Appearances
Depending on the facts and circumstances, an organization may invite political candidates
to speak at its events without jeopardizing its tax-exempt status. Political candidates may
be invited in their capacity as candidates, or in their individual capacity (not as a candidate).
Candidates may also appear without an invitation at organization events that are open to
the public.
A candidate may seek to reassure the organization that it is permissible for the organization
to do certain things in connection with the candidates appearance. An organization in this
position should keep in mind that the candidate may not be familiar with the organizations
tax-exempt status and that the candidate may be focused on compliance with the election
laws that apply to the candidates campaign rather than the federal tax law that applies to
the organization. The organization will be in the best position to ensure compliance with
the prohibition on political campaign intervention if it makes its own independent conclusion
about its compliance with federal tax law.
Speaking as a Candidate
When a candidate is invited to speak at an organization event as a political candidate, the
organization must take steps to ensure that:
It provides an equal opportunity to political candidates seeking the same office;

It does not indicate any support for or opposition to the candidate (this should be stated
explicitly when the candidate is introduced and in communications concerning the
candidates attendance); and
No political fundraising occurs.
Equal Opportunity to Participate
In determining whether candidates are given an equal opportunity to participate, an
organization should consider the nature of the event to which each candidate is invited, in
addition to the manner of presentation.
JW1559-000503
Page 5
For example, an organization that invites one candidate to speak at its well attended annual
banquet, but invites the opposing candidate to speak at a sparsely attended general
meeting, will likely have violated the political campaign prohibition, even if the manner of
presentation for both speakers is otherwise neutral.
Public Forums
Sometimes an organization invites several candidates for the same office to speak at a
public forum. A public forum involving several candidates for public office may qualify as an
exempt educational activity. However, if the forum is operated to show a bias for or against
any candidate, then the forum would be political campaign intervention.
When an organization invites several candidates for the same office to speak at a forum, it
should consider the following factors:
Whether questions for the candidate are prepared and presented by an independent
nonpartisan panel,
Whether the topics discussed by the candidates cover a broad range of issues that the
candidates would address if elected to the office sought and are of interest to the public,
Whether each candidate is given an equal opportunity to present his or her view on the
issues discussed,
Whether the candidates are asked to agree or disagree with positions, agendas,
platforms or statements of the organization, and
Whether a moderator comments on the questions or otherwise implies approval or

disapproval of the candidates.
Example 7: President E is the president of Society N, a historical society that is a
section 501(c)(3) organization. In the month prior to the election, President E invites
the three Congressional candidates for the district in which Society N is located to
address the members, one each at a regular meeting held on three successive
weeks. Each candidate is given an equal opportunity to address and field questions
on a wide variety of topics from the members. Society Ns publicity announcing the
dates for each of the candidates speeches and President Es introduction of each
candidate include no comments on their qualifications or any indication of a
preference for any candidate. Society Ns actions do not constitute political
Example 8: The facts are the same as in Example 7 except that there are four
candidates in the race rather than three, and one of the candidates declines the
invitation to speak. In the publicity announcing the dates for each of the candidates
speeches, Society N includes a statement that the order of the speakers was
determined at random and the fourth candidate declined the Societys invitation to
speak. President E makes the same statement in his opening remarks at each of
the meetings where one of the candidates is speaking. Society Ns actions do not
constitute political campaign intervention.
Example 9: Minister F is the minister of Church O, a section 501(c)(3) organization.
The Sunday before the November election, Minister F invites Senate Candidate X to
preach to her congregation during worship services. During his remarks, Candidate
X states, I am asking not only for your votes, but for your enthusiasm and
JW1559-000504
Page 6
dedication, for your willingness to go the extra mile to get a very large turnout on
Tuesday. Minister F invites no other candidate to address her congregation during
the Senatorial campaign. Because these activities take place during official church
services, they are attributed to Church O. By selectively providing church facilities to
allow Candidate X to speak in support of his campaign, Church Os actions
constitute political campaign intervention.
Speaking or Participating as a Non-Candidate
Candidates may also appear or speak at organization events in a non-candidate capacity.
For instance, a political candidate may be a public figure who is invited to speak because
he or she: (a) currently holds, or formerly held, public office; (b) is considered an expert in a
non-political field; or (c) is a celebrity or has led a distinguished military, legal, or public
service career. A candidate may choose to attend an event that is open to the public, such
as a lecture, concert or worship service. The candidates presence at an organizationsponsored event does not, by itself, cause the organization to be engaged in political
campaign intervention. However, if the candidate is publicly recognized by the
organization, or if the candidate is invited to speak, the organization must ensure that:
The individual is chosen to speak solely for reasons other than candidacy for public
office;
The individual speaks only in a non-candidate capacity;
Neither the individual nor any representative of the organization makes any mention of
his or her candidacy or the election;
No campaign activity occurs in connection with the candidates attendance; and
The organization maintains a nonpartisan atmosphere on the premises or at the event
where the candidate is present.
In addition, the organization should clearly indicate the capacity in which the candidate is
appearing and should not mention the individuals political candidacy or the upcoming
election in the communications announcing the candidates attendance at the event.
Example 10: Historical society P is a section 501(c)(3) organization. Society P is
located in the state capital. President G is the president of Society P and
customarily acknowledges the presence of any public officials present during
meetings. During the state gubernatorial race, Lieutenant Governor Y, a candidate,
attends a meeting of the historical society. President G acknowledges the
Lieutenant Governors presence in his customary manner, saying, We are happy to
have joining us this evening Lieutenant Governor Y. President G makes no
reference in his welcome to the Lieutenant Governors candidacy or the election.
Society P has not engaged in political campaign intervention as a result of President
Gs actions.
Example 11: Chairman H is the chairman of the Board of Hospital Q, a section
501(c)(3) organization. Hospital Q is building a new wing. Chairman H invites
Congressman Z, the representative for the district containing Hospital Q, to attend
the groundbreaking ceremony for the new wing. Congressman Z is running for
reelection at the time. Chairman H makes no reference in her introduction to
Congressman Zs candidacy or the election. Congressman Z also makes no
reference to his candidacy or the election and does not do any fundraising while at
Hospital Q. Hospital Q has not intervened in a political campaign.
JW1559-000505
Page 7
Example 12: University X is a section 501(c)(3) organization. X publishes an alumni

newsletter on a regular basis. Individual alumni are invited to send in updates about
themselves which are printed in each edition of the newsletter. After receiving an update
letter from Alumnus Q, X prints the following: Alumnus Q, class of XX is running for mayor
of Metropolis. The newsletter does not contain any reference to this election or to
Alumnus Qs candidacy other than this statement of fact. University X has not intervened
in a political campaign.
Example 13: Mayor G attends a concert performed by Symphony S, a section 501(c)(3)
organization, in City Park. The concert is free and open to the public. Mayor G is a
candidate for reelection, and the concert takes place after the primary and before the
general election. During the concert, the chairman of Ss board addresses the crowd and
says, I am pleased to see Mayor G here tonight. Without his support, these free concerts
in City Park would not be possible. We will need his help if we want these concerts to
continue next year so please support Mayor G in November as he has supported us. As a
result of these remarks, Symphony S has engaged in political campaign intervention.
Issue Advocacy vs. Political Campaign Intervention

Under federal tax law, section 501(c)(3) organizations may take positions on public policy
issues, including issues that divide candidates in an election for public office. However,
section 501(c)(3) organizations must avoid any issue advocacy that functions as political
campaign intervention. Even if a statement does not expressly tell an audience to vote for
or against a specific candidate, an organization delivering the statement is at risk of
violating the political campaign intervention prohibition if there is any message favoring or
opposing a candidate. A statement can identify a candidate not only by stating the
candidates name but also by other means such as showing a picture of the candidate,
referring to political party affiliations, or other distinctive features of a candidates platform or
biography. All the facts and circumstances need to be considered to determine if the
advocacy is political campaign intervention.
Key factors in determining whether a communication results in political campaign
intervention include the following:
Whether the statement identifies one or more candidates for a given public office;
Whether the statement expresses approval or disapproval for one or more candidates
positions and/or actions;
Whether the statement is delivered close in time to the election;
Whether the statement makes reference to voting or an election;
Whether the issue addressed in the communication has been raised as an issue
distinguishing candidates for a given office;
Whether the communication is part of an ongoing series of communications by the

organization on the same issue that are made independent of the timing of any election;
and
Whether the timing of the communication and identification of the candidate are related to a
non-electoral event such as a scheduled vote on specific legislation by an officeholder who
also happens to be a candidate for public office.
JW1559-000506
Page 8
A communication is particularly at risk of political campaign intervention when it makes

reference to candidates or voting in a specific upcoming election. Nevertheless, the
communication must still be considered in context before arriving at any conclusions.
Example 14: University O, a section 501(c)(3) organization, prepares and finances a
full-page newspaper advertisement that is published in several large circulation
newspapers in State V shortly before an election in which Senator C is a candidate
for nomination in a party primary. Senator C represents State V in the United States
Senate. The advertisement states that S. 24, a pending bill in the United States
Senate, would provide additional opportunities for State V residents to attend
college, but Senator C has opposed similar measures in the past. The
advertisement ends with the statement Call or write Senator C to tell him to vote for
S. 24. Educational issues have not been raised as an issue distinguishing
Senator C from any opponent. S. 24 is scheduled for a vote in the United States
Senate before the election, soon after the date that the advertisement is published in
the newspapers. Even though the advertisement appears shortly before the election
and identifies Senator Cs position on the issue as contrary to Os position,
University O has not violated the political campaign intervention prohibition because
the advertisement does not mention the election or the candidacy of Senator C,
education issues have not been raised as distinguishing Senator C from any
opponent, and the timing of the advertisement and the identification of Senator C are
directly related to the specifically identified legislation University O is supporting and
appears immediately before the United States Senate is scheduled to vote on that
particular legislation. The candidate identified, Senator C, is an officeholder who is
in a position to vote on the legislation.
Example 15: Organization R, a section 501(c)(3) organization that educates the
public about the need for improved public education, prepares and finances a radio
advertisement urging an increase in state funding for public education in State X,
which requires a legislative appropriation. Governor E is the governor of State X.
The radio advertisement is first broadcast on several radio stations in State X
beginning shortly before an election in which Governor E is a candidate for
re-election. The advertisement is not part of an ongoing series of substantially similar
advocacy communications by Organization R on the same issue. The
advertisement cites numerous statistics indicating that public education in State X is
under-funded. While the advertisement does not say anything about Governor Es
position on funding for public education, it ends with Tell Governor E what you think
about our under-funded schools. In public appearances and campaign literature,
Governor Es opponent has made funding of public education an issue in the
campaign by focusing on Governor Es veto of an income tax increase the previous
year to increase funding of public education. At the time the advertisement is
broadcast, no legislative vote or other major legislative activity is scheduled in the
State X legislature on state funding of public education. Organization R has violated
the political campaign prohibition because the advertisement identifies Governor E,
appears shortly before an election in which Governor E is a candidate, is not part of
an ongoing series of substantially similar advocacy communications by Organization
R on the same issue, is not timed to coincide with a non-election event such as a
legislative vote or other major legislative action on that issue, and takes a position on
an issue that the opponent has used to distinguish himself from Governor E.
JW1559-000507
Page 9
Example 16: Candidate A and Candidate B are candidates for the state senate in
District W of State X. The issue of State X funding for a new mass transit project in
District W is a prominent issue in the campaign. Both candidates have spoken out
on the issue. Candidate A supports for the new mass transit project. Candidate B
opposes the project and supports State X funding for highway improvements
instead. P is the executive director of C, a section 501(c)(3) organization that
promotes community development in District W. At Cs annual fundraising dinner in
District W, which takes place in the month before the election in State X, P gives a
lengthy speech about community development issues including the transportation
issues. P does not mention the name of any candidate or any political party.
However, at the conclusion of the speech, P makes the following statement, For
those of you who care about quality of life in District W and the growing traffic
congestion, there is a very important choice coming up next month. We need new
mass transit. More highway funding will not make a difference. You have the power
to relieve the congestion and improve your quality of life in District W. Use that
power when you go to the polls and cast your vote in the election for your state
senator. C has violated the political campaign intervention as a result of P's
remarks at C's official function shortly before the election, in which P referred to the
upcoming election after stating a position on an issue that is a prominent issue in a
campaign that distinguishes the candidates.
Voter Guides
Voter guides are usually pamphlets or other short documents, often in chart form, intended
to help voters compare candidates positions on a set of issues. Preparing or distributing a
voter guide may violate the prohibition against political campaign intervention if the guide
focuses on a single issue or narrow range of issues, or if the questions are structured to
reflect bias. Although any document that identifies candidates and their positions close in
time to an election has the potential to result in political campaign intervention, preparation
or distribution of voter guides, because of their nature, present a particular risk for
non-compliance . The following factors are key considerations in whether a voter guide can
be distributed to educate voters without violating the prohibition on political campaign
intervention.
Whether the questions and any other description of the issues are clear and unbiased in
both their structure and content.
Whether the questions posed provided to the candidates are identical to those included in
the voter guide.
Whether the candidates are given a reasonable amount of time to respond to the questions.
If the candidate is given limited choices for an answer to a question (e.g. yes/no,
support/oppose), whether the candidate is also given a reasonable opportunity to explain
his position in his own words and that explanation is included in the voter guide.
Whether the answers in the voter guide are those provided by the candidates in response
to the questions, including whether the candidate's answers are unedited, and whether they
appear in close proximity to the question to which they respond.
Whether all candidates for a particular office are covered.
JW1559-000508
Page 10
Whether the number of questions, and the subjects covered, are sufficient to encompass
most major issues of interest to the entire electorate.
In assessing whether a voter guide is unbiased and nonpartisan, every aspect of the voter
guides format, content and distribution must be taken into consideration. If the
organizations position on one or more issues is set out in the guide so that it can be
compared to the candidates positions, the guide will constitute political campaign
intervention.
An organization may be asked to distribute voter guides prepared by a third party. Each
organization that distributes one or more voter guides is responsible for its own actions. If
the voter guide is biased, distribution of the voter guide is an act of political campaign
intervention. Therefore, an organization should reach its own independent conclusion
about whether a voter guide prepared by itself or prepared by a third party covers a broad
scope of issues and uses neutral form and content.
Business Activity
The question of whether an activity constitutes participation or intervention in a political
campaign may also arise in the context of a business activity of the organization, such as
selling or renting of mailing lists, the leasing of office space, or the acceptance of paid
political advertising. In this context, some of the factors to be considered in determining
whether the organization has engaged in political campaign intervention include the
following:
Whether the good, service or facility is available to candidates in the same election on an
equal basis,
Whether the good, service, or facility is available only to candidates and not to the general
public,
Whether the fees charged to candidates are at the organizations customary and usual
rates, and
Whether the activity is an ongoing activity of the organization or whether it is conducted

only for a particular candidate.
Example 17: Museum K is a section 501(c)(3) organization. It owns an historic building

that has a large hall suitable for hosting dinners and receptions. For several years,
Museum K has made the hall available for rent to members of the public. Standard fees
are set for renting the hall based on the number of people in attendance, and a number of
different organizations have rented the hall. Museum K rents the hall on a first come, first
served basis. Candidate P rents Museum Ks social hall for a fundraising dinner.
Candidate Ps campaign pays the standard fee for the dinner. Museum K is not involved in
political campaign intervention as a result of renting the hall to Candidate P for use as the
site of a campaign fundraising dinner.
JW1559-000509
Page 11
Example 18: Theater L is a section 501(c)(3) organization. It maintains a mailing list of all
of its subscribers and contributors. Theater L has never rented its mailing list to a third
party. Theater L is approached by the campaign committee of Candidate Q, who supports
increased funding for the arts. Candidate Q's campaign committee offers to rent Theater
L's mailing list for a fee that is comparable to fees charged by other similar organizations.
Theater L rents its mailing list to Candidate Q's campaign committee. Theater L declines
similar requests from campaign committees of other candidates. Theater L has intervened
in a political campaign.
Web Sites
The Internet has become a widely used communications tool. Section 501(c)(3)
organizations use their own web sites to disseminate statements and information. They
also routinely link their web sites to web sites maintained by other organizations as a way of
providing additional information that the organizations believe is useful or relevant to the
public.
A web site is a form of communication. If an organization posts something on its web site
that favors or opposes a candidate for public office, the organization will be treated the
same as if it distributed printed material, oral statements or broadcasts that favored or
opposed a candidate.
An organization has control over whether it establishes a link to another site. When an
organization establishes a link to another web site, the organization is responsible for the
consequences of establishing and maintaining that link, even if the organization does not
have control over the content of the linked site. Because the linked content may change
over time, an organization may reduce the risk of political campaign intervention by
monitoring the linked content and adjusting the links accordingly.
Links to candidate-related material, by themselves, do not necessarily constitute political
campaign intervention. The IRS will take all the facts and circumstances into account when
assessing whether a link produces that result. The facts and circumstances to be
considered include, but are not limited to, the context for the link on the organizations web
site, whether all candidates are represented, any exempt purpose served by offering the
link, and the directness of the links between the organizations web site and the web page
that contains material favoring or opposing a candidate for public office.
Example 19: M, a section 501(c)(3) organization, maintains a web site and posts an
unbiased, nonpartisan voter guide that is prepared consistent with the principles discussed
in the voter guide section above. For each candidate covered in the voter guide, M
includes a link to that candidates official campaign web site. The links to the candidate
web sites are presented on a consistent neutral basis for each candidate, with text saying
For more information on Candidate X, you may consult [URL]. M has not intervened in a
political campaign because the links are provided for the exempt purpose of educating
voters and are presented in a neutral, unbiased manner that includes all candidates for a
particular office.
Example 20: Hospital N, a section 501(c)(3) organization, maintains a web site that includes
such information as medical staff listings, directions to Hospital N, and descriptions of its
specialty health programs, major research projects, and other community outreach
JW1559-000510
Page 12
programs. On one page of the web site, Hospital N describes its treatment program for a
particular disease. At the end of the page, it includes a section of links to other web sites
titled More Information. These links include links to other hospitals that have treatment
programs for this disease, research organizations seeking cures for that disease, and
articles about treatment programs. This section includes a link to an article on the web site
of O, a major national newspaper, praising Hospital Ns treatment program for the disease.
The page containing the article on Os web site contains no reference to any candidate or
election and has no direct links to candidate or election information. Elsewhere on Os web
site, there is a page displaying editorials that O has published. Several of the editorials
endorse candidates in an election that has not yet occurred. Hospital N has not intervened
in a political campaign by maintaining the link to the article on Os web site because the link
is provided for the exempt purpose of educating the public about Hospital Ns programs and
neither the context for the link, nor the relationship between Hospital N and O nor the
arrangement of the links going from Hospital Ns web site to the endorsement on Os web
site indicate that Hospital N was favoring or opposing any candidate.
Example 21: Church P, a section 501(c)(3) organization, maintains a web site that includes
such information as biographies of its ministers, times of services, details of community
outreach programs, and activities of members of its congregation. B, a member of the
congregation of Church P, is running for a seat on the town council. Shortly before the
election, Church P posts the following message on its web site, Lend your support to B,
your fellow parishioner, in Tuesdays election for town council. Church P has intervened in
a political campaign on behalf of B.
Effect of Conducting Multiple Activities

Although each of the activities described in this fact sheet is described separately, an
organization might combine one or more of the types of activity described above. For
example, an organization leader may speak about an issue at an event where a candidate
appears, or a voter guide might be distributed at a candidate forum. Where there is a
combination of activities, the interaction among them may affect whether or not the
organization is engaged in political campaign intervention.
30
JW1559-000511
BUREAU OF LABOR STATISTICS, DEPARTMENT STORE

INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS
(January 1941 = 100, unless otherwise noted)
Percent Change
from Nov. 2002
to Nov. 2003
Nov.
2002
Nov.
2003
Piece Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestics and Draperies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Womens and Childrens Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mens Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Infants Wear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Womens Underwear. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Womens Hosiery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Womens and Girls Accessories . . . . . . . . . . . . . . . . . . . . . . . . . . .
Womens Outerwear and Girls Wear . . . . . . . . . . . . . . . . . . . . . . .
Mens Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mens Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Boys Clothing and Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jewelry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toilet Articles and Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and Bedding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floor Coverings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Housewares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Major Appliances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Radio and Television. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recreation and Education 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Home Improvements 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automotive Accessories 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
473.3
571.3
652.4
899.2
622.7
551.8
345.3
559.1
373.5
572.1
603.6
461.3
871.7
793.1
972.5
622.2
600.6
738.6
221.6
47.5
84.6
125.2
111.7
480.5
548.6
649.8
845.3
598.3
514.2
343.3
555.8
375.7
549.5
598.3
451.0
866.8
797.2
976.2
612.9
594.5
712.6
210.0
44.3
82.2
124.9
112.0
1.5
-4.0
-0.4
-6.0
-3.9
-6.8
-0.6
-0.6
0.6
-4.0
-0.9
-2.2
-0.6
0.5
0.4
-1.5
-1.0
-3.5
-5.2
-6.7
-2.8
-0.2
0.3
Groups 115: Soft Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Groups 1620: Durable Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Groups 2123: Misc. Goods 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
575.9
404.5
95.4
567.7
388.9
93.9
-1.4
-3.9
-1.6
Store Total3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
513.0
503.1
-1.9
Groups
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
Absence of a minus sign before the percentage change in this column signifies a price increase.
Indexes on a January 1986 = 100 base.
3
The store total index covers all departments, including some not listed separately, except for the following: candy, food, liquor,
tobacco and contract departments.
2
DRAFTING INFORMATION
The principal author of this revenue
ruling is Michael Burkom of the Office
of Associate Chief Counsel (Income Tax
and Accounting). For further information regarding this revenue ruling, contact
Mr. Burkom at (202) 6227924 (not a
toll-free call).
Section 527.Political
Organizations
26 CFR 1.5272: Def
initions.
(Also 501.)
Public advocacy; public policy issues.

This ruling concerns certain public advocacy activities conducted by social welfare organizations, unions and trade associations. The guidance clarifies the tax implications of advocacy that meets the definition of political campaign activity.
Rev. Rul. 20046
tions described in 501(c)(4), 501(c)(5),

or 501(c)(6) may, consistent with their
exempt purpose, publicly advocate positions on public policy issues. This advocacy may include lobbying for legislation
consistent with these positions. Because
public policy advocacy may involve discussion of the positions of public officials
who are also candidates for public office,
a public policy advocacy communication
may constitute an exempt function within
the meaning of 527(e)(2). If so, the organization would be subject to tax under
527(f).
Organizations that are exempt from federal income tax under 501(a) as organiza-
January 26, 2004
328
2004-4 I.R.B.
JW1559-000512
ISSUE
In each of the six situations described
below, has the organization exempt from
federal income tax under 501(a) as an
organization described in 501(c)(4),
501(c)(5), or 501(c)(6) that engages
in public policy advocacy expended funds
for an exempt function as described in
527(e)(2)?
LAW
Section 501(c)(4) provides exemption
from taxation for civic leagues or organizations not organized for profit, but operated exclusively for the promotion of social welfare.
Section 1.501(c)(4)1 of the Income
Tax Regulations states an organization is
operated exclusively for the promotion of
social welfare if it is primarily engaged in
promoting in some way the common good
and general welfare of the people of the
community.
from taxation for labor, agricultural, or
horticultural organizations.
Section 1.501(c)(5)1 requires that labor, agricultural, or horticultural organizations have as their objects the betterment
of the conditions of those engaged in such
pursuits, the improvement of the grade of
their products, and the development of a
higher degree of efficiency in their respective occupations.
from taxation for business leagues, not organized for profit and no part of the net
earnings of which inures to the benefit of
any private shareholder or individual.
Section 1.501(c)(6)1 provides that a
business league is an association of persons having some common business interest, the purpose of which is to promote
such common interest and not to engage in
a regular business of a kind ordinarily carried on for profit. A business leagues activities should be directed to the improvement of business conditions of one or more
lines of business as distinguished from the
performance of particular services for individual persons.
Section 527 generally provides that political organizations that collect and expend monies for exempt function purposes
as described in 527(e)(2) are exempt
2004-4 I.R.B.
from Federal income tax except on their investment income.

Section 527(e)(1) defines a political organization as a party, committee, association, fund or other organization (whether
or not incorporated), organized and operated primarily for the purpose of accepting contributions or making expenditures,
or both, for an exempt function.
Section 527(e)(2) provides that the term
exempt function for purposes of 527
means the function of influencing or attempting to influence the selection, nomination, election, or appointment of any
individual to any Federal, State, or local
public office or office in a political organization, or the election of Presidential or
Vice-Presidential electors, whether or not
such individual or electors are selected,
nominated, elected, or appointed. By its
terms, 527(e)(2) includes all attempts to
influence the selection, nomination, election, or appointment of the described officials.
Section 527(f)(1) provides that an organization described in 501(c) and exempt from tax under 501(a) is subject
to tax on any amount expended for an exempt function described in 527(e)(2) at
the highest tax rate specified in 11(b).
The tax is imposed on the lesser of the net
investment income of the organization for
the taxable year or the amount expended
on an exempt function during the taxable
year. A 501(c) organization is taxed under 527(f)(1) only if the expenditure is
from its general treasury rather than from
a separate segregated fund described in
527(f)(3).
Section 527(f)(3) provides that if an organization described in 501(c) and exempt from tax under 501(a) sets up a separate segregated fund (which segregates
monies for 527(e)(2) exempt function
purposes) that fund will be treated as a
separate political organization described in
527 and, therefore, be subject to tax as a
political organization under 527.
Section 527(i) provides that, in order to
be tax-exempt, a political organization is
required to give notice that it is a political organization described in 527, unless excepted. An organization described
in 501(c) that does not set up a separate segregated fund, but makes exempt
function expenditures subject to tax under
527(f) is not subject to this requirement.
527(i)(5)(A).
329
Section 527(j) provides that, unless excepted, a tax-exempt political organization that has given notice under 527(i)
and does not timely make periodic reports
of contributions and expenditures, or that
fails to include the information required,
must pay an amount calculated by multiplying the amount of contributions and
expenditures that are not disclosed by the
highest corporate tax rate. An organization
described in 501(c) that does not set up
a separate segregated fund, but makes exempt function expenditures subject to tax
under 527(f), is not subject to the reporting requirements under 527(j).
Section 1.5272(c)(1) provides that the
term exempt function includes all activities that are directly related to and support
the process of influencing or attempting to
influence the selection, nomination, election, or appointment of any individual to
public office or office in a political organization. Whether an expenditure is for an
exempt function depends on all the facts
and circumstances.
Section 1.5276(f) provides that an organization described in 501(c) that is exempt under 501(a) may, if it is consistent
with its exempt status, establish and maintain a separate segregated fund to receive
contributions and make expenditures in a
political campaign.
Rev. Rul. 200349, 200320 I.R.B.
903 (May 19, 2003), discusses the reporting and disclosure requirements for
political organizations in question and
answer format. In Q&A6, the ruling
holds that while a 501(c) organization
that makes an expenditure for an exempt
function under 527(e)(2) is not required
to file the notice required under 527(i), if
the 501(c) organization establishes a separate segregated fund under 527(f)(3),
that fund is required to file the notice in
order to be tax-exempt unless it meets one
of the other exceptions to filing.
Certain broadcast, cable, or satellite
communications that meet the definition
of electioneering communications are
regulated by the Bipartisan Campaign
Reform Act of 2002 (BCRA), 116 Stat.
81. An exempt organization that violates
the regulatory requirements of BCRA may
well jeopardize its exemption or be subject
to other tax consequences.
January 26, 2004

JW1559-000513
ANALYSIS OF FACTUAL
SITUATIONS
An organization exempt from federal
income tax under 501(a) as an organization described in 501(c) that, consistent with its tax-exempt status, wishes to
engage in an exempt function within the
meaning of 527(e)(2) may do so with
its own funds or by setting up a separate
segregated fund under 527(f)(3). If the
organization chooses to establish a separate segregated fund, that fund, unless excepted, must give notice under 527(i) in
order to be tax-exempt. A separate segregated fund that has given notice under
527(i) is then subject to the reporting requirements under 527(j). See Rev. Rul.
200349. If the organization chooses to
use its own funds, the organization is not
subject to the notice requirements under
527(i) and the reporting requirements under 527(j), but is subject to tax under
527(f)(1) on the lesser of its investment
income or the amount of the exempt function expenditure.
All the facts and circumstances must be
considered to determine whether an expenditure for an advocacy communication relating to a public policy issue is for an exempt function under 527(e)(2). When an
advocacy communication explicitly advocates the election or defeat of an individual
to public office, the expenditure clearly is
for an exempt function under 527(e)(2).
However, when an advocacy communication relating to a public policy issue does
not explicitly advocate the election or defeat of a candidate, all the facts and circumstances need to be considered to determine
whether the expenditure is for an exempt
function under 527(e)(2).
In facts and circumstances such as those
described in the six situations, factors that
tend to show that an advocacy communication on a public policy issue is for an exempt function under 527(e)(2) include,
but are not limited to, the following:
a) The communication identifies a candidate for public office;
b) The timing of the communication coincides with an electoral campaign;
c) The communication targets voters in
a particular election;
d) The communication identifies that
candidates position on the public policy
issue that is the subject of the communication;
January 26, 2004
e) The position of the candidate on the

public policy issue has been raised as distinguishing the candidate from others in
the campaign, either in the communication
itself or in other public communications;
and
f) The communication is not part of an
ongoing series of substantially similar advocacy communications by the organization on the same issue.
In facts and circumstances such as those
described in the six situations, factors that
tend to show that an advocacy communication on a public policy issue is not for an
exempt function under 527(e)(2) include,
but are not limited to, the following:
a) The absence of any one or more of
the factors listed in a) through f) above;
b) The communication identifies specific legislation, or a specific event outside
the control of the organization, that the organization hopes to influence;
c) The timing of the communication coincides with a specific event outside the
control of the organization that the organization hopes to influence, such as a legislative vote or other major legislative action (for example, a hearing before a legislative committee on the issue that is the
subject of the communication);
d) The communication identifies the
candidate solely as a government official
who is in a position to act on the public
policy issue in connection with the specific event (such as a legislator who is
eligible to vote on the legislation); and
e) The communication identifies the
candidate solely in the list of key or principal sponsors of the legislation that is the
subject of the communication.
In all of the situations, the advocacy
communication identifies a candidate in an
election, appears shortly before that election, and targets the voters in that election.
Even though these factors are present, the
remaining facts and circumstances must
be analyzed in each situation to determine
whether the advocacy communication is
for an exempt function under 527(e)(2).
Each of the situations assumes that:
1. All payments for the described activity are from the general treasury of the organization rather than from a separate segregated fund under 527(f)(3);
2. The organization would continue
to be exempt under 501(a), even if the
described activity is not a 501(c) exempt activity, because the organizations
330
primary activities are described in the appropriate subparagraph of 501(c); and

3. All advocacy communications described also include a solicitation of contributions to the organization.
Situation 1. N, a labor organization recognized as tax exempt under 501(c)(5),
advocates for the betterment of conditions
of law enforcement personnel. Senator
A and Senator B represent State U in the
United States Senate. In year 200x, N
prepares and finances full-page newspaper advertisements supporting increased
spending on law enforcement, which
would require a legislative appropriation.
These advertisements are published in several large circulation newspapers in State
U on a regular basis during year 200x.
One of these full-page advertisements is
published shortly before an election in
which Senator A (but not Senator B) is a
candidate for re-election. The advertisement published shortly before the election
stresses the importance of increased federal funding of local law enforcement
and refers to numerous statistics indicating the high crime rate in State U. The
advertisement does not mention Senator
As or Senator Bs position on law enforcement issues. The advertisement ends
with the statement Call or write Senator
A and Senator B to ask them to support
increased federal funding for local law
enforcement. Law enforcement has not
been raised as an issue distinguishing Senator A from any opponent. At the time this
advertisement is published, no legislative
vote or other major legislative activity is
scheduled in the United States Senate on
increased federal funding for local law
enforcement.
Under the facts and circumstances in
Situation 1, the advertisement is not for an
exempt function under 527(e)(2). Although Ns advertisement identifies Senator A, appears shortly before an election in
which Senator A is a candidate, and targets
voters in that election, it is part of an ongoing series of substantially similar advocacy
communications by N on the same issue
during year 200x. The advertisement identifies both Senator A and Senator B, who is
not a candidate for re-election, as the representatives who would vote on this issue.
Furthermore, Ns advertisement does not
identify Senator As position on the issue,
and law enforcement has not been raised as
an issue distinguishing Senator A from any
2004-4 I.R.B.
JW1559-000514
opponent. Therefore, there is nothing to

indicate that Senator As candidacy should
be supported or opposed based on this issue. Based on these facts and circumstances, the amount expended by Non the
advertisement is not an exempt function
expenditure under 527(e)(2) and, therefore, is not subject to tax under 527(f)(1).
Situation 2. O, a trade association recognized as tax exempt under 501(c)(6),
advocates for increased international trade.
Senator C represents State V in the United
States Senate. O prepares and finances
a full-page newspaper advertisement that
is published in several large circulation
newspapers in State V shortly before an
election in which Senator C is a candidate
for nomination in a party primary. The
advertisement states that increased international trade is important to a major industry in State V. The advertisement states
that S. 24, a pending bill in the United
States Senate, would provide manufacturing subsidies to certain industries to encourage export of their products. The advertisement also states that several manufacturers in State V would benefit from the
subsidies, but Senator C has opposed similar measures supporting increased international trade in the past. The advertisement
ends with the statement Call or write Senator C to tell him to vote for S. 24. International trade concerns have not been raised
as an issue distinguishing Senator C from
any opponent. S. 24 is scheduled for a vote
in the United States Senate before the election, soon after the date that the advertisement is published in the newspapers.
exempt function under 527(e)(2). Os
advertisement identifies Senator C, appears shortly before an election in which
Senator C is a candidate, and targets
voters in that election. Although international trade issues have not been raised
as an issue distinguishing Senator C from
any opponent, the advertisement identifies Senator Cs position on the issue as
contrary to Os position. However, the
advertisement specifically identifies the
legislation O is supporting and appears
immediately before the United States Senate is scheduled to vote on that particular
legislation. The candidate identified, Senator C, is a government official who is
in a position to take action on the public policy issue in connection with the
2004-4 I.R.B.
specific event. Based on these facts and

circumstances, the amount expended by
O on the advertisement is not an exempt
function expenditure under 527(e)(2)
and, therefore, is not subject to tax under
527(f)(1).
Situation 3. P, an entity recognized as
tax exempt under 501(c)(4), advocates
for better health care. Senator D represents
State W in the United States Senate. P prepares and finances a full-page newspaper
advertisement that is published repeatedly
in several large circulation newspapers in
State W beginning shortly before an election in which Senator D is a candidate for
re-election. The advertisement is not part
of an ongoing series of substantially similar advocacy communications by P on the
same issue. The advertisement states that
a public hospital is needed in a major city
in State W but that the public hospital cannot be built without federal assistance. The
advertisement further states that Senator
D has voted in the past year for two bills
that would have provided the federal funding necessary for the hospital. The advertisement then ends with the statement Let
Senator D know you agree about the need
for federal funding for hospitals. Federal
funding for hospitals has not been raised
as an issue distinguishing Senator D from
any opponent. At the time the advertisement is published, a bill providing federal
funding for hospitals has been introduced
in the United States Senate, but no legislative vote or other major legislative activity
on that bill is scheduled in the Senate.
Situation 3, the advertisement is for an exempt function under 527(e)(2). Ps advertisement identifies Senator D, appears
shortly before an election in which Senator D is a candidate, and targets voters in
that election. Although federal funding of
hospitals has not been raised as an issue
distinguishing Senator D from any opponent, the advertisement identifies Senator
Ds position on the hospital funding issue
as agreeing with Ps position, and is not
part of an ongoing series of substantially
similar advocacy communications by P on
the same issue. Moreover, the advertise ment does not identify any specific legislation and is not timed to coincide with
a legislative vote or other major legislative action on the hospital funding issue.
Based on these facts and circumstances,
the amount expended by P on the adver-
331
tisement is an exempt function expenditure

under 527(e)(2) and, therefore, is subject
to tax under 527(f)(1).
Situation 4. R, an entity recognized as
for improved public education. Governor
E is the governor of State X. R prepares
and finances a radio advertisement urging
an increase in state funding for public education in State X, which requires a legislative appropriation. The radio advertisement is first broadcast on several radio
stations in State X beginning shortly before an election in which Governor E is a
candidate for re-election. The advertisement is not part of an ongoing series of
substantially similar advocacy communications by R on the same issue. The advertisement cites numerous statistics indicating that public education in State X is under-funded. While the advertisement does
not say anything about Governor Es position on funding for public education, it
ends with Tell Governor Ewhat you think
about our under-funded schools. In public
appearances and campaign literature, Governor Es opponent has made funding of
public education an issue in the campaign
by focusing on Governor Es veto of an
income tax increase the previous year to
increase funding of public education. At
the time the advertisement is broadcast, no
legislative vote or other major legislative
activity is scheduled in the State Xlegislature on state funding of public education.
Situation 4, the advertisement is for an
exempt function under 527(e)(2). Rs
advertisement identifies Governor E, appears shortly before an election in which
Governor E is a candidate, and targets
voters in that election. Although the advertisement does not explicitly identify
Governor Es position on the funding of
public schools issue, that issue has been
raised as an issue in the campaign by Governor Es opponent. The advertisement
does not identify any specific legislation, is not part of an ongoing series of
substantially similar advocacy communications by R on the same issue, and is not
timed to coincide with a legislative vote
or other major legislative action on that
issue. Based on these facts and circumstances, the amount expended by R on the
advertisement is an exempt function expenditure under 527(e)(2) and, therefore,
is subject to tax under 527(f)(1).
January 26, 2004

JW1559-000515
Situation 5. S, an entity recognized as

to abolish the death penalty in State Y.
Governor F is the governor of State Y.
S regularly prepares and finances television advertisements opposing the death
These advertisements appear
penalty.
on several television stations in State Y
shortly before each scheduled execution in
State Y. One such advertisement opposing
the death penalty appears on State Y television stations shortly before the scheduled
execution of G and shortly before an election in which Governor F is a candidate
for re-election. The advertisement broadcast shortly before the election provides
statistics regarding developed countries
that have abolished the death penalty and
refers to studies indicating inequities related to the types of persons executed in
the United States. Like the advertisements
appearing shortly before other scheduled
executions in State Y, the advertisement
notes that Governor F has supported the
death penalty in the past and ends with the
statement Call or write Governor F to demand that he stop the upcoming execution
of G.
exempt function under 527(e)(2). Ss advertisement identifies Governor F, appears
shortly before an election in which Governor F is a candidate, targets voters in that
election, and identifies Governor Fs position as contrary to Ss position. However,
the advertisement is part of an ongoing series of substantially similar advocacy communications by S on the same issue and the
advertisement identifies an event outside
the control of the organization (the scheduled execution) that the organization hopes
January 26, 2004
to influence. Further, the timing of the

advertisement coincides with this specific
event that the organization hopes to influence. The candidate identified is a government official who is in a position to take
action on the public policy issue in connection with the specific event. Based on
these facts and circumstances, the amount
expended by S on the advertisements is
not an exempt function expenditure under
527(e)(2) and, therefore, is not subject to
tax under 527(f)(1).
Situation 6. T, an entity recognized
as tax exempt under 501(c)(4), advocates to abolish the death penalty in State
Z. Governor H is the governor of State
Z. Beginning shortly before an election
in which Governor H is a candidate for
re-election, T prepares and finances a television advertisement broadcast on several
television stations in State Z. The advertisement is not part of an ongoing series
of substantially similar advocacy communications by T on the same issue. The
advertisement provides statistics regarding developed countries that have abolished the death penalty, and refers to studies indicating inequities related to the types
of persons executed in the United States.
The advertisement calls for the abolishment of the death penalty. The advertisement notes that Governor H has supported
the death penalty in the past. The advertisement identifies several individuals previously executed in State Z, stating that
Governor H could have saved their lives
by stopping their executions. No executions are scheduled in State Z in the near
future. The advertisement concludes with
the statement Call or write Governor Hto
demand a moratorium on the death penalty
in State Z.
332

Situation 6, the advertisement is for an
exempt function under 527(e)(2). Ts
advertisement identifies Governor H, appears shortly before an election in which
Governor His a candidate, targets the voters in that election, and identifies Governor Hs position as contrary to Ts position. The advertisement is not part of an
ongoing series of substantially similar advocacy communications by T on the same
issue. In addition, the advertisement does
not identify and is not timed to coincide
with a specific event outside the control of
the organization that it hopes to influence.
Based on these facts and circumstances,
the amount expended by T on the advertisement is an exempt function expenditure
under 527(e)(2) and, therefore, is subject
to tax under 527(f)(1).
HOLDINGS
In Situations 1, 2, and 5, the amounts
expended by N, O, and S are not exempt
function expenditures under 527(e)(2)
and, therefore, are not subject to tax under 527(f)(1). In Situations 3, 4, and
6, the amounts expended by P, R and T
are exempt function expenditures under
527(e)(2) and, therefore, are subject to
tax under 527(f)(1).
The principal author of this revenue ruling is Judith E. Kindell of Exempt Organizations, Tax Exempt and Government
Entities Division. For further information regarding this revenue ruling, contact
Judith E. Kindell at (202) 2838964 (not a
toll-free call).
2004-4 I.R.B.
JW1559-000516
not issued to Taxpayer by the same com
pany in the same calendar year. The result

in this case would be the same if, instead
of individually issued MECs, the Origi
nal Contracts and New Contracts were evi
denced by certificates that were issued un
der a group contract or master contract and

that were treated as separate contracts for
purposes of 817(h), 7702, and 7702A.
HOLDING
If a taxpayer that owns multiple modi
fied endowment contracts (MECs) issued

by the same insurance company in the
same calendar year exchanges some of
those MECs for new MECs issued by a
second insurance company, the new con
tracts are not required to be aggregated

with the remaining original contracts un
der 72(e)(12).
The principal author of this revenue rul
ing is Melissa S. Luxner of the Office of

Associate Chief Counsel (Financial Insti
tutions & Products). For further infor
mation regarding this revenue ruling, con
tact Ms. Luxner at (202) 6223970 (not a

toll-free call).
Section 430.Minimum
Funding Standards for
Single-Employer Defined
Benefit Pension Plans

Procedures with respect to applications for re
quests for letter rulings on substitute mortality tables

under section 430(h)(3)(C) of the Code and section
303(h)(3)(C) of the Employee Retirement Income
Security Act of 1974 are set forth. See Rev. Proc.
2007-37, page 1433.
Section 501.Exemption
From Tax on Corporations,
Certain Trusts, etc.

26 CFR 1.501(c)(3)1: Organizations organized and
operated for religious, charitable, scientific, testing
for public safety, literary or educational purposes, or
for the prevention ofcruelty to children or animals.
Exempt organizations; political cam
paigns. This ruling provides 21 examples

illustrating the application of the facts and
circumstances to be considered to deter
mine whether an organization exempt from
June 18, 2007
income tax under section 501(a) of the

Code as an organization described in sec
tion 501(c)(3) has participated in, or inter
vened in (including the publishing or dis
tributing of statements), any political cam
paign on behalf of (or in opposition to) any

candidate for public office.
an elective public office, whether such of
fice be national, State, or local. The reg
ulations further provide that activities that

constitute participation or intervention in a
political campaign on behalf of or in op
position to a candidate include, but are not

limited to, the publication or distribution
of written statements or the making of oral
statements on behalf of or in opposition to
Rev. Rul. 200741
such a candidate.
Whether an organization is participat
Organizations that are exempt from in
come tax under section 501(a) of the In

ing or intervening, directly or indirectly,
ternal Revenue Code as organizations de
in any political campaign on behalf of or
scribed in section 501(c)(3) may not par
in opposition to any candidate for public
ticipate in, or intervene in (including the office depends upon all of the facts and
publishing or distributing of statements), circumstances of each case. For exam
any political campaign on behalf of (or in ple, certain voter education activities, in
opposition to) any candidate for public of

cluding preparation and distribution of cer
tain voter guides, conducted in a non-par
fice.
tisan manner may not constitute prohibited
political activities under section 501(c)(3)
ISSUE
of the Code. Other so-called voter ed
In each of the 21 situations described ucation activities may be proscribed by

below, has the organization participated or the statute. Rev. Rul. 78248, 19781
intervened in a political campaign on be
C.B. 154, contrasts several situations il
half of (or in opposition to) any candidate lustrating when an organization that pub
for public office within the meaning of sec

lishes a compilation of candidate positions
or voting records has or has not engaged
tion 501(c)(3)?
in prohibited political activities based on
whether the questionnaire used to solicit
LAW
candidate positions or the voters guide it
Section 501(c)(3) provides for the ex

self shows a bias or preference in con
emption from federal income tax of organi

tent or structure with respect to the views
zations organized and operated exclusively of a particular candidate. See also Rev.
for charitable or educational purposes, no Rul. 80282, 19802 C.B. 178, amplify
substantial part of the activities of which ing Rev. Rul. 78248 regarding the timing
is carrying on propaganda, or otherwise at
and distribution of voter education materi
tempting to influence legislation (except as als.

otherwise provided in section 501(h)), and
The presentation of public forums or
which does not participate in, or intervene debates is a recognized method of edu
in (including the publishing or distributing cating the public. See Rev. Rul. 66256,
of statements), any political campaign on 19662 C.B. 210 (nonprofit organization
behalf of (or in opposition to) any candi
formed to conduct public forums at which
lectures and debates on social, political,
date for public office.
Section 1.501(c)(3)1(c)(3)(i) of the In
and international matters are presented
come Tax Regulations states that an organ
qualifies for exemption from federal in
ization is not operated exclusively for one come tax under section 501(c)(3)). Pro
or more exempt purposes if it is an action viding a forum for candidates is not, in

organization.
and of itself, prohibited political activity.
Section 1.501(c)(3)1(c)(3)(iii) of the See Rev. Rul. 74574, 19742 C.B. 160
regulations defines an action organiza
(organization operating a broadcast station
tion as an organization that participates or is not participating in political campaigns
intervenes, directly or indirectly, in any po
on behalf of public candidates by pro
litical campaign on behalf of or in opposi

viding reasonable amounts of air time
tion to any candidate for public office. The equally available to all legally qualified
term candidate for public office is de
candidates for election to public office
fined as an individual who offers himself, in compliance with the reasonable access
or is proposed by others, as a contestant for provisions of the Communications Act of
1421
200725 I.R.B.
JW1559-000517
Situation 1. B, a section 501(c)(3) or

501(c)(3) organization, and is well known
ganization that promotes community in
in the community. With the permission
volvement, sets up a booth at the state fair of five prominent healthcare industry lead
where citizens can register to vote. The ers, including President A, who have per
signs and banners in and around the booth sonally endorsed Candidate T, Candidate T
give only the name of the organization, the publishes a full page ad in the local news
date of the next upcoming statewide elec

paper listing the names of the five lead
tion, and notice of the opportunity to regis

ers. President A is identified in the ad as
ter. No reference to any candidate or politi
the CEO of Hospital J. The ad states, Ti
cal party is made by the volunteers staffing tles and affiliations of each individual are
the booth or in the materials available at provided for identification purposes only.
the booth, other than the official voter reg
The ad is paid for by Candidate Ts cam
istration forms which allow registrants to paign committee. Because the ad was not
select a party affiliation. B is not engaged paid for by Hospital J, the ad is not oth
in political campaign intervention when it erwise in an official publication of Hos
pital J, and the endorsement is made by

operates this voter registration booth.
Situation 2. C is a section 501(c)(3) or
President A in a personal capacity, the ad
ganization that educates the public on en
does not constitute campaign intervention
vironmental issues. Candidate G is run
by Hospital J.
ning for the state legislature and an impor
Situation 4. President B is the presi
tant element of her platform is challenging dent of University K, a section 501(c)(3)

the environmental policies of the incum
organization. University K publishes a
bent. Shortly before the election, C sets up monthly alumni newsletter that is dis
ANALYSIS OF FACTUAL
a telephone bank to call registered voters in tributed to all alumni of the university.
SITUATIONS
the district in which Candidate G is seek
In each issue, President B has a column
ing election. In the phone conversations, titled My Views. The month before the
The 21 factual situations appear be
Cs representative tells the voter about the election, President B states in the My
low under specific subheadings relating to
importance of environmental issues and Views column, It is my personal opin
types of activities. In each of the factual

asks questions about the voters views on ion that Candidate U should be reelected.
situations, all the facts and circumstances
these issues. If the voter appears to agree For that one issue, President B pays from
are considered in determining whether an
with the incumbents position, Cs repre
his personal funds the portion of the cost
organizations activities result in political
sentative thanks the voter and ends the call. of the newsletter attributable to the My
campaign intervention. Note that each of
If the voter appears to agree with Candi
Views column. Even though he paid part
these situations involves only one type of
date Gs position, Cs representative re
of the cost of the newsletter, the newsletter
activity. In the case of an organization that
minds the voter about the upcoming elec
is an official publication of the univer
combines one or more types of activity,

tion, stresses the importance of voting in sity. Because the endorsement appeared
the interaction among the activities may
the election and offers to provide trans
in an official publication of University K,
affect the determination of whether or not
portation to the polls. C is engaged in po
it constitutes campaign intervention by
the organization is engaged in political
litical campaign intervention when it con
University K.
ducts this get-out-the-vote drive.
Situation 5. Minister C is the minis
ter of Church L, a section 501(c)(3) organ
Voter Education, Voter Registration and

ization and Minister C is well known in
Individual Activity by Organization
Get Out the Vote Drives
the community. Three weeks before the
Leaders
Section 501(c)(3) organizations are
election, he attends a press conference at
The political campaign intervention Candidate Vs campaign headquarters and
permitted to conduct certain voter educa
tion activities (including the presentation prohibition is not intended to restrict free states that Candidate V should be reelected.
of public forums and the publication of expression on political matters by leaders Minister C does not say he is speaking on
voter education guides) if they are car
of organizations speaking for themselves, behalf of Church L. His endorsement is re
ried out in a non-partisan manner. In as individuals. Nor are leaders prohib

ported on the front page of the local news
addition, section 501(c)(3) organizations ited from speaking about important issues paper and he is identified in the article as
may encourage people to participate in the of public policy. However, for their or
the minister of Church L. Because Minister
ganizations to remain tax exempt under C did not make the endorsement at an offi
electoral process through voter registration

and get-out-the-vote drives, conducted in section 501(c)(3), leaders cannot make cial church function, in an official church
a non-partisan manner. On the other hand, partisan comments in official organization publication or otherwise use the churchs
voter education or registration activities publications or at official functions of the assets, and did not state that he was speak
conducted in a biased manner that favors organization.

ing as a representative of Church L, his ac
(or opposes) one or more candidates is

Situation 3. President A is the Chief tions do not constitute campaign interven
Executive Officer of Hospital J, a section tion by Church L.

prohibited.
1934). However, a forum for candidates
could be operated in a manner that would
show a bias or preference for or against a
particular candidate. This could be done,
for example, through biased questioning
procedures. On the other hand, a forum
held for the purpose of educating and in
forming the voters, which provides fair

and impartial treatment of candidates,
and which does not promote or advance
one candidate over another, would not
constitute participation or intervention in
any political campaign on behalf of or
in opposition to any candidate for public
office. See Rev. Rul. 8695, 19862 C.B.
73 (organization that proposes to educate
voters by conducting a series of public
forums in congressional districts during
congressional election campaigns is not
participating in a political campaign on
behalf of any candidate due to the neutral
form and content of its proposed forums).
200725 I.R.B.
1422
June 18, 2007

JW1559-000518
Situation 6. Chairman D is the chair
man of the Board of Directors of M, a sec
tion 501(c)(3) organization that educates

the public on conservation issues. Dur
ing a regular meeting of M shortly before

the election, Chairman D spoke on a num
ber of issues, including the importance of

voting in the upcoming election, and con
cluded by stating, It is important that you

all do your duty in the election and vote
for Candidate W. Because Chairman Ds
remarks indicating support for Candidate
W were made during an official organiza
tion meeting, they constitute political cam
paign intervention by M.
manner of presentation for both speakers is

otherwise neutral.
When an organization invites several
candidates for the same office to speak
at a public forum, factors in determining
whether the forum results in political cam
paign intervention include the following:
Candidate Appearances
Depending on the facts and circum
stances, an organization may invite po
litical candidates to speak at its events

without jeopardizing its tax-exempt sta
tus. Political candidates may be invited

in their capacity as candidates, or in their
individual capacity (not as a candidate).
Candidates may also appear without an
invitation at organization events that are
open to the public.
When a candidate is invited to speak at
an organization event in his or her capac
ity as a political candidate, factors in de
termining whether the organization partici
pated or intervened in a political campaign

include the following:
Whether the organization provides an

equal opportunity to participate to po
litical candidates seeking the same of
fice;
Whether the organization indicates any
support for or opposition to the can
didate (including candidate introduc
tions and communications concerning

the candidates attendance); and
Whether any political fundraising oc
curs.
In determining whether candidates are

given an equal opportunity to participate,
the nature of the event to which each can
didate is invited will be considered, in ad
dition to the manner of presentation. For

example, an organization that invites one
candidate to speak at its well attended an
nual banquet, but invites the opposing can
didate to speak at a sparsely attended gen
eral meeting, will likely have violated the

political campaign prohibition, even if the
June 18, 2007
his opening remarks at each of the meet
ings where one of the candidates is speak
ing. Society Ns actions do not constitute

political campaign intervention.
Situation 9. Minister F is the minister
of Church O, a section 501(c)(3) organi
zation. The Sunday before the November

election, Minister F invites Senate Candi
Whether questions for the candidates date X to preach to her congregation dur
are prepared and presented by an inde

ing worship services. During his remarks,
pendent nonpartisan panel,
Candidate X states, I am asking not only
Whether the topics discussed by the for your votes, but for your enthusiasm and
candidates cover a broad range of is
dedication, for your willingness to go the
sues that the candidates would address extra mile to get a very large turnout on
if elected to the office sought and are Tuesday. Minister F invites no other can
of interest to the public,

didate to address her congregation during
Whether each candidate is given an the Senatorial campaign. Because these
equal opportunity to present his or her activities take place during official church
view on each of the issues discussed,
services, they are attributed to Church O.
Whether the candidates are asked to By selectively providing church facilities
agree or disagree with positions, agen
to allow Candidate X to speak in support
das, platforms or statements of the or
of his campaign, Church Os actions con
ganization, and
stitute political campaign intervention.
Whether a moderator comments on
the questions or otherwise implies Candidate Appearances Where Speaking
approval or disapproval of the candi
or Participating as a Non-Candidate
dates.
Situation 7. President E is the presi
dent of Society N, a historical society that

is a section 501(c)(3) organization. In the
month prior to the election, President E
invites the three Congressional candidates
for the district in which Society N is lo
cated to address the members, one each at

a regular meeting held on three successive
weeks. Each candidate is given an equal
opportunity to address and field questions
on a wide variety of topics from the mem
bers. Society Ns publicity announcing the

dates for each of the candidates speeches
and President Es introduction of each can
didate include no comments on their qual
ifications or any indication of a preference

for any candidate. Society Ns actions do
not constitute political campaign interven
tion.
Situation 8. The facts are the same as in
Situation 7 except that there are four can
didates in the race rather than three, and

one of the candidates declines the invita
tion to speak. In the publicity announc
ing the dates for each of the candidates

speeches, Society N includes a statement
that the order of the speakers was deter
mined at random and the fourth candidate

declined the Societys invitation to speak.
President E makes the same statement in
1423
Candidates may also appear or speak

at organization events in a non-candidate
capacity. For instance, a political candi
date may be a public figure who is invited

to speak because he or she: (a) currently
holds, or formerly held, public office; (b)
is considered an expert in a non political
field; or (c) is a celebrity or has led a dis
tinguished military, legal, or public service

career. A candidate may choose to attend
an event that is open to the public, such
as a lecture, concert or worship service.
The candidates presence at an organiza
tion-sponsored event does not, by itself,

cause the organization to be engaged in po
litical campaign intervention. However, if

the candidate is publicly recognized by the
organization, or if the candidate is invited
to speak, factors in determining whether
the candidates appearance results in polit
ical campaign intervention include the fol
lowing:
Whether the individual is chosen to

speak solely for reasons other than can
didacy for public office;
Whether the individual speaks only in

a non-candidate capacity;
Whether either the individual or any
representative of the organization
200725 I.R.B.
JW1559-000519
Xprints the following: Alumnus Q, class

of XX is running for mayor of Metropo
lis. The newsletter does not contain any
reference to this election or to Alumnus

Qs candidacy other than this statement of
fact. University X has not intervened in a

political campaign.
Situation 13. Mayor G attends a con
cert performed by Symphony S, a section

501(c)(3) organization, in City Park. The
concert is free and open to the public.

Mayor G is a candidate for reelection, and
the concert takes place after the primary
and before the general election. During
the concert, the chairman of Ss board ad
dresses the crowd and says, I am pleased

to see Mayor G here tonight. Without his
Situation 10. Historical society P is a support, these free concerts in City Park
section 501(c)(3) organization. Society P would not be possible. We will need his
is located in the state capital. President G help if we want these concerts to continue
is the president of Society P and custom
next year so please support Mayor G in
arily acknowledges the presence of any November as he has supported us. As a
public officials present during meetings. result of these remarks, Symphony S has
During the state gubernatorial race, Lieu
engaged in political campaign interven
tenant Governor Y, a candidate, attends a tion.

meeting of the historical society. Presi
dent G acknowledges the Lieutenant Gov

Issue Advocacy vs. Political Campaign
ernors presence in his customary manner, Intervention
saying, We are happy to have joining us
Section 501(c)(3) organizations may
this evening Lieutenant Governor Y. Pres
take positions on public policy issues,

ident G makes no reference in his welcome
including issues that divide candidates
to the Lieutenant Governors candidacy or
in an election for public office. How
the election. Society P has not engaged in

ever, section 501(c)(3) organizations must
political campaign intervention as a result
avoid any issue advocacy that functions
of President Gs actions.
as political campaign intervention. Even
Situation 11. Chairman H is the chair
if a statement does not expressly tell an

man of the Board of Hospital Q, a sec
audience to vote for or against a specific

tion 501(c)(3) organization. Hospital Q is
candidate, an organization delivering the
building a new wing. Chairman H invites
statement is at risk of violating the polit
Congressman Z, the representative for the

ical campaign intervention prohibition if
district containing Hospital Q, to attend
there is any message favoring or opposing
the groundbreaking ceremony for the new
a candidate. A statement can identify
a
wing. Congressman Z is running for re
candidate
not only by stating the candi
election at the time. Chairman Hmakes no

dates name but also by other means such
reference in her introduction to Congress
as showing a picture of the candidate,

man Zs candidacy or the election. Con
referring to political party affiliations, or

gressman Zalso makes no reference to his
other distinctive features of a candidates
candidacy or the election and does not do
platform or biography. All the facts and
any political campaign fundraising while
circumstances need to be considered to
at Hospital Q. Hospital Q has not inter
determine if the advocacy is political cam
vened in a political campaign.

paign intervention.
Situation 12. University X is a sec
Key factors in determining whether a

tion 501(c)(3) organization. Xpublishes an
communication results in political cam
alumni newsletter on a regular basis. In
paign intervention include the following:

dividual alumni are invited to send in up
dates about themselves which are printed

in each edition of the newsletter. After re
ceiving an update letter from Alumnus Q,

makes any mention of his or her can
didacy or the election;

Whether any campaign activity occurs
in connection with the candidates at
tendance;
Whether the organization maintains
a nonpartisan atmosphere on the
premises or at the event where the
candidate is present; and
Whether the organization clearly indi
cates the capacity in which the candi
date is appearing and does not mention

the individuals political candidacy or
the upcoming election in the communi
cations announcing the candidates at
tendance at the event.
200725 I.R.B.
1424
Whether the statement identifies one

or more candidates for a given public
office;
Whether the statement expresses ap
proval or disapproval for one or more

candidates positions and/or actions;
Whether the statement is delivered

close in time to the election;
Whether the statement makes refer
ence to voting or an election;

Whether the issue addressed in the
communication has been raised as an
issue distinguishing candidates for a
given office;
Whether the communication is part of
an ongoing series of communications
by the organization on the same issue
that are made independent of the tim
ing of any election; and

Whether the timing of the communi
cation and identification of the candi
date are related to a non-electoral event

such as a scheduled vote on specific
legislation by an officeholder who also
happens to be a candidate for public of
fice.
A communication is particularly at risk
of political campaign intervention when it
makes reference to candidates or voting in
a specific upcoming election. Neverthe
less, the communication must still be con
sidered in context before arriving at any

conclusions.
Situation 14. University O, a section
501(c)(3) organization, prepares and fi
nances a full page newspaper advertise
ment that is published in several large cir
culation newspapers in State V shortly be
fore an election in which Senator C is a

candidate for nomination in a party pri
mary. Senator C represents State V in

the United States Senate. The advertise
ment states that S. 24, a pending bill in the

United States Senate, would provide addi
tional opportunities for State V residents

to attend college, but Senator C has op
posed similar measures in the past. The ad
vertisement ends with the statement Call

or write Senator C to tell him to vote for
S. 24. Educational issues have not been
raised as an issue distinguishing Senator C
from any opponent. S. 24 is scheduled for
a vote in the United States Senate before
the election, soon after the date that the
advertisement is published in the newspa
pers. Even though the advertisement ap
pears shortly before the election and iden-
June 18, 2007

JW1559-000520
tifies Senator Cs position on the issue as coincide with a non election event such as
contrary to Os position, University O has a legislative vote or other major legislative Whether the good, service or facility
is available to candidates in the same
not violated the political campaign inter
action on that issue, and takes a position
election on an equal basis,
vention prohibition because the advertise
on an issue that the opponent has used to
Whether the good, service, or facility
ment does not mention the election or the distinguish himself from Governor E.
candidacy of Senator C, education issues
is available only to candidates and not
Situation 16. Candidate A and Candi
have not been raised as distinguishing Sen

date B are candidates for the state senate
to the general public,
ator C from any opponent, and the tim
in District W of State X. The issue of State Whether the fees charged to candidates
ing of the advertisement and the identifi
Xfunding for a new mass transit project in
are at the organizations customary and
usual rates, and
cation of Senator C are directly related to District W is a prominent issue in the cam
the specifically identified legislation Uni

paign. Both candidates have spoken out on Whether the activity is an ongoing ac
tivity of the organization or whether it

versity O is supporting and appears imme
the issue. Candidate A supports funding
is conducted only for a particular can
diately before the United States Senate is the new mass transit project. Candidate
didate.
scheduled to vote on that particular legis
B opposes the project and supports State
lation. The candidate identified, Senator X funding for highway improvements in
Situation 17. Museum K is a section

C, is an officeholder who is in a position stead. P is the executive director of C,
to vote on the legislation.
a section 501(c)(3) organization that pro
501(c)(3) organization. It owns an historic
Situation 15. Organization R, a section motes community development in District building that has a large hall suitable for
501(c)(3) organization that educates the W. At Cs annual fundraising dinner in hosting dinners and receptions. For sev
public about the need for improved public District W, which takes place in the month eral years, Museum K has made the hall
education, prepares and finances a radio before the election in State X, P gives a available for rent to members of the pub
advertisement urging an increase in state lengthy speech about community develop

lic. Standard fees are set for renting the
funding for public education in State X, ment issues including the transportation is
hall based on the number of people in at
which requires a legislative appropriation. sues. P does not mention the name of any tendance, and a number of different orga
Governor Eis the governor of State X. The candidate or any political party. However, nizations have rented the hall. Museum K
radio advertisement is first broadcast on at the conclusion of the speech, P makes rents the hall on a first come, first served
several radio stations in State Xbeginning the following statement, For those of you basis. Candidate P rents Museum Ks so
shortly before an election in which Gov

who care about quality of life in District W cial hall for a fundraising dinner. Candi
ernor E is a candidate for re-election. The and the growing traffic congestion, there date Ps campaign pays the standard fee
advertisement is not part of an ongoing is a very important choice coming up next for the dinner. Museum K is not involved
series of substantially similar advocacy month. We need new mass transit. More in political campaign intervention as a re
communications by Organization R on highway funding will not make a differ

sult of renting the hall to Candidate P for
the same issue. The advertisement cites ence. You have the power to relieve the use as the site of a campaign fundraising
numerous statistics indicating that pub
congestion and improve your quality of dinner.
lic education in State X is under funded. life in District W. Use that power when
Situation 18. Theater L is a section
While the advertisement does not say you go to the polls and cast your vote in 501(c)(3) organization. It maintains a
anything about Governor Es position on the election for your state senator. C has mailing list of all of its subscribers and
funding for public education, it ends with violated the political campaign interven
contributors. Theater L has never rented
Tell Governor Ewhat you think about our tion as a result of Ps remarks at Cs offi
its mailing list to a third party. Theater L
under-funded schools. In public appear
cial function shortly before the election, in is approached by the campaign committee
ances and campaign literature, Governor which P referred to the upcoming election of Candidate Q, who supports increased
Es opponent has made funding of pub
after stating a position on an issue that is a funding for the arts. Candidate Qs cam
lic education an issue in the campaign prominent issue in a campaign that distin
paign committee offers to rent Theater Ls
by focusing on Governor Es veto of an guishes the candidates.
mailing list for a fee that is comparable
income tax increase the previous year to
to fees charged by other similar organi
increase funding of public education. At Business Activity

zations. Theater L rents its mailing list
to Candidate Qs campaign committee.
the time the advertisement is broadcast,
The question of whether an activity Theater L declines similar requests from
no legislative vote or other major legisla
tive activity is scheduled in the State X constitutes participation or intervention campaign committees of other candidates.
legislature on state funding of public ed
in a political campaign may also arise in Theater L has intervened in a political
ucation. Organization R has violated the the context of a business activity of the campaign.
political campaign prohibition because the organization, such as selling or renting of
advertisement identifies Governor E, ap
mailing lists, the leasing of office space, or Web Sites
pears shortly before an election in which the acceptance of paid political advertis
The Internet has become a widely used

Governor E is a candidate, is not part of ing. In this context, some of the factors to
an ongoing series of substantially similar be considered in determining whether the communications tool. Section 501(c)(3)
advocacy communications by Organiza
organization has engaged in political cam
organizations use their own web sites to
tion R on the same issue, is not timed to paign intervention include the following:
disseminate statements and information.
June 18, 2007
1425
200725 I.R.B.
JW1559-000521
They also routinely link their web sites to

web sites maintained by other organiza
tions as a way of providing additional in
formation that the organizations believe is

useful or relevant to the public.
A web site is a form of communication.
If an organization posts something on its
web site that favors or opposes a candidate
for public office, the organization will be
treated the same as if it distributed printed
material, oral statements or broadcasts that
favored or opposed a candidate.
An organization has control over
whether it establishes a link to another
site. When an organization establishes
a link to another web site, the organiza
tion is responsible for the consequences

of establishing and maintaining that link,
even if the organization does not have
control over the content of the linked site.
Because the linked content may change
over time, an organization may reduce the
risk of political campaign intervention by
monitoring the linked content and adjust
ing the links accordingly.

Links to candidate-related material, by
themselves, do not necessarily constitute
political campaign intervention. All the
facts and circumstances must be taken into
account when assessing whether a link
produces that result. The facts and cir
cumstances to be considered include, but

are not limited to, the context for the link
on the organizations web site, whether
all candidates are represented, any exempt
purpose served by offering the link, and
the directness of the links between the
organizations web site and the web page
that contains material favoring or oppos
ing a candidate for public office.

Situation 19. M, a section 501(c)(3) or
ganization, maintains a web site and posts

an unbiased, nonpartisan voter guide that
is prepared consistent with the principles
discussed in Rev. Rul. 78248. For each
candidate covered in the voter guide, M
includes a link to that candidates official
campaign web site. The links to the can
didate web sites are presented on a consis
tent neutral basis for each candidate, with

text saying For more information on Can
didate X, you may consult [URL]. M has

not intervened in a political campaign be
cause the links are provided for the exempt

purpose of educating voters and are pre
sented in a neutral, unbiased manner that
200725 I.R.B.
includes all candidates for a particular of
fice.
Situation 20. Hospital N, a section
501(c)(3) organization, maintains a web
site that includes such information as
medical staff listings, directions to Hos
pital N, and descriptions of its specialty

health programs, major research projects,
and other community outreach programs.
On one page of the web site, Hospital
N describes its treatment program for a
particular disease. At the end of the page,
it includes a section of links to other web
sites titled More Information. These
links include links to other hospitals that
have treatment programs for this disease,
research organizations seeking cures for
that disease, and articles about treatment
programs. This section includes a link to
an article on the web site of O, a major
national newspaper, praising Hospital Ns
treatment program for the disease. The
page containing the article on Os web site
contains no reference to any candidate or
election and has no direct links to candi
date or election information. Elsewhere

on Os web site, there is a page displaying
editorials that O has published. Several
of the editorials endorse candidates in an
election that has not yet occurred. Hos
pital N has not intervened in a political

campaign by maintaining the link to the
article on Os web site because the link
is provided for the exempt purpose of
educating the public about Hospital Ns
programs and neither the context for the
link, nor the relationship between Hospital
N and O nor the arrangement of the links
going from Hospital Ns web site to the
endorsement on Os web site indicate that
Hospital N was favoring or opposing any
candidate.
Situation 21. Church P, a section
501(c)(3) organization, maintains a web
site that includes such information as
biographies of its ministers, times of
services, details of community outreach
programs, and activities of members of
its congregation. B, a member of the con
gregation of Church P, is running for a

seat on the town council. Shortly before
the election, Church P posts the follow
ing message on its web site, Lend your

support to B, your fellow parishioner,
in Tuesdays election for town council.
Church P has intervened in a political
campaign on behalf of B.
1426
HOLDINGS
In situations 2, 4, 6, 9, 13, 15, 16, 18
and 21, the organization intervened in a
political campaign within the meaning of
section 501(c)(3). In situations 1, 3, 5,
7, 8, 10, 11, 12, 14, 17, 19 and 20, the
organization did not intervene in a political
campaign within the meaning of section
501(c)(3)
The principal author of this revenue
ruling is Judith Kindell of Exempt Orga
nizations, Tax Exempt and Government

Entities Division. For further informa
tion regarding this revenue ruling, contact

Ms. Kindell at (202) 2838964 (not a
toll-free call).
Section 707.Transactions
Between Partner and
Partnership
26 CFR 1.7071: Transactions between partner and
partnership.
Partnership property; transfer. This

ruling concludes that a transfer of partner
ship property to a partner in satisfaction of

a guaranteed payment under section 707(c)
of the Code is a sale or exchange under sec
tion 1001, and not a distribution under sec
tion 731.
Rev. Rul. 200740

ISSUE
Is a transfer of partnership property to
a partner in satisfaction of a guaranteed
payment under section 707(c) a sale or ex
change under section 1001, or a distribu
tion under section 731?

FACTS
Partnership purchased Blackacre for
$500x. A, a partner in Partnership, is
entitled to a guaranteed payment under
section 707(c) of $800x. Subsequently,
when the fair market value of Blackacre is
$800x and Partnerships adjusted basis in
Blackacre is $500x, Partnership transfers
Blackacre to A in satisfaction of the guar
anteed payment to A.
June 18, 2007

JW1559-000522
From:
Marks Nancy J
Sent:
To:
Daly Richard M; Lerner Lois G; Paz Holly O
Subject:
Re: TIGTA report
I'm fine. While I'd like Mike's add I suspect we can't get it if Nikole can't get us the referral. It came from them not us.
We had email traffic about doing one but didn't since they had.
----- Original Message ----From: Daly Richard M
Sent: Tuesday, April 02, 2013 04:03 PM Eastern Standard Time
To: Lerner Lois G; Paz Holly O; Marks Nancy J
Subject: RE: TIGTA report
With one exception this looks like what we discussed yesterday.
The exception is this: I thought we wanted to add something to the "Highlights" page, under the heading "Why TIGTA
Did this Audit."
I thought we wanted to add a phrase or a sentence

(b)(5) DP
Still, you may want to propose a sentence or a phrase:

(b)(5)/DP
To: Daly Richard M; Marks Nancy J
Cc: Paz Holly O
Subject: FW: TIGTA report
Importance: High
Lois G. Lerner
To: Lerner Lois G
JW1559-000523
From:
Sent:
To:
Lerner Lois G; Brown Susan D; Sinno Suzanne
Cc:
Judson Victoria A
Subject:
ok.
To: Cook Janine; Brown Susan D; Sinno Suzanne
All good--this was our second crack and they didn't "take" some of the previous comments -but no harm repeating. One thing--the potentially at the end --we actually prefer not taking it
out--no one from IRS is trying to minimize the reality of how long it takes to see this stuff --it is
important for them to know there is a delay, so I recommend taking it out
Lois G. Lerner
From: Cook Janine [mailto:Janine.Cook@irscounsel.treas.gov ]
FYI, here is what we are sending forward from CC:TEGE. We didnt use as light of a touch as you did, but still restrained
ourselves. We included your edit as well.
To: Cook Janine; Brown Susan D
Importance: High
This is the comment I sent on the version you are reviewing
Lois G. Lerner
JW1559-000524
From: Lerner Lois G
Cc: Landes Scott S; Sinno Suzanne
Importance: High
It seems to assume that all c 4,5, and 6 secret political committees , but keeping in mind it is
their testimony--not ours--I only have one comment.
Lois G. Lerner
Importance: High
Please coordinate any TEGE and CI comments with Nancy in counse l for response TOMORROW by 1:00 as noted
below.
Thanks.
Robert.Mahaffie@treasury.gov ; Barbara.Wiss@treasury.gov; Barre Catherine M; Rose Nancy L;
Cameron.Arterton@treasury.gov ; James.Mackie@treasury.gov ; Jessica.Hauser@treasury.gov; Zarlenga Lisa;
Kevin.Knopf@treasury.gov ; cynthia.clark@fincen.gov ; Patrick.Obrien@fincen.gov ; Mike.Maher@do.treas.gov ;
Jeffrey.Warner@treasury.gov; Andrea.Gacki@treasury.gov ; Kevin.OConnor@fincen.gov; Luke.Ballman@treasury.gov;
Barbara.Hammerle@treasury.gov; Marshall.Kofler@fms.treas.gov ; Marc.Seldin@fms.treas.gov ;
ExecSecProcessUnit@treasury.gov; Kathryn.Alvarez@treasury.gov ; leigh.williams@treasury.gov; LLR@treasury.gov;
Peter.Lee@treasury.gov; Priti.Agrawal@treasury.gov ; Counsel.Office@tigta.treas.gov ; Paul.Ahern@treasury.gov;
Catherine.Ahn@treasury.gov; Gary.Sutton@treasury.gov; Brian.Townsend@treasury.gov ; Julia.Yoo@treasury.gov;
George.Bostick@treasury.gov; Bill.Bradley@fincen.gov ; lindsay.orlin@fincen.gov ; Melissa.Nasrah@treasury.gov;
Jennifer.Hershfang@treasury.gov ; Matthew.Tuchband@treasury.gov ; Stephanie.Petersen@treasury.gov;
JW1559-000525
Terrorism.
JW1559-000526
From:
Lerner Lois G
Sent:
To:
Daly Richard M; Marks Nancy J; Paz Holly O
Subject:
Re: Daly has no Email traffic re TEGE or IRS referral to TIGTA re c 4s etc
I've asked again
Lois G. Lerner-------------------------- Sent from my BlackBerry Wireless Handheld
----- Original Message ----From: Daly Richard M
To: Marks Nancy J; Lerner Lois G; Paz Holly O
Subject: Daly has no Email traffic re TEGE or IRS referral to TIGTA re c 4s etc
I've just looked. I have not retained any email traffic on this. Sorry. Mike
-----Original Message ----From: Marks Nancy J
To: Lerner Lois G; Daly Richard M; Paz Holly O
Subject: Re: TIGTA report
I'm guessing she'd have delivered it if finding it was easy. it would have been in the Fed/March 2012 time frame I
believe. Those emails on my system are archived I never had a copy but if Michele can show we how to find them
tomorrow I might be able to narrow time frame. Mike you may have some of that exchange as well.
You may want to update her on the reports two referrals and our efforts to clarify that we were cooperative and they
have what there is to be had.
----- Original Message ----From: Lerner Lois G
To: Daly Richard M; Pa z Holly O; Marks Nancy J
Will ask Nikole one more time.
Lois G. Lerner
-----Original Message ----From: Daly Richard M
JW1559-000527
Did this Audit."

(b)(5) DP
Still, you may want to propose a sentence or a phrase:

(b)(5)
-----Original Message----From: Lerner Lois G
Cc: Paz Holly O
Importance: High
Lois G. Lerner
To: Lerner Lois G
Attached is a version of the discussion draft that contains our comments as discuss ed yesterday.
JW1559-000528
From:
Lerner Lois G
Sent:
To:
Sinno Suzanne; Kindell Judith E
Cc:
Biss Meghan R; Marx Dawn R
Subject:
Re: Senate Judiciary CRIME Subcommittee Hearing on Campaign Finance Investigation
scheduled for 4/9.
Our pleasure to help
Lois G. Lerner-------------------------Sent from my BlackBerry Wireless Handheld
From: Sinno Suzanne
To: Lerner Lois G; Kindell Judith E
Cc: Biss Meghan R; Marx Dawn R
Subject: RE: Senate Judiciary CRIME Subcommittee Hearing on Campaign Finance Investigation scheduled for 4/9.
well they did a great job because both meetings went well! I promise to leave you guys alone.
for at least the rest of
today...
From: Lerner Lois G
To: Sinno Suzanne; Kindell Judith E
Subject: RE: Senate Judiciary CRIME Subcommittee Hearing on Campaign Finan ce Investigation scheduled for 4/9.
You're welcome--we exhausted! (-: Thanks to Judy and Meghan who prep me and stop me
from doing stupid stuff!
Lois G. Lerner
From: Sinno Suzanne
To: Kindell Judith E
Cc: Lerner Lois G; Biss Meghan R; Marx Dawn R
Thank you!! and thank you for your help on the call. I got you guys twice today. I know you love those hill calls :)
From: Kindell Judith E
To: Sinno Suzanne
JW1559-000529
discussion that is helpfu l). You can also find these on our web site at the following locations:
http://www.irs.gov/uac/Election -Year-Activities-and-the-Prohibition-on-Political-Campaign-Intervention-for-Section501(c)(3)-Organizations
JW1559-000530
From:
Lerner Lois G
Sent:
To:
Sinno Suzanne
Subject:
Re: Senate Judiciary CRIME Subcommittee Hearing on Campaign Finance Investigation
scheduled for 4/9.
Did you get Counsel version of DOJ testimony? I sent to Cathy and Nikole I think
From: Sinno Suzanne
well they did a great job because both meetings went well! I promise to lea ve you guys alone. for at least the rest of
today...
From: Lerner Lois G
Subject: RE: Senate Judiciary CRIME Su bcommittee Hearing on Campaign Finance Investigation scheduled for 4/9.
You're welcome--we exhausted! (-: Thanks to Judy and Meghan who prep me and stop me
from doing stupid stuff!
Lois G. Lerner
From: Sinno Suzanne
Thank you!! and thank you for your help on the call. I got you guys twice today. I know you love those hill calls :)
To: Sinno Suzanne
JW1559-000531
discussion that is helpful). You can also find these on our web site at the following locations:
http://www.irs.gov/uac/Ele ction-Year-Activities-and-the-Prohibition-on-Political-Campaign-Intervention-for-Section501(c)(3)-Organizations
JW1559-000532
From:
Lerner Lois G
Sent:
To:
Flax Nikole C
Subject:
Re: TIGTA Report
Ok
------Original Message -----From: Nikole Flax
To: Lois Call in Number
Subject: Re: TIGTA Report
Sent: Apr 2, 2013 4:30 PM
No - it is fine. We can just address in the response.
------Original Message -----From: Lerner Lois G
To: Flax Nikole C
Subject: TIGTA Report
Sent: Apr 2, 2013 4:27 PM
Any lick finding the email where we referred c4 issue to TIGTA? We are providing com ments back on the draft by
Thursday
Lois G. Lerner
JW1559-000533
From:
Lerner Lois G
Sent:
To:
Marks Nancy J
Cc:
Paz Holly O
Subject:
Fw: TIGTA Report
Please forward to Mike. Can't find his email address on Blackberry Lois G. Lerner -------------------------- Sent from my
BlackBerry Wireless Handheld
------Original Message -----From: Nikole Flax
To: Lois Call in Number
Subject: Re: TIGTA Report
Sent: Apr 2, 2013 4:30 PM
No - it is fine. We can just address in the response.
------Original Message -----From: Lerner Lois G
To: Flax Nikole C
Subject: TIGTA Report
Sent: Apr 2, 2013 4:27 PM
Any lick finding the email where we referred c4 issue to T IGTA? We are providing comments back on the draft by
Thursday
Lois G. Lerner
JW1559-000534
From:
Lerner Lois G
Sent:
To:
Marks Nancy J; Daly Richard M; Paz Holly O
Subject:
Re: TIGTA report
I never had one
----- Original Message ----From: Marks Nancy J
To: Lerner Lois G; Daly Richard M; Paz Holly O
Subject: Re: TIGTA report
I'm guessing she'd have delivered it if finding it was easy. it would have been in the Fed/March 2012 time frame I
believe. Those emails on my system are archived I never had a copy but if Michele can show we how to find them
tomorrow I might be able to narrow time frame. Mike you may have some of that exchange as well.
You may want to update her on the reports two referrals and our efforts to clarify that we were cooperative and th ey
have what there is to be had.
----- Original Message ----From: Lerner Lois G
To: Daly Richard M; Paz Holly O; Marks Nancy J
Will ask Nikole one more time.
Lois G. Lerner
Did this Audit."
(...
(b)(5)/DP
JW1559-000535
(b)(5) DP
Still, you may want to propose a sen tence or a phrase: "
(b)(5)/DP
Cc: Paz Holly O
Importance: High
Lois G. Lerner
To: Lerner Lois G
JW1559-000536
From:
Lerner Lois G
Sent:
Wednesday, April 03, 2013 7:05 AM
To:
Paterson Troy D TIGTA
Cc:
Paz Holly O
Subject:
Re: Email issues
Thanks. We'll have the rest of our comments to you soon
Sent: Wednesday, April 03, 2013 06:14 AM Eastern Standard Time
To: Lerner Lois G
Cc: Paz Holly O
Subject: RE: Email issues
Lois,
Thats no problemmy e -mail was just letting you know that I received your e -mail and attachments. I am scheduled to
meet with the team first thing this morning to discuss. If we have any questions, Ill be sure to let you know.
Troy
Cc: Paz Holly O
Subject: Email issues
Got your email, but can't open it --we've had computer issues all day and now it appears as
though the computer doesn't recognize my encryption ID!!!! I have to leave for the day --will try
again in the morning.
Lois G. Lerner
JW1559-000537
From:
Lerner Lois G
Sent:
To:
White Shirley A; Lowe Justin
Subject:
Fw: [SPAM] EO Tax Journal 2013-57
Most recent speech
From: paul streckfus [mailto:pstreckfus@gmail.com]
To: paul streckfus < pstreckfus@gmail.com>
Subject: [SPAM] EO Tax Journal 2013 -57
From the Desk of Paul Streckfus,
Editor, EO Tax Journal
Email Update 2013 -57 (Wednesday, April 3, 2013)
Editors note: These email updates are intended for the use of recipients and are n ot intended for
redistribution. Others interested in receiving these email updates should contact us
at eotaxjournal@gmail.com or go to our website, eotaxjournal.com , for additional information.
1 - Lois Lerner on Current Issues
2 - Panhel Loses Tax-Exempt Status
3 - Two Fraternities Lose Tax -Exempt Status
_________________________________
1 - Lois Lerner on Current Issues
What follows are the March 21 remarks of Lois Lerner, Director, Exempt Organizations, as delivered to
attendees of the annual Washington Non -Profit & Tax Conference.
Lerner: These luncheon meetings are the best diet in the world for me because I can never eat before I give a
talk. I would fall asleep halfway through the speech but enjoy your lunch.
My division headquarters moved to 900 North Capitol Street about a year and a couple of months ago into the
new frontier that is known as NOMA. Its a little magical acronym that they put together to make us think its a
nicer place than it actually is. But they keep telling us the neighborhoods going to be better and I think that it
probably will someday.
The one thing I like about it is we have much better office space than we had in our other office, so thats a plus,
but theres no place to eat there. Its difficult to get a cab. Im hearing today that theres a Starbucks but I
havent seen it yet, so I am going to take that news back.
JW1559-000538
In any event, we re at the corner of North Capitol and K Street. K Street is the dividing line. Nothing new has
happened on K Street. It will eventually, but not in my area yet. So beyond my office, there are a lot of liquor
stores right now and when the cab picked me up t o come there, he had to go up a couple of blocks north before
he could turn.
I thought, this just couldnt have happened if I had asked for it. Im sitting at the traffic light and Im looking at
these signs that say in big, bold letters, Owe the IRS? P ay without losing any of your money! So if any of you
would like the phone number to call, Ill give it to you afterwards because I havent figured that one out yet
myself.
Before I start talking, my staff has asked me to ask you how many of you are sig ned up for our e -newsletter EO
Update? Most of you. This is a good crowd. I was in Minneapolis and down in Florida last week before very big
crowds and only a few hands went up. I think its a really, really useful tool for practitioners and people who are
working in this area. Usually you have to go online to sign up but today one of my staff people, Susan Ruth, is
manning a booth here at the conference, so if you want to sign up for the EO Update, just go out and talk to
Susan. Shell sign you right up an d youll be all set. As I said, its a really good tool and you will appreciate it.
The EO Workplan
Mostly I am going to talk about our workplan today and what is going on. I want to leave some time for
questions at the end. Our workplan is really the t ool that we use to be as transparent as possible with you. We
ask for a lot of transparency from you and we want to be as transparent as we can.
So over the years, weve developed this workplan that lays out our projects, what we intend to do, what were
interested in, and I think its been very well received by the sector. In fact, I think sometimes when were late
with it, we get a little bit of, hmm, what is going on, are they still going to do this? It does take a lot of people
and a lot of time to pu t it together but we do think its a really important piece of what we do.
So this year while we were putting it together, Im thinking, gee, I think weve been a little remiss here in how
were doing this. We go out and we tell the sector that were int erested in this and were going to do these
projects and to you, it translates to, okay, for 2013, Loiss office is going to do X, Y and Z. So by 2014, she
ought to be telling us what she found. Thats not exactly how it works.
Most of my projects are ve ry, very complex. They have lots of planning and lots of phases and almost never can
we do the entire project within one calendar or fiscal year. And heres why. We start out by strategic planning.
Ive talked to you about that before. But then once we dec ide to do the project, we actually have to plan out how
were going to do it, who is going to do it, and how that is all going to work.
If were going to have a questionnaire, we have to put people together to draft the questionnaire. If we are going
to do exams, we need to put together statistical samples and we have to work with our research people to do
that. We also sometimes have to do specialized training for our agents because they may be working in an area
that we havent looked at for a long time or were trying to gather specific types of information and we want to
be as consistent as we can on that.
We also have to gather data from inside the IRS and outside the IRS to put together case files so we can have a
full picture of the organizations. We have to do some data analysis and issue identification and then we go
ahead and conduct either a determination project or an examination project. And then when thats all done, we
have to analyze the information and figure out how were going to report that information out to you.
Add to that the fact that all the new projects have to be phased in to our already ongoing work. So its pretty
JW1559-000539
challenging and I dont think that we have done a good job explaining that to you, so what were going to try to
do going forward is give you a better sense of what were going to accomplish in a particular year.
So, for example, maybe I announce that were going to be looking at X issue, and in 2013 we might be
developing the questionnaire. We will tell you in 20 13, heres the larger issue. Were going to do a project in
2013, well be developing the questionnaire. Then the next year well tell you were sending out the
questionnaire and were going to analyze it and report the results of our analysis. And then th e following year
we might say, weve done that and were going to look at some organizations and do exams, and on and on and
on.
I think chunking that out is going to make it less frustrating for you and for us because my folks work really,
really hard and then they hear the sector saying, you arent doing anything, we havent heard anything about it,
thats frustrating to you. On the other hand, from your perspective, well, gee, she told us four years ago she was
going to do this and we havent heard wor d one about it, did they forget? We didnt forget. Its just a lot of
work and were working on it.
The Self-Declarer Project
My next topic is a very good segue into a project thats taking some time but youre going to see some results,
and that is our 501(c)(4), (5) and (6) self -declarer project. We developed a project to look at these organizations.
Weve never taken a look at , in the same context, organizations that decide not to come in for recognition but
instead self declare and start filing 990s.
Nothing wrong with that, its just an area that we thought we ought to take a look at to make sure that they are
doing things correctly, that they are self -declaring under the correct subsections, and that we understand better
why they chose not to come in or if theyre going to come in. Is there some kind of trajectory if an organization
has been around a long time?
So, drum roll: this afternoon, Mr. Streckfus, at 2:00 pm, if you get the EO Update or you go on my website, you
will see the (4), (5), (6) questionnaire. Were putting it up on the Web for all to see and were doing this
questionnaire slightly differently from past questionnaires.
We used to send the questionnaire out to you and you had to fill it out by hand. That was really terrible. It took
you forever, it took us forever to analyze the results. We then went to sending a disk with the questionnaire and
that was a little bit better but now we have a process whereby we can put the questionnaire up on the website,
we can send you a PIN number so that only people with a PIN number can go in and fill out the questionnaire
and we can get the results almost instantaneou sly.
But we want the rest of you who arent getting that letter to know whats in the questionnaire so you can go to
the website and theres also a non -fillable form so you know what were asking. For those of you who get the
EO Update, youll get it dir ectly. For those of you who dont, its going on the website I think about 2:00 pm
today. Its going to go to 1300 organizations, (4)s, (5)s and (6)s, who filed a 990 for tax year 2010 and 2011
indicating that they were an organization that did not come in for recognition. And were asking lots of different
things and I think you will find it very interesting.
How many of you have been involved with an organization that has received a compliance check questionnaire?
Okay, not that many. We use the complia nce check questionnaires because they enable us to gather lots of
information either from a particular part of the sector or across the sector on a particular issue. They dont take
the same kind of resources as an examination does but they give us a lot o f information and they help us focus
our resources for exam on the organizations that we really need to be looking at.
JW1559-000540
When we send them to organizations, the letter they get says, this is a questionnaire, it is not an exam. You
dont have to fill it out . If you dont fill it out, we might refer you for exam, so we get about a 95% compliance
rate [laughter]. I believe in carrots. I tell you that because that has been the case with every questionnaire weve
used up to now and weve used many of them. The n ext project I am going to talk about, thats not what
happened.
The Group Ruling Questionnaire
The next project is the group ruling questionnaire, which we put out I think a month and a half ago. A couple of
years ago our Advisory Committee to TEGE took on group rulings as its project. Group rulings allow a parent
organization to come in, present the IRS with sort of a representative sample of what the subordinate
organizations would look like. If we agree that they are exempt , we give the parent a group ruling and all the
subordinates are also exempt by virtue of the parents exemption and group ruling. The parent can add and
subtract to that group ruling without having to come back to the IRS for permission to do so. This has gone on
for many, many year s.
In the context of automatic revocation, we saw some things that we thought were very disturbing. One was
many, many, many subordinates in a group ruling being auto -revoked for failure to file for three years. Now,
remember, the parent is responsible f or general supervision and control of these organizations and in making
sure that they follow these rules. So it was disturbing to us that there are all these subordinates not filing and
losing their exemption.
The second thing that we saw that I thought was more interesting was that weve got about 4,000 non -church
group ruling holders and about 220 of the parent organizations lost their exemption automatically because they
didnt file for three years even though their subordinates were filing. So whats the impact on the subordinates?
The subordinates dont have their own exemption if theyre a (c)(3). If theyre a (c)(4), for example, they can
hold themselves out, but the (c)(3) subordinates get their exemption by virtue of the parent having the group
ruling. When the parent loses its exemption, the group ruling is dissolved. Even though the subordinates were
doing what they were supposed to do, they find themselves in this very strange limbo land where they dont
have exemption even though theyve don e everything right.
So, in light of those factors, we thought its probably a good idea for us to put out a questionnaire to group
ruling holders and find out what theyre doing to meet their responsibilities as a parent, how they communicate
to their subordinates, what kinds of things that they consider when allowing somebody to come into their ruling
or go out of their ruling.
Its a quite extensive questionnaire and I think its another one you might be interested in looking at. But what I
found most interesting was we sent it out to about 2,000 central organizations, group ruling holders, not the
subordinates, not churches, 2,000 parents received the questionnaire, were asked to fill it out with that same
letter that we send to everybody. We said you dont have to, but if you dont, we might refer you for exam.
Out of those 2,000, 500 did not respond. Thats a huge number, 25 percent, compared to the usual five percent.
So we want to look behind that and well move to open exams for those organizati ons to see what lies behind
their reluctance to fill out the questionnaire and also well end up gathering information that they could have
given us on the questionnaires. So stay tuned for what we find in that area.
Just to manage expectations, for the responses to the questionnaire, well be able to analyze those pretty
quickly, but the exams will take some time so you wont be hearing about the results of those for a couple of
years.
JW1559-000541
Auto-Revocation Update
Lets see what else there is. Some of you a re really tired about hearing about the auto -revocation updates. I keep
doing it because they do impact the rest of my work. As of March, weve had about 500,000 organizations that
have shown up on the automatic revocation list for failure to file for thre e years. About 37,000 organizations
have come back and requested reinstatement. What I find really interesting is about 44,500 private foundations
were auto revoked for failure to file. That was a surprise to me. I did not expect that in the private founda tion
world. And about 400 of those have come back and regained their exemption.
So why is this important to you if youre not one of the people that is working with an organizations that has
been automatically revoked? Its important because it has put s ome strain on our determinations process. In
addition to all the new organizations that are coming in and asking for recognition of their exemption, we have a
significant number of really large organizations that have always had a filing requirement that a re asking us for
retroactive reinstatement.
Now, we put out two pieces of guidance when the automatic revocation came into play. We gave the small
organizations that had to file a 990 -N, and maybe really hadnt heard the news yet, a transition period whe re
they could come in and pay us $100. If they met the criteria for exemption, we gave them retroactive
recognition back to the date of their revocation. That was one -year only for those very small organizations.
In the other piece of guidance, we made i t very clear that larger organizations that had had filing requirements
and greater resources were going to have a much harder row to hoe in the context of getting retroactive
reinstatement. We did not expect that we would get a lot of those requests, but we actually have because they
need retroactive reinstatement not so much for the IRS but for many other reasons. So that has put a real strain
on our resources. I know that youre all concerned that were taking a very long time to deal with new
applications, but that is one piece of the puzzle.
Application Processing Backlog
Another piece of the puzzle is our web page. How many of you go to look at the web page to see whats called
Wheres my application? to see where you might be? We put this web pag e out several years ago to try to
give some sense of how long you might have to wait if you have an application pending. At that time, our
process had two buckets. One was screening, which means if you come in and we look at your application and
everything looks good to go, we approved it right away and thats great, you are okay.
If we cant do that because we need more information from you or we have to ask you some questions, then you
have to get assigned to a revenue agent for more development on your case. Much of my staff was working on
that piece and that was taking longer than it does now. What weve done is change the process to help move
more cases out of the second bucket.
We have added an intermediate process. So as you go through screening, w e might find that everything is okay
except we need something that is missing in the documents in your application. Instead of having to assign that
case out to a revenue agent to get that missing information, we hand it off to a lower level staff person w ho can
reach out to you and as soon as the document comes in, they put it in the file and close the case, so youre then
good to go.
Those screening cases I think accounted for about 70 percent of my closures last year and I believe the
timeframe for tho se and dont quote me on this or hold me to this because I dont know the actual number but I
think it was somewhere around 90 to 120 days. Thats pretty good. Thats a big piece of what we do.
The other piece is what is holding folks up and most people in this room probably are doing applications that go
JW1559-000542
into those other categories. These are categories where for various reasons we need more information, perhaps
the 1023 or 1024 wasnt filled out very well; it didnt have all the information we needed to
make a decision.
Perhaps its an issue that we have a focus group of people working on because its a hard issue and it makes
sense for us to have the same people doing it over and over again because then were more consistent , there
being a higher leve l of sophistication about the issues. So those kinds of things interfere with applications
necessarily being processed as quickly as you might like. Thats kind of the bad news part.
But the good news part is that page that we developed a couple of years ago to say, these are the buckets that
you can fall into and heres about how long it takes, doesnt really make sense under our new process. So what
were doing right now is were developing a new page to give you a better sense of where your application
might really be. I cant give you specifics , but I can give you an overview. I think youre going to be probably
pleased when you see what weve done. I think that hopefully will come out in the next month or two.
Auto-Revocation Process Problems
A couple of other things that have happened in the automatic revocation process that I want to share with you
because you may be dealing with it. One is what I call hijacked EINs. We have seen in this process large
organizations, generally colleges and universi ties, but not always, that have other kinds of organizations in their
ambit that hijacked the college and university or other organizations EIN and filed a 990 -N with that EIN.
I have had some very high profile colleges come into me and say, Im trying to file my 990 but its bouncing
back because somebody else has filed with my EIN already, and now everything in our system has been
changed so that that EIN is reflecting the wrong name and address. Thats not only a problem we have, but its
an IRS problem, and heres why.
You each have a Social Security number -- your Social Security number. Nobody else is supposed to use that
Social Security number and you know if they do, theres a problem for you. Its the same with organizations.
Their EIN is the s ame as their Social Security number. Its a unique identifier to each organization.
The problem is usually with small organizations, generally sororities and fraternities. In one case it was an
ambulance society and theyre just doing their little thing and they dont know better and they think, oh, weve
got to fill this out, they want a n EIN, I saw that on a piece of paper in the deans office. Ill use it. No!
That is exactly what is happening. No one is doing anything with a bad motive, its just kind of silly and creates
lots of problems. If you have a client or an organization that is in that place, please contact my office. You can
call the call site. Theyre going to contact my office anyway. We will work it through for you as quickly as we
can. We dont want you to be in that situation.
In one case, it was very odd. I cant tal k about names but the name that it got changed to was not even related to
the educational organization. So our filing system, when you submit your tax forms with your Social Security
number, the system is going to assume that thats really you unless there s something on there that tells us it
isnt you.
The same thing happens with the EIN. When you submit something with an organizations EIN, and most of the
time the name is somewhat close or it has that organizations name in it, my system is going to a ccept that. So if
there is a problem, you need to let us know right away.
The system will in fact adjust the address because if you legitimately are sending in a form and youve changed
your address, we should have the new address in our system. You file using your unique identifier so we think
its you. Thats just the way automatic systems work.
JW1559-000543
I cant stress enough how if you have this problem dont roll your eyes and say, oh, I cant believe the IRS. It is
the way it works. You need to come in and well fix it. Also, please take the opportunity to tell these small
organizations what the EIN is for and how theyre creating havoc.
The other thing that I learned just two days ago about self -declarers is a rule under automatic revocation, and
this is the law, not me, if the organization is automatically revoked, the only way it can get its exemption back is
to apply for reinstatement through the application process even if it didnt have to do that the first time. So those
(c)(4)s, (c)(5)s, (c)(6)s, (c )whatevers that didnt have to apply but are holding themselves out, if they are auto revoked, they now have to apply to come back in.
Those group ruling subordinates that didnt have their own ruling but didnt file and got automatically revoked
cannot just be pulled back into a group ruling. Instead, they have to come in and apply. I found this out by
accident because somebody came to ask me a question and she said, shes a grantor, I want to grant some
money to this new small organization but theyre p art of a group ruling and the group ruling parent has not yet
sent in its annual list of whose in the group ruling, so you dont have anything on your record about this
organization.
We got to chatting about it and she wanted to know their foundation sta tus and other things. I asked her a few
questions and she said, well, they had been automatically revoked. So I said, oh well, the group ruling parent
cant take a sub thats been automatically revoked and bring it back into the group ruling and if you try to do
that, when we look at the information that youre presenting us, we will see that it was automatically revoked
and we will not include it on the group ruling roster, at which time she said, oh no, it wasnt part of the group
ruling, it had its own ( c)(3) status before it was automatically revoked and so it didnt want to go back into the
IRS so we got a new EIN and asked the group ruling holder to bring it back inside the group ruling.
So all of you people who think that all EOs are really good and why do we even have my office, its this kind of
stuff that goes on. So these are people who are trying to circumvent the group ruling rules, while all of you are
saying its taking forever for my application to go through and these people are screwing ar ound. Thats going
on and I dont know if its purposeful, but I do know that its important for people to understand getting a new
EIN is not the answer. Its like getting a Social Security number, theyre very easy to get. You can get one,
well enter it in our system but when we actually start looking and youve got two EINs, and one of them is
revoked, unless you came back in, the other is not going to be legitimate in terms of your status. So keep that in
mind.
Social Security Numbers
That reminds m e that last year I was talking a lot about Social Security numbers on 990s. I wont give you the
lecture again because I did it last year but basically The Chronicle of Philanthropy did a big study showing that
a lot of Social Security numbers were on the 990s. We cannot redact Social Security numbers on the 990s
unless theyre on the Schedule B. Legally, the only think we can redact is Schedule B. We do have a process
when we see them, we put them on disk and we sell them to folks [laughter] -- not the Social Security numbers,
the 990s.
We do put a notice when were selling them to purchasers of a disk saying there is personal information such as
Social Security numbers on the disk, so you may want to redact them, before you make it public, but we dont
have any control over their doing that. So thats a reminder. I dont think its happening anymore. Most of the
personal data was I think pre -2009. I dont think its happening so much on the new 990 but just in case, do be
careful.
For the instructions fo r tax year 2012 we have put a reminder notice on the 990, 990 -EZ, 990-PF, 5227, 990-T,
JW1559-000544
1023, and 1024, and well be adding that wording to the heading of sections on all of those forms in 2013.
Were trying to do our part. Just remind your clients this is something beyond our control and theyre not going
to want it out there for all to see.
Interactive Form 1023
One of the other good things I need to talk about is another piece going back to the determination process
because we are constantly trying to save time in our process and move more quickly. Its just really hard to do
because we dont know what were going to get in at the beginning of the year. I dont mean just numbers but
types of applications.
Many of you over the years have heard me talk about Cyber Assistant, which was a tool that we were trying to
design to make it easier for organizations to fill out their 1023 online in the hope that we would get better
information in the 1023s and more cases could be screened out. We were also hoping ultimately that they could
file electronically. That wasnt part of the first part but we really did want this interactive form that would make
it easier for organizations to fill out the application form.
This was probably eight or nine years ago when w e started down that road. Unfortunately, we ran into a whole
bunch of IT problems with the product. It worked inside but it didnt work outside. It was going to cost an
enormous amount of money to do it so we really havent been focusing on that.
However, heres the good news. Last year my Advisory Committee decided to look at the 1023 as their project.
If you havent looked at that report, you might want to look at it. All very, very good ideas about making it
electronic, having electronic filing, having approved ones electronically available, all kinds of records. I dont
oppose any of those ideas but they all cost time and money. And so I dont know when those pieces are going to
happen. But one thing they did say was make available the educational mate rials from when you were doing the
Cyber Assistant. Is there some way we can post that educational material? So we said we will look into it.
Well, as you all know, the IT world moves very quickly and some things that were absolutely impossible or
very costly four years ago, its sort of like buying an iPhone or whatever. When it first comes out people run
down to the store and pay a lot of money. A couple of years later, its much more affordable. So the same thing
happens in my world and we looked into it and for a much, much smaller cost, we were able to use that
information. Were working with a vendor right now to put together an interactive 1023.
Our Advisory Committee has already reviewed it and made comments. Its looking really, really good. You
know I hate to give you timeframes for when things are going to come out. But were really shooting for this
thing to come out in the summer. Dont hold me to the summer because my mantra is everything takes longer
than you think, if anything can go wrong , it will, and everything is harder than you might imagine. But I really
do think youre going to see this before the end of the fiscal year. I think it will be very helpful to you and very
helpful to us. So thank you for that and now I will take questions .
Attendee: Do you see sequestration affecting your your groups ability to continue doing the job that it has
been doing?
Lerner: The question is whether sequestration is going to affect our ability to do our work. I think sequestration
is going to affect every government agencys ability to do its work. We will all be effected in different places
but it is a huge cut in money that we all have to make which means I spend a lot of my day with other
executives in the IRS looking at where we can save fun ding so that we can minimize the furlough days that our
people will have to take and then theres other things as well, but we are each given a certain amount that we
must cut from our budget. You may not know this but sequestration isnt just IRS you need to cut whatever the
percentage is. Its each program within each agency that has to cut a particular percentage. So we will actually
JW1559-000545
be cutting and well look at that and work with that and try to do the best we can.
Attendee: We have a subordinate that was automatically revoked. Theyve reapplied and been reinstated. Can
you subsequently add them back to the group exemption?
Lerner: You can, but I will tell you one thing that we are doing. We are explaining in the letter to the
subordinates, now that you have your own exemption, you dont have to be part of the group exemption for my
purposes. You may want to be part of that group and retain your exemption. Are you willing to tell me what
your group is or what kind of group it is?
Attendee: Its a medical association.
Lerner: Okay, so they could still be part of your medical association without being a part of your group ruling.
That may take away some headaches for you because you dont have to oversee whether theyre filing and all
that good stu ff. And from their perspective, theyre in the system; if theyre (c)(3)s, theyre on Pub 78 and all of
that stuff, and we will communicate with them in the event theres another legal change that has implication for
them.
So were just letting people kn ow that. Its obviously their choice but in many ways I think it benefits the parent
because I have heard absolute horror stories when I go around and talk to group ruling holders who say: Well,
they wont listen to me. Then I say: What do you want me t o do about that? The way I describe it is, theyre
like teenagers under 18 and so youre responsible. But once they have their own exemption, theyre over 18 and
you can kick them out of the house, or you can keep them in the house but youre no longer re sponsible.
Attendee: There was talk about doing away with group filings. Has there been any further developments?
Lerner: Shes asking me about one of the recommendations in the ACT report that we should get rid of the
ability for a group 990 filing. So, if youre in a group, the parent has to file. A parent can also file a group return
on behalf of all the subordinates or so me of the subordinates or it doesnt have to file a return on behalf of any
subordinates.
Sometimes I think I dont know how these rules came about. They dont make any sense in our modern world,
and I think thats what the ACTs recommendation was. In t erms of the modern world we live in, more
transparency and all of you having to fill out these 990s and explaining what is going on in a lot of detail in
their organizations, why should a group ruling holder get a better deal than you have? It doesnt make sense for
transparency. So thats one of the things were looking at. I think we want to get more information about what is
really going on behind the scenes and so we are using a questionnaire. So, in other words, a learning process.
Attendee: Would you talk about some of the questions on the self -declarers questionnaire?
Lerner: No. Its a very broad questionnaire. You need to go look at it. Its big. Its a lot of things. As I said, one
of the reasons we did this was because we were looking at som e of these 990s and the activities of organizations
that were filing under particular subsections. And it wasnt clear to us that they had really selected the right
subsection, not that they couldnt be exempt, but that they were doing things that their ch osen Code section
wasnt the right Code section for them. Were also interested in why some choose to go ahead and apply and
others dont. We also interested in, as I said, if you start out with not applying when youre pretty small and as
you grow you dec ide you want to apply.
Just for informational purposes, the reason an organization might want to apply is to have reliance on the letter
they get from the IRS. If they think theyre doing everything right within their subsection, they dont need that.
The only time theyre going to need it is when the IRS comes knocking on your door and says, gee, were
JW1559-000546
auditing you and we have no clue why you think youre exempt because youre not.
You dont have any reliance, theres no letter to say I told the IRS an d the IRS said youre good to go. Thats
the only distinction. I dont want to give the impression that youre bad if you dont apply and youre good if
you do. The law allows for both, were just curious about it. So its a broad range of questions and th ese are all
990 filers so were not talking about those who dont have to file.
Attendee: Do you have any issues with identity theft since the 990 is a public document. People know the EIN,
the address, the board. Is there any thought maybe to redacting the EIN off the 990 before its made public?
Lerner: The IRS has no authority under the statute to redact anything from the 990 except the Schedule B
donor information. Technically, what we should be doing is redacting all of the identifying information and
putting the Schedule B out. If somebody asks me for a Schedule B without the identifying information, I would
give them a Schedule B with the amounts of the contributions and nothing else. But for our purposes, to avoid
getting stuff out there that was nt intended, because remember this is a process, weve got 1.5 million
organizations filing and this stuff comes in, people are going through it, its a very big process. To avoid
protected information going out more often than we would like, which is rea lly zero, we take the entire
Schedule B off, but we have no authority to redact anything else. It would have to be a statutory change.
Attendee: ***
Lerner: Shes asking if you are a group ruling holder, then once a year we send you a list of the informa tion we
have about your group. Its your job to say no, no, no, these guys arent here any more and these are our new
ones. And thats done with pen and paper, and shes asking me if there are any plans to make that electronic.
I would just say that ther e are plans for the IRS to make everything electronic; the question is when. Lots and
lots of IRS people are chasing the same IT resources so I cant tell you when its going to happen. I know it will
make it easier for all of us. Would it help if we sent it to you on a disk? I dont know if we could do that. I will
take that back and maybe have some discussions with others.
Attendee: Any update on the college and university final report?
Lerner: Thank you for asking that question, which I wanted to disc uss. The question is, is there an update on
the colleges and universities report? Thats another one thats been going on for a while and youre thinking
were kind of snoozing, what the heck are you doing, taking so long?
We put out a questionnaire to a bout 400, 500 colleges asking about lots of things, their demographics, their
endowments, their compensation packages, UBIT issues, and we got a lot of information and we put it out in a
first report I think probably two and one half years ago about that, it might be longer. We also decided that we
were going to do some examinations on two issues, one with UBIT, one with compensation. We always look at
compensation, its a continuing thing for us.
What we saw in the questionnaires was that most organizati ons said that they tried to use the rebuttable
presumption to set their compensation and we heard that over and over again but weve also seen some very
interesting comparable information as we go through this. So in the colleges and universities, I think we
probably told everybody were going to look behind the comparables. Are they really comparable? What are we
seeing there?
In the UBIT area, we saw lots and lots of activities being characterized as unrelated by some colleges and
universities and relat ed by others. It doesnt mean one is right and one is wrong, but we wanted to look behind
that and see what were the facts and circumstances, were these really related activities or if they were unrelated,
10
JW1559-000547
how come nobody ever has to pay any taxes on them? So those are the two things were going to be doing.
These are large organizations and they take a long time for us to get through the exams, but I am not going to
predict today, but I can say I think you will be seeing some reporting out on this hopefu lly by the end of this
fiscal year. We have a review process on this obviously but I dont have control over that, but well put
something together soon. Anything else? Well, thank you very much. I appreciate the opportunity to speak to
you. And please sig n up for our EO Update.
_________________________________
2 - Panhel Loses Tax-Exempt Status
Several schools' Panhel nonprofit status was revoked after an IRS policy change
By Laura Anthony, The Daily Pennsylvanian, March 31, 2013
The Panhellenic Counci l is no longer considered a nonprofit organization by the Internal Revenue Service.
According to the IRS, Panhel lost its tax -exempt status as a 501(c)(4) nonprofit organization. According to
GuideStar, an online database of records and tax information for nonprofit organizations, This organizations
exempt status was automatically revoked by the IRS for failure to file a Form 990, 990 -EZ, 990-N, or 990-PF
for 3 consecutive years.
On behalf of the Panhellenic Council, College junior and Vice President of Finance and Correspondence Alyssa
Bonnell issued the following statement: There are a number of reasons why an incorporations tax status may
change. For the Panhellenic Association, it is a matter of re -filing a form with the IRS to reaffirm our tax exempt status. We anticipate being fully reinstated within the next few months. Panhel declined further
comment -- including on what this loss of tax -exempt status means for the organization.
Director of the Office of Fraternity and Sorority Life Scott Reik ofski said in an email, Panhellenic Councils
nonprofit status was impacted because officers were delayed in filing necessary yearly paperwork with the IRS.
The forms are being completed to have the status reinstated. Panhel was originally classified as a 501(c)(4)
organization, which the IRS website describes as applying to civic leagues, social welfare organizations, and
local associations of employees.
The tax exemption was automatically revoked on June 15, 2010 and was posted on the IRS website on
July 13,
2011. According to The New York Times, 275,000 nonprofits nationwide lost this status with the IRS in the
summer of 2011. This is because many were unaware of the changes that came with the passing of the Pension
Protection Act in 2006 -- all nonprofits are now required to file with the IRS, no longer only those with an
annual revenue of $25,000 or more.
Penns other two Greek governing councils have slightly different statuses in the eyes of the IRS. According to
College junior and Interfraternit y Council Treasurer James Falzone, IFC is classified as a 501(c)(3) nonprofit,
which according to the IRS applies to groups such as charitable, religious and educational organizations.
College sophomore and Multicultural Greek Council President Jonathan P az said that MGC is an extension of
OFSL, so it does not have its own nonprofit status. In other words, we are a standing council but not an entity
independent of Penn, hence why we are not 501(c)(3) -recognized, as an umbrella organization. Our independen t
organizations are recognized with their own nonprofit status, Paz said in an email.
Data from the IRS also shows that Penns Panhellenic Council is not the only one to lose this tax exempt status.
The Panhellenic organizations of six other colleges are listed on the IRS as having lost their tax -exempt status,
although they are all classified differently as 501(c)(7) organizations, which the IRS describes as encompassing
social and recreational clubs. However, Executive Director of the National Panhell enic Conference Nicki
Meneley said in an email, Very few of our College Panhellenics are incorporated so I can tell you that this is
11
JW1559-000548
not a trend.
_________________________________
3 - Two Fraternities Lose Tax -Exempt Status
Sigma Phi Epsilon and Alpha P si both failed to submit the required Form 990 to the IRS
By Laura Anthony, The Daily Pennsylvanian, January 16, 2013
Penns chapters of Sigma Phi Epsilon and Alpha Psi recently lost their tax -exempt status as nonprofit
institutions. According to the Inte rnal Revenue Service website, Alpha Psis tax -exempt status was revoked on
May 15, 2010 and SigEps was revoked on Nov. 15, 2010. The fraternities are no longer recognized as
501(c)(7) organizations.
Andrew Lemens, SigEps director of Fraternity Operations, said in an email that the national organization
became aware of this revocation of Penns chapter in 2011, by consulting the IRSs list of Automatic
Revocation of Exemption.
Alpha Psi, the co -ed veterinary fraternity, does not belong to a national organization, so its financial
management procedures are currently unclear. However, the national organization of SigEp states that each
chapter president and vice president of finance should collaborate w ith the chapters Alumni and Volunteer
Corporation to file a Form 990 and maintain their nonprofit status.
Alumni volunteers may remind them or help them with that but ultimately that is something that would be
completed by the chapter president, Tyler Boggess, Sigma Phi Epsilons East Chapter Services director, said.
According to Lemens each chapter determines their own procedure for this process.
Brett Danko, president of the Alumni and Volunteer Corporation for Penns chapter of SigEp, said the AVC
takes the lead on filing the necessary tax forms rather than the student leaders. He added that he is the member
of the AVC in charge of the chapters tax forms. Im going to take the fault myself because I didnt follow it as
much as I should have, Danko said.
According to Lemens, Since 2008, each chapter has received quarterly reminders and best practices about the
filing requirement. Danko said that he likely received notifications from SigEp headquarters about filing the
990s, but he said there wer e misunderstandings along the way. As a volunteer on the AVC, he said, he wasnt
familiar with the intricacies of the tax requirements. I was aware that we needed to fill out things. I just didnt
know if it exactly pertained to us, he said.
According to GuideStar, an online database of nonprofit records and tax information, [These organizations]
exempt status[es] [were] automatically revoked by the IRS for failure to file a Form 990, 990 -EZ, 990-N, or
990-PF for 3 consecutive years. Further investigat ion and due diligence are warranted.
Student leaders of SigEp and Alpha Psi did not respond to requests for interviews. However, Penns chapters
are not alone in receiving this revocation of their tax -exempt status. According to Boggess, there are 235
chapters of SigEp nationwide. Data from the IRS shows that 155 SigEp chapters have lost their tax -exempt
status since May 15, 2010.
Commenting on these revocations across the country, Lemens said, The IRS data reflects duplicates, closed
chapters, chapters awaiting reinstatement of their status and separate alumni corporation or housing entities not
considered subordinate organizations of SigEp.
Donald Kramer -- who teaches a course on nonprofit organization law at the Law School and is chair of a
nonprofit law group at a Philadelphia law firm -- does not expect this revocation to have a serious impact on the
12
JW1559-000549
structure or functioning of the fraternities. According to Kramer, the only consequence of this change is that the
fraternities will now have to pay federal income taxes.
They need to reapply for tax exemption and file annual tax returns. Until they do, they can be assessed taxes at
a corporate rate on any profits above their expenses to operate, Lemens added. He said the national
organization of Si gEp, will continue to provide resources and support to help chapters maintain or regain tax exempt status. This change in tax status should not affect any property taxes related to the fraternity houses,
since the fraternities do not own their chapter ho uses.
Moving forward, Danko says SigEps AVC is working with an accountant to properly file its taxes in the
coming years. It may re -apply for nonprofit status, but for now, he said, The one thing we want is to be in full
compliance with any rules and re gulations that are out there.
Daily Pennsylvanian Editors note: Although both Sigma Phi Epsilon and Alpha Psi have lost their tax -exempt
statuses, the two fraternities are not unique in this regard, as there are other Greek chapters and student
organizations at Penn that have lost their tax -exempt status in recent years.
_________________________________
13
JW1559-000550
From:
Lerner Lois G
Sent:
To:
Barre Catherine M; Flax Nikole C; Weber Richard; Sterner Christopher B
Cc:
Landes Scott S; Sinno Suzanne; Lowe Justin
Subject:
Re: JUSTICE Oversight Testimony on Campaign Finance (FC-ALERTS:DOJ-0016-A)
Interesting
To: Lerner Lois G; Flax Nikole C; Weber Richard; Sterner Christopher B
FYI I got an email this afternoon that Justice i s going to circulate substantially revised testimony for comment.
From: Lerner Lois G
Importance: High
Lois G. Lerner
JW1559-000551
From:
Paz Holly O
Sent:
To:
Cc:
Lerner Lois G; Marx Dawn R
Subject:
FW: Spreadsheet
Attachments:
Combined Spreadsheet TAG Final Draftmay6.xls
Troy,
Here is the May 6 email from
b(6) and b(7)(C)\...
with the attached spreadsheet.
Holly
From: Combs Peggy L [mailto:Peggy.L.Combs@irs.gov ]
Sent: Monday, May 07, 2012 12:30 PM
To: Combs Peggy L
Subject: FW: Spreadsheet
From: Herr Joseph R
Sent: Monday, May 07, 201 2 10:53 AM
To: Combs Peggy L
Cc: Bell Ronald D; Bibb Kenneth B
Peggy,
The email below is a draft of the BOLO/Emerging Issue spreadsheet dated May 6, 2010.
This draft is populated with a
sample named tea parties. A sample was incorporated into the draft spreadsheet to help illustrate what information
would be contained in the spreadsheet.
Joseph R. Herr
Revenue Agent Group 7821
Exempt Organizations Determinations
(513) 263-3725
(513) 263-4488 fax
From:
b(6) and b(7)(C)\personal infor...
Sent: Thursday, May 06, 2010 9:27 AM
To: Herr Joseph R
Subject: Spreadsheet
Importance: Low
JW1559-000552
b(3)\6103;(b)(5) DP
JW1559-000553
b(3)\6103;(b)(5) DP
JW1559-000554
b(3)\6103;(b)(5) DP
JW1559-000555
b(3)\6103;(b)(5) DP
JW1559-000556
Subject:
Updated: Hearing Prep for Senate Judiciary Hearing on 4/9
Location:
Room 3226 (1111 Constitution) or Call in: 888-331-8226 ACCESS CODE: 4532324
Start:
Fri 4/5/2013 2:30 PM
End:
Fri 4/5/2013 3:30 PM
Show Time As:
Tentative
Recurrence:
(none)
Meeting Status:
Not yet responded
Organizer:
Sinno Suzanne
Required Attendees:
Haynes Patricia J; Lerner Lois G; Barre Catherine M; Amato Amy; Flax Nikole C
JW1559-000557
From:
Paz Holly O
Sent:
To:
Subject:
FW: TIGTA report
Attachments:
Importance:
High
Cc: Paz Holly O
Importance: High
Lois G. Lerner
To: Lerner Lois G
JW1559-000558
(b)(5) DP; (b)(3)/6103
JW1559-000559
(b)(5) DP; (b)(3)/6103
JW1559-000560
(b)(5) DP; (b)(3)/6103
JW1559-000561
(b)(5) DP; (b)(3)/6103
JW1559-000562
(b)(5) DP; (b)(3)/6103
JW1559-000563
(b)(5) DP; (b)(3)/6103
JW1559-000564
(b)(5) DP; (b)(3)/6103
JW1559-000565
(b)(5) DP; (b)(3)/6103
JW1559-000566
(b)(5) DP; (b)(3)/6103
JW1559-000567
(b)(5) DP; (b)(3)/6103
JW1559-000568
(b)(5) DP; (b)(3)/6103
JW1559-000569
(b)(5) DP; (b)(3)/6103
JW1559-000570
(b)(5) DP; (b)(3)/6103
JW1559-000571
(b)(5) DP; (b)(3)/6103
JW1559-000572
(b)(5) DP; (b)(3)/6103
JW1559-000573
(b)(5) DP; (b)(3)/6103
JW1559-000574
(b)(5) DP; (b)(3)/6103
JW1559-000575
(b)(5) DP; (b)(3)/6103
JW1559-000576
(b)(5) DP; (b)(3)/6103
JW1559-000577
(b)(5) DP; (b)(3)/6103
JW1559-000578
(b)(5) DP; (b)(3)/6103
JW1559-000579
(b)(5) DP; (b)(3)/6103
JW1559-000580
(b)(5) DP; (b)(3)/6103
JW1559-000581
(b)(5) DP; (b)(3)/6103
JW1559-000582
(b)(5) DP; (b)(3)/6103
JW1559-000583
(b)(5) DP; (b)(3)/6103
JW1559-000584
(b)(5) DP; (b)(3)/6103
JW1559-000585
(b)(5) DP; (b)(3)/6103
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(b)(5) DP; (b)(3)/6103
JW1559-000587
(b)(5) DP; (b)(3)/6103
JW1559-000588
(b)(5) DP; (b)(3)/6103
JW1559-000589
(b)(5) DP; (b)(3)/6103
JW1559-000590
(b)(5) DP; (b)(3)/6103
JW1559-000591
(b)(5) DP; (b)(3)/6103
JW1559-000592
(b)(5) DP; (b)(3)/6103
JW1559-000593
(b)(5) DP; (b)(3)/6103
JW1559-000594
(b)(5) DP; (b)(3)/6103
JW1559-000595
(b)(5) DP; (b)(3)/6103
JW1559-000596
(b)(5) DP; (b)(3)/6103
JW1559-000597
(b)(5) DP; (b)(3)/6103
JW1559-000598
(b)(5) DP; (b)(3)/6103
JW1559-000599
(b)(5) DP; (b)(3)/6103
JW1559-000600
(b)(5) DP; (b)(3)/6103
JW1559-000601
(b)(5) DP; (b)(3)/6103
JW1559-000602
(b)(5) DP; (b)(3)/6103
JW1559-000603
(b)(5) DP; (b)(3)/6103
JW1559-000604
(b)(5) DP; (b)(3)/6103
JW1559-000605
(b)(5) DP; (b)(3)/6103
JW1559-000606
(b)(5) DP; (b)(3)/6103
JW1559-000607
(b)(5) DP; (b)(3)/6103
JW1559-000608
(b)(5) DP; (b)(3)/6103
JW1559-000609
(b)(5) DP; (b)(3)/6103
JW1559-000610
(b)(5) DP; (b)(3)/6103
JW1559-000611
(b)(5) DP; (b)(3)/6103
JW1559-000612
(b)(5) DP; (b)(3)/6103
JW1559-000613
(b)(5) DP; (b)(3)/6103
JW1559-000614
From:
Flax Nikole C
Sent:
To:
Lemons Terry L; Sinno Suzanne; Barre Catherine M; Weber Richard; Haynes Patricia J;
Cc:
Onorato Corina R
Subject:
Senate hearing
Attachments:
Draft Testimony 4-3-13.docx
Lunger Richard; Sterner Christopher B; Vozne Jennifer L; Lerner Lois G; Kindell Judith E
We are going to proceed with CI testifying for IRS at the hearing.
Attached is a early version of the written testimony
where I tried to separate the issues and make it clear that CI will not be discussing substantive c4 rules.
work - as noted (and some formatting needs to be changed).
send through clearance.
It needs some
W e need to get the document in shape soon so that we can
Susie/Terry/CI - can you decide who will take the lead in getting this ready to go and recirculated for all to take a close
look? Adding Chris who supplied the 7206 material. We'll also need a shorter oral testimony and a prep with Steve on
Monday (so adding Corina).
Thanks
JW1559-000615
(b)(5)/DP
JW1559-000616
(b)(5)/DP
JW1559-000617
(b)(5)/DP
JW1559-000618
(b)(5)/DP
JW1559-000619
(b)(5)/DP
JW1559-000620
(b)(5)/DP
JW1559-000621
(b)(5)/DP
JW1559-000622
(b)(5)/DP
JW1559-000623
(b)(5)/DP
JW1559-000624
(b)(5)/DP
JW1559-000625
(b)(5)/DP
JW1559-000626
(b)(5)/DP
JW1559-000627
From:
Landes Scott S
Sent:
To:
Lerner Lois G; Flax Nikole C; Weber Richard; Sterner Christopher B
Cc:
Barre Catherine M; Sinno Suzanne; Lowe Justin
Subject:
Attachments:
CRM (Raman) testimony for April 9, 2013 SJC sub hearing (3APR13).docx
Here is the revised testimony provided by DOJ.
The new deadline is 11:00 A.M., Thursday, April 4 .
Sent: Wednesday, April 03, 2013 11:44 AM
To: LLR@treasury.gov; Rochelle.Granat@treasury.gov; Jason.Brown@treasury.gov; Margaret.Bailey@treasury.gov;
Cameron.Arterton@treasury.gov; James.Mackie@treasury.gov; Jessica.Hauser@treasury.gov; Zarlenga Lisa ;
Kevin.Knopf@treasury.gov; cynthia.clark@fincen.gov; Patrick.Obrien@fincen.gov; Mike.Maher@do.treas.gov;
Barbara.Hammerle@treasury.gov; Marshall.K ofler@fms.treas.gov; Marc.Seldin@fms.treas.gov;
Andrew.Woolf@treasury.gov; Barb.Bracy@treasury.gov; Brandon.Oliver@treasury.gov; Bri an.Egan@treasury.gov;
ExecSecProcessUnit@treasury.gov; Kathryn.Alvarez@treasury.gov; leigh.williams@treasury.gov;
Michael.McRaith@treasury.gov; Michelle.Ayers@treasury.gov; DelmarR@oig.treas.gov; Patrick.Maloney@treasury.gov;
Catherine.Ahn@treasury.gov; Gary.Sutton@treasury.gov; Brian.Townsend@treasury.gov; Julia.Yoo@ treasury.gov;
Cathy.Higginbotham@treasury.gov; Daniel.Ballard@treasury.gov; Darlene.P eterson@treasury.gov;
George.Bostick@treasury.gov; Bill.Bradley@fincen.gov; lindsay.orlin@fince n.gov; Melissa.Nasrah@treasury.gov;
Tyler.Hand@treasury.gov; llritems@fms.treas.gov; Tom.Longnecker@fms.treas.gov; Barre Catherine M
Please find revised testimony provided by DOJ. The new deadline is 11:00 A.M., THURSDAY, APRIL 4 .
From: LLR
To: Granat, Rochelle; Brown, Jason; Bailey, Ann ; Farrell, Paula; Furey, Christian; Canning, Gordon; Mahaffie, Bob; Wiss,
Barbara; 'Catherine.M.Barre@irs.gov'; Rose, Nancy L; Arterton, Cameron; Mackie, James III; Hauser, Jessica; Zarlenga,
Lisa; Knopf, Kevin; Clark, Cynthia; O'Brien, Patrick; 'Mike.Mahe r@do.treas.gov'; Warner, Jeffrey; Gacki, Andrea;
O'Connor, Kevin; Ballman, Luke; Hammerle, Barbara; Kofler, Marshall P.; Seldin, Marc I.; Santaniello, Thomas E.
Cc: Harman, Luke; Adeyemo, Adewale (Wally); Krulic, Alexander; Woolf, Andrew; Bracy, Barb; Oliv er, Brandon; Egan,
Brian; Peretti, Brian; Sonfield, Brian; Camacho, Cara; ExecSecProcessUnit; Alvarez, Kathryn; Williams, Leigh; LLR;
McRaith, Michael; Ayers, Michelle; Delmar, Richard K; Maloney, Patrick; Lee, Peter; Agrawal, Priti;
'Counsel.Office@tigta. treas.gov'; Ahern, Paul; 'Catherine.Ahn@treasury.gov'; Sutton, Gary; Townsend, Brian; Yoo, Julia;
Abraham, Lisa; Mellody, Kathleen; McLoughlin, Colleen; Weber, Karen; Blair, Anita; Mann, Benjamin; Higginbotham,
JW1559-000628
Cathy; Ballard, Daniel; Peterson, Darlene; Me lanson, Karen; Pena, Lisa; Cole, Lorraine; Harvey, Mariam; Lewis, Mike;
Dietz, Polly; East, Robyn; Canty, Scott; Sharpe, Thomas Jr. (Disabled); TOC; Marco, Veronica; Corwin, Erik H; Goldstein,
Richard S; 'Scott.S.Landes@irs.gov'; McField, Terri L; Mujumdar , Namrata; Salstrom, Sandra; Bostick, George; Bradley,
Bill; Orlin, Lindsay; Nasrah, Melissa; Hershfang, Jennifer; Tuchband, Matthew; Petersen, Stephanie; Hand, Tyler;
'llritems@fms.treas.gov'; Longnecker, Thomas L.
for an April 9th hearing before the Senate Judiciary Committees Subcom mittee on Crime and
Terrorism.
JW1559-000629
(b)(5) DP
JW1559-000630
(b)(5) DP
JW1559-000631
(b)(5) DP
JW1559-000632
(b)(5) DP
JW1559-000633
Subject:
Updated: Hearing Prep for Senate Judiciary Hearing on 4/9
Location:
Room 3226 (1111 Constitution) or Call in: 888-331-8226 ACCESS CODE: 4532324
Start:
Fri 4/5/2013 2:30 PM
End:
Fri 4/5/2013 3:30 PM
Show Time As:
Tentative
Recurrence:
(none)
Meeting Status:
Not yet responded
Organizer:
Sinno Suzanne
Required Attendees:
Haynes Patricia J; Lerner Lois G; Barre Catherine M; Amato Amy; Flax Nikole C
JW1559-000634
From:
Lerner Lois G
Sent:
Wednesday, April 03, 2013 1:19 PM
To:
Paz Holly O
Cc:
Daly Richard M; Marks Nancy J
Subject:
Attachments:
Importance:
High
Sorry for the delay--looked at this in numerous sessions and then lost my comments! I added
a bit to your comment pieces --nothing big--do we have a place here where we refer them to
the info we sent yesterday re :the 2 referrals. I tried to find, but cou ldn't seem to find the recs
to refer for investigation.
JW1559-000635
(b)(5) DP; (b)(3)/6103
JW1559-000636
(b)(5) DP; (b)(3)/6103
JW1559-000637
(b)(5) DP; (b)(3)/6103
JW1559-000638
(b)(5) DP; (b)(3)/6103
JW1559-000639
(b)(5) DP; (b)(3)/6103
JW1559-000640
(b)(5) DP; (b)(3)/6103
JW1559-000641
(b)(5) DP; (b)(3)/6103
JW1559-000642
(b)(5) DP; (b)(3)/6103
JW1559-000643
(b)(5) DP; (b)(3)/6103
JW1559-000644
(b)(5) DP; (b)(3)/6103
JW1559-000645
(b)(5) DP; (b)(3)/6103
JW1559-000646
(b)(5) DP; (b)(3)/6103
JW1559-000647
(b)(5) DP; (b)(3)/6103
JW1559-000648
(b)(5) DP; (b)(3)/6103
JW1559-000649
(b)(5) DP; (b)(3)/6103
JW1559-000650
(b)(5) DP; (b)(3)/6103
JW1559-000651
(b)(5) DP; (b)(3)/6103
JW1559-000652
(b)(5) DP; (b)(3)/6103
JW1559-000653
(b)(5) DP; (b)(3)/6103
JW1559-000654
(b)(5) DP; (b)(3)/6103
JW1559-000655
(b)(5) DP; (b)(3)/6103
JW1559-000656
(b)(5) DP; (b)(3)/6103
JW1559-000657
(b)(5) DP; (b)(3)/6103
JW1559-000658
(b)(5) DP; (b)(3)/6103
JW1559-000659
(b)(5) DP; (b)(3)/6103
JW1559-000660
(b)(5) DP; (b)(3)/6103
JW1559-000661
(b)(5) DP; (b)(3)/6103
JW1559-000662
(b)(5) DP; (b)(3)/6103
JW1559-000663
(b)(5) DP; (b)(3)/6103
JW1559-000664
(b)(5) DP; (b)(3)/6103
JW1559-000665
(b)(5) DP; (b)(3)/6103
JW1559-000666
(b)(5) DP; (b)(3)/6103
JW1559-000667
(b)(5) DP; (b)(3)/6103
JW1559-000668
(b)(5) DP; (b)(3)/6103
JW1559-000669
(b)(5) DP; (b)(3)/6103
JW1559-000670
(b)(5) DP; (b)(3)/6103
JW1559-000671
(b)(5) DP; (b)(3)/6103
JW1559-000672
(b)(5) DP; (b)(3)/6103
JW1559-000673
(b)(5) DP; (b)(3)/6103
JW1559-000674
(b)(5) DP; (b)(3)/6103
JW1559-000675
(b)(5) DP; (b)(3)/6103
JW1559-000676
(b)(5) DP; (b)(3)/6103
JW1559-000677
(b)(5) DP; (b)(3)/6103
JW1559-000678
(b)(5) DP; (b)(3)/6103
JW1559-000679
(b)(5) DP; (b)(3)/6103
JW1559-000680
(b)(5) DP; (b)(3)/6103
JW1559-000681
(b)(5) DP; (b)(3)/6103
JW1559-000682
(b)(5) DP; (b)(3)/6103
JW1559-000683
(b)(5) DP; (b)(3)/6103
JW1559-000684
(b)(5) DP; (b)(3)/6103
JW1559-000685
(b)(5) DP; (b)(3)/6103
JW1559-000686
(b)(5) DP; (b)(3)/6103
JW1559-000687
(b)(5) DP; (b)(3)/6103
JW1559-000688
(b)(5) DP; (b)(3)/6103
JW1559-000689
(b)(5) DP; (b)(3)/6103
JW1559-000690
(b)(5) DP; (b)(3)/6103
JW1559-000691
From:
Lerner Lois G
Sent:
To:
Cc:
Paz Holly O; Daly Richard M
Subject:
Attachments:
Attached are our comments regarding this draft. They should be read in concert with
yesterday's email about 2 specific factual situations. Let us know if you have any questions.
JW1559-000692
(b)(5) DP; (b)(3)/6103
JW1559-000693
(b)(5) DP; (b)(3)/6103
JW1559-000694
(b)(5) DP; (b)(3)/6103
JW1559-000695
(b)(5) DP; (b)(3)/6103
JW1559-000696
(b)(5) DP; (b)(3)/6103
JW1559-000697
(b)(5) DP; (b)(3)/6103
JW1559-000698
(b)(5) DP; (b)(3)/6103
JW1559-000699
(b)(5) DP; (b)(3)/6103
JW1559-000700
(b)(5) DP; (b)(3)/6103
JW1559-000701
(b)(5) DP; (b)(3)/6103
JW1559-000702
(b)(5) DP; (b)(3)/6103
JW1559-000703
(b)(5) DP; (b)(3)/6103
JW1559-000704
(b)(5) DP; (b)(3)/6103
JW1559-000705
(b)(5) DP; (b)(3)/6103
JW1559-000706
(b)(5) DP; (b)(3)/6103
JW1559-000707
(b)(5) DP; (b)(3)/6103
JW1559-000708
(b)(5) DP; (b)(3)/6103
JW1559-000709
(b)(5) DP; (b)(3)/6103
JW1559-000710
(b)(5) DP; (b)(3)/6103
JW1559-000711
(b)(5) DP; (b)(3)/6103
JW1559-000712
(b)(5) DP; (b)(3)/6103
JW1559-000713
(b)(5) DP; (b)(3)/6103
JW1559-000714
(b)(5) DP; (b)(3)/6103
JW1559-000715
(b)(5) DP; (b)(3)/6103
JW1559-000716
(b)(5) DP; (b)(3)/6103
JW1559-000717
(b)(5) DP; (b)(3)/6103
JW1559-000718
(b)(5) DP; (b)(3)/6103
JW1559-000719
(b)(5) DP; (b)(3)/6103
JW1559-000720
(b)(5) DP; (b)(3)/6103
JW1559-000721
(b)(5) DP; (b)(3)/6103
JW1559-000722
(b)(5) DP; (b)(3)/6103
JW1559-000723
(b)(5) DP; (b)(3)/6103
JW1559-000724
(b)(5) DP; (b)(3)/6103
JW1559-000725
(b)(5) DP; (b)(3)/6103
JW1559-000726
(b)(5) DP; (b)(3)/6103
JW1559-000727
(b)(5) DP; (b)(3)/6103
JW1559-000728
(b)(5) DP; (b)(3)/6103
JW1559-000729
(b)(5) DP; (b)(3)/6103
JW1559-000730
(b)(5) DP; (b)(3)/6103
JW1559-000731
(b)(5) DP; (b)(3)/6103
JW1559-000732
(b)(5) DP; (b)(3)/6103
JW1559-000733
(b)(5) DP; (b)(3)/6103
JW1559-000734
(b)(5) DP; (b)(3)/6103
JW1559-000735
(b)(5) DP; (b)(3)/6103
JW1559-000736
(b)(5) DP; (b)(3)/6103
JW1559-000737
(b)(5) DP; (b)(3)/6103
JW1559-000738
(b)(5) DP; (b)(3)/6103
JW1559-000739
(b)(5) DP; (b)(3)/6103
JW1559-000740
(b)(5) DP; (b)(3)/6103
JW1559-000741
(b)(5) DP; (b)(3)/6103
JW1559-000742
(b)(5) DP; (b)(3)/6103
JW1559-000743
(b)(5) DP; (b)(3)/6103
JW1559-000744
(b)(5) DP; (b)(3)/6103
JW1559-000745
(b)(5) DP; (b)(3)/6103
JW1559-000746
(b)(5) DP; (b)(3)/6103
JW1559-000747
(b)(5) DP; (b)(3)/6103
JW1559-000748
From:
Sent:
To:
Lerner Lois G
Cc:
Subject:
RE: 201210022-Discussion Draft_Report (IRS comments).doc
Lois,
Thank you for your feedback and thanks for responding early.
We appreciate it.
Ill get together with the team and discuss each comment. If we have any questions, we will let you know.
Troy
Sent: Wednesday, April 03, 2013 2:36 PM
Cc: Paz Holly O; Daly Richard M
Subject: 201210022-Discussion Draft_Report (IRS comments).doc
Attached are our comments regarding this draft. They should be read in concert with
yesterday's email about 2 specific factual situations. Let us know if you have any questions.
JW1559-000749
From:
Pendzick Michelle L
Sent:
To:
Lerner Lois G; Choi Robert S; Downing Nanette M; Templeman Monika A; Zuckerman
Andrew E; Paz Holly O; Surguy Vickie A; Thomas Cindy M; Weber JoAnna H; Griffin
Sylvia C; Kulick Leslie; McConkey Peter A; Kaufman Sara J; McClernan Betty A; Kerr
William Y; Hall Regeina D; Marx Dawn R; Fish David L; Kahn Joyce I; White Joleah;
Ghougasian Laurice A
Cc:
Grant Joseph H; Medina Moises C; Khakoo Imraan G
Subject:
Customer Sat Topline Reports (Oct - Dec 12)
Attachments:
EPEO Topline Report (Oct-Dec12).xls
Hello,
Please find attached the most recent customer satisfaction top -line reports covering October - December 2012. I was
happy to see an uptick in both Exam programs overall satisfaction scores.
These have also been posted to the SharePoint site.
Thank you,
Michelle
Michelle L. Pendzick
TE/GE, Strategic Planning
v. 202-683-9195
f. 202-283-9911
JW1559-000750
IRS TE/GE Customer Satisfaction Survey
Determination Letter Request
ROLLUP STATISTICS: October 2012 - December 2012
From surveys gathered through 3/12/2013
OVERALL SATISFACTION
Overall Satisfaction with Length of Process
Neutral
Dissat
(1-3)
(4,5)
Mean
%
%
5.35
16%
26%
4.01
41%
27%
Sat
(6,7)
%
58%
32%
Mean
5.37
4.13
Overall Satisfaction with IRS Communication

Application
Ease of Locating Application

Ease of Understanding Application
Ease of Completing Application
Time Spent Completing Application
4.96
5.59
5.05
4.87
4.47
24%
10%
18%
20%
27%
27%
29%
37%
39%
43%
49%
62%
46%
41%
31%
5.10
6.09
5.72
5.63
5.32
19%
3%
5%
5%
10%
31%
21%
32%
36%
41%
51%
77%
63%
59%
50%
How Quickly Received Acknowledgement Letter

Clarity of Acknowledgement Letter
Time it Took the IRS to Contact You
Overall Satisfaction with Agent
Courtesy of Agent
Knowledge of Agent
How Well Agent Listened
How Thoroughly Agent Answered Questions
Communication About the Status of
Determination
Consideration Given Prior Information

Description of Add'l Information Needed
Explanation of Why Add'l Information
Requested
Time Given to Respond to Add'l Requests

Time Spent Responding to Requests
Timeliness of Agent in Responding
Ease of Understanding Determination Letter
4.80
4.82
4.42
5.27
5.78
5.62
5.47
5.46
26%
25%
33%
19%
10%
13%
15%
16%
30%
29%
29%
22%
20%
20%
22%
21%
45%
46%
38%
59%
70%
67%
63%
63%
5.59
5.11
4.16
5.56
6.15
5.59
5.73
5.62
11%
19%
38%
%
10%
2%
9%
9%
9%
25%
31%
32%
31%
18%
33%
25%
29%
65%
50%
30%
60%
80%
58%
66%
62%
5.05
21%
24%
55%
5.29
16%
29%
55%
5.18
5.23
19%
17%
25%
26%
56%
57%
5.56
5.51
11%
11%
29%
30%
60%
58%
5.02
22%
26%
53%
5.30
15%
31%
54%
5.17
4.99
5.00
6.12
18%
22%
24%
5%
28%
29%
23%
15%
54%
50%
53%
80%
5.60
5.10
5.58
6.14
9%
17%
10%
3%
29%
38%
29%
17%
61%
45%
61%
80%
Did IRS Contact You in Timeframe
(Acknowledgement Letter)
Consistency of IRS (POA only)
Number of Additional Requests

Method of Most Useful Communication (Only
Respondents Who Had 1+ Requests)
(Check All That Apply)
Visit www.irs.gov
Yes
No
I Initiated
%
%
%
Yes
59%
28%
13%
46%
Mean
5.27
None
%
14%
Phone
%
41%
Yes
%
69%
Incons
(1-3)
%
16%
One
%
46%
Fax
%
13%
No
%
32%
Neutral
(4,5)
%
28%
Two
%
26%
Mail
%
46%
Cons
(6,7)
%
56%
Three +
%
14%
Employee Plans
Dissat Neutral
(1-3)
(4,5)
%
%
15%
25%
42%
28%
Sat
(6,7)
60%
30%
Employee Plans
No
I Initiated
%
%
48%
6%
Incons Neutral
Cons
(1-3)
(4,5)
(6,7)
%
%
%
17%
33%
51%
Two
Three +
One
%
%
%
45%
31%
22%
Fax
Mail
%
%
52%
19%
No
58%
Mean
5.16
None
%
3%
Phone
%
30%
Yes
%
43%
Response Rates
Employee Plans
Mailed Returned Response Rate

Mailed Returned
Response Rate
36%
567
1093
384
1200
49%
JW1559-000751
Exempt Organizations Examination
How Well Notification Letter Communicated Process
Explanation of What is Required at the Initial Meeting
Time Given to Prepare for Initial Meeting
Time Spent Preparing for Initial Meeting
Overall Satisfaction with Initial Meeting
Courtesy of Agent
Knowledge of Agent
Explanation of Exam Process
Explanation of Taxpayer Rights
Amount of Information You Were Asked to Provide
Reasonableness of Agent's Requests
Consideration Given to Prior Information
Explanation of Why Add'l Information Requested
Communication About Status of Exam
Ease of Understanding Exam Letter/Report
Explanation of Why Adjustments Were Made
How Did Your Opinion of IRS Change
Did Agent Contact You by Telephone

Personal Interaction Regarding Resolution
Visit www.irs.gov
Mean
5.91
5.33
5.87
6.17
5.74
5.83
5.86
5.41
6.11
6.55
6.19
6.17
6.24
6.09
6.22
5.80
6.13
6.01
5.94
5.88
5.97
5.62
5.76
6.06
6.01
5.99
Better
%
41%
Yes
%
88%
None
%
30%
Phone
%
36%
Yes
%
71%
Mean
5.64
Yes
%
22%
Mailed
478
Dissat (1-3) Neutral (4,5) Sat (6,7)
%
%
%
5%
23%
72%
14%
29%
57%
7%
24%
70%
4%
17%
79%
6%
30%
64%
4%
26%
70%
4%
23%
72%
10%
37%
53%
2%
20%
78%
2%
7%
92%
5%
14%
81%
5%
14%
81%
4%
12%
84%
4%
19%
77%
4%
14%
83%
7%
23%
70%
5%
13%
82%
6%
17%
78%
5%
20%
76%
7%
22%
72%
5%
21%
74%
9%
29%
62%
8%
23%
70%
4%
20%
76%
4%
20%
76%
4%
20%
76%
Same
Worse
%
%
54%
4%
No
12%
Three +
One
Two
%
%
%
32%
19%
19%
In-Person
Mail/Fax
%
%
29%
35%
No
29%
Incons (1-3) Neutral (4,5) Cons (6,7)
%
%
%
8%
20%
72%
No
79%
Response Rates
Returned
191
Response Rate
41%
JW1559-000752
Employee Plans Examination
How Well Notification Letter Communicated Process
Explanation of What is Required at the Initial Meeting
Time Given to Prepare for Initial Meeting
Time Spent Preparing for Initial Meeting
Overall Satisfaction with Initial Meeting
Courtesy of Agent
Knowledge of Agent
Explanation of Exam Process
Explanation of Taxpayer Rights
Amount of Information You Were Asked to Provide
Reasonableness of Agent's Requests
Consideration Given to Prior Information
Explanation of Why Add'l Information Requested
Communication About Status of Exam
Ease of Understanding Exam Letter/Report
Explanation of Why Adjustments Were Made
How Did Your Opinion of IRS Change
Did Agent Contact You by Telephone

Personal Interaction Regarding Resolution
Visit www.irs.gov
Mean
5.78
5.19
5.69
5.94
5.54
5.64
5.84
5.17
5.93
6.25
6.08
5.95
6.02
5.93
5.95
5.33
5.89
5.71
5.66
5.58
5.89
5.39
5.30
5.64
5.84
6.00
Better
%
32%
Yes
%
86%
None
%
11%
Phone
%
36%
Yes
%
61%
Mean
5.91
Yes
%
16%
Employee Plans
Dissat (1-3) Neutral (4,5)

%
%
8%
22%
18%
28%
9%
25%
9%
16%
8%
32%
7%
29%
5%
23%
14%
39%
6%
20%
6%
10%
6%
16%
6%
21%
6%
17%
6%
21%
7%
18%
13%
30%
7%
19%
9%
23%
9%
24%
11%
26%
6%
21%
13%
29%
17%
25%
10%
25%
6%
24%
4%
20%
Sat (6,7)
71%
54%
66%
75%
59%
64%
71%
47%
75%
85%
78%
73%
76%
74%
76%
56%
74%
68%
67%
63%
72%
58%
59%
66%
70%
76%
Employee Plans
Same
Worse
%
%
61%
6%
No
14%
Three +
One
Two
%
%
%
42%
29%
18%
In-Person
Mail/Fax
%
%
19%
46%
No
39%
Incons (1-3) Neutral (4,5) Cons (6,7)
%
%
%
9%
19%
72%
No
84%
Response Rates
Employee Plans
Mailed
Returned
Response Rate
1227
514
43%
JW1559-000753
From:
Kindell Judith E
Sent:
To:
Lerner Lois G; Biss Meghan R
Cc:
Marx Dawn R
Subject:
FW: Senate hearing
Attachments:
Here are my suggestions. I only looked at the 501(c)(4) part.
From: Flax Nikole C
To: Lemons Terry L; Sinno Suzanne; Barre Catherine M; Weber Richard; Haynes Patricia J; Lunger Richard; Sterner
Christopher B; Vozne Jennifer L; Lerner Lois G; Kindell Judith E
Cc: Onorato Corina R
Subject: Senate hearing
We are going to proceed with CI testi fying for IRS at the hearing. Attached is a early version of the written testimony
where I tried to separate the issues and make it clear that CI will not be discussing substantive c4 rules. It needs some
look? Adding Chris who supplied th e 7206 material. We'll also need a shorter oral testimony and a prep with Steve on
Thanks
JW1559-000754
(b)(5)/DP
JW1559-000755
(b)(5)/DP
JW1559-000756
(b)(5)/DP
JW1559-000757
(b)(5)/DP
JW1559-000758
(b)(5)/DP
JW1559-000759
(b)(5)/DP
JW1559-000760
(b)(5)/DP
JW1559-000761
(b)(5)/DP
JW1559-000762
(b)(5)/DP
JW1559-000763
(b)(5)/DP
JW1559-000764
(b)(5)/DP
JW1559-000765
(b)(5)/DP
JW1559-000766
Subject:
Meeting with Senate PSI (Levin and McCain staff) to discuss 501(c)(4) letters
Start:
Wed 4/10/2013 1:00 PM
End:
Wed 4/10/2013 2:00 PM
Show Time As:
Tentative
Recurrence:
(none)
Meeting Status:
Not yet responded
Organizer:
Sinno Suzanne
Required Attendees:
Lerner Lois G; Marks Nancy J; Flax Nikole C; Barre Catherine M
JW1559-000767
From:
Lerner Lois G
Sent:
To:
Sinno Suzanne
Subject:
Accepted: Meeting with Senate PSI (Levin and McCain staff) to discuss 501(c)(4) letters
JW1559-000768
From:
Lerner Lois G
Sent:
To:
Kindell Judith E
Cc:
Sinno Suzanne
Subject:
Attachments:
Importance:
High
See my questions on page 11 and fn7 We need the info ASAP so Suzie can work on getting
this through the process. Otherwise I agree with your suggested edits Thanks!
JW1559-000769
(b)(5) DP
JW1559-000770
(b)(5) DP
JW1559-000771
(b)(5) DP
JW1559-000772
(b)(5) DP
JW1559-000773
(b)(5) DP
JW1559-000774
(b)(5) DP
JW1559-000775
(b)(5) DP
JW1559-000776
(b)(5) DP
JW1559-000777
(b)(5) DP
JW1559-000778
(b)(5) DP
JW1559-000779
(b)(5) DP
JW1559-000780
(b)(5) DP
JW1559-000781
From:
Lerner Lois G
Sent:
To:
Cc:
Marx Dawn R
Subject:
FW: Levin 501(c)(4) letters - 1 of 6
Attachments:
33118_Complaince guide for Tax-Exempt Organizations.pdf; 33118_Final_Levin.pdf;
33118_Incoming_Levin.pdf; 33118_Levin _Attachment2.pdf; 34450_Final_Levin.pdf;
34450_Incoming_Levin.pdf; 35510_Incoming_Levin.pdf; 35510_Levin.response.pdf
Importance:
High
Please print all--more to come.
Lois G. Lerner
From: Sinno Suzanne
To: Lerner Lois G; Marks Nancy J; Flax Nikole C; Barre Catherine M
Subject: Levin 501(c)(4) letters - 1 of 6
JW1559-000782

INTERNAL REVENUE SERVICE
TAX-EXEMPT AND G OVERNMENT ENTITIES
EXEMPT ORG ANIZATIONS ,
Compliance
Guide for
Tax-Exempt
Organizations
(Other than 501 (c)(3)
Public Charities and
Private Foundations) ,
Inside:
Activities that may jeopardize
exempt status,
Federal information returns, tax
returns or notices that must be filed ,
Recordkeepingwhy, what, when ,
Changes to be reported to the IRS ,
Required public disclosures ,
Resources for tax-exempt organizations ,
JW1559-000783
CONTENTS ,
What activities may jeopardize
an organizations tax-exempt status? 2 ,
Private Benefit and Inurement 2,
Political Campaign Activities 3,
Legislative Activities 5,
What federal information returns,
tax returns and notices must be filed? 6,
Form 990, Return of Organization Exempt From Income Tax, Form
990-EZ, Short Form Return of Organization Exempt From Income Tax

and Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt
Organizations not Required To File Form 990 or 990-EZ 6,
Form 990-T, Exempt Organization Business Income Tax Return 10,
Employment Tax Returns 12,
Why keep records? 14,
Evaluate Programs 14,
Monitor Budgetary Results 14,
Prepare Financial Statements 15,
Prepare Annual Information and Tax Returns 15,
Identify Sources of Receipts 15,
Substantiate Revenues, Expenses and Deductions for
Unrelated Business Income Tax (UBIT) Purposes 15,
What records should be kept? 16,
Accounting Periods and Methods 16,
Supporting Documents 17,
How long should records be kept? 20 ,
Record Retention Periods 20,
How should changes be reported to the IRS? 20 ,
Reporting Changes on the Annual Information Return 20,
Determination Letters and Private Letter Ruling Requests 21 ,
What disclosures are required? 22 ,
Public Inspection of Exemption Applications and Annual Returns 22,

Sale of Free Government Information 23,
Solicitation Notice 23,
Nondeductible Lobbying and Political Expenditures 24
Charitable Contributions 25,
How to get IRS assistance and information 26 ,
Specialized Assistance for Tax-Exempt Organizations 26,
Tax Publications for Exempt Organizations 27,
Forms for Exempt Organizations 27,
General IRS Assistance 28,
Tax-exempt organization reference chart 29,
JW1559-000784
Compliance
Guide for
Tax-Exempt
Organizations
(Other than 501 (c)(3)
Public Charities and
Private Foundations) ,
(a)
ederal tax law provides tax benefits to nonprofit organiza-
tions recognized as exempt from federal income tax under

section 501 (a) of the Internal Revenue Code (the Code)
The Code requires that tax-exempt organizations comply with
federal tax law to maintain tax-exempt status and avoid penalties
In this publication, the IRS focuses on organizations that have
been granted tax exemption under section 501 (a) of the Code
other than section 501 (c)(3) public charities and private foundations and section 527 political organizations For information
on the compliance requirements of 501 (c)(3) public charities
and private foundations, see Publications 4221 -PC, Compliance
Guide for 501(c)(3) Public Charities, and 4221-PF, Compliance
Guide for 501(c)(3) Private Foundations For information on 527
political organizations, see www.irs.gov/polorgs

This publication addresses activities that could jeopardize a
tax-exempt organizations exempt status and identifies general
compliance requirements on recordkeeping, reporting, and
disclosure for exempt organizations (EOs) Content includes
references to the statute, Treasury regulations, IRS publications
and IRS forms with instructions This publication is neither
comprehensive nor intended to address every situation
To learn more about compliance rules and procedures that
apply to organizations that are exempt from federal income
tax, see IRS Publication 557, Tax-Exempt Status for Your
Organization, as well as the Life Cycles of Sections 501(c)(3), (4),
(5) and (6) Organizations and Information for Other Non-profit
Organizations on www.irs.gov/eo Stay abreast of new EO information, also on this Web site, by signing up for the EO Update, a
free e-newsletter for tax-exempt organizations and practitioners
who represent them For further assistance, consult a tax adviser
JW1559-000785
What activities may jeopardize an
organizations tax-exempt status?
Once a non-profit organization has completed the application process and has established that it is exempt from federal
income tax, the organizations officers, directors, trustees and
employees still have ongoing responsibilities They must ensure
that the organization maintains its tax-exempt status and
meets its ongoing compliance responsibilities
A tax-exempt organization that does not restrict its participation in certain activities and does not absolutely refrain from
others, risks failing the operational requirements for exemption
from income tax and jeopardizing its tax-exempt status The
following summarizes certain limitations on the activities of
some common types of tax-exempt organizations
Private Benefit and Inurement ,
Many types of non-501 (c)(3) tax-exempt organizations including social welfare organizations, business leagues and trade
associations, social clubs, voluntary employees' beneficiary
associations, cemetery companies, and veterans' organizations,
among others, are prohibited, by statute, from allowing inurement of net earnings or assets of the organization to benefit
any insider An insider is a person who has a personal or private
interest in the activities of the organization such as an officer,
director, or a key employee An example of prohibited inurement would include payment of unreasonable compensation
to an insider
The types of activities that may be considered to constitute
prohibited inurement of earnings may differ from one Code
section to another depending on the specified exempt purposes of the organization Accordingly, an activity that will be
considered to result in inurement of earnings to a member of
a labor organization may not result in inurement of earnings
to a member of an agricultural organization or a social welfare
organization because the organizations are organized and
operated for different exempt purposes Go to the Life Cycles
of 501 (c)(4), (5) and (6) organizations at www.irs.gov/eo for
further information about the inurement prohibition and
providing benefits to members In any case, inurement may
jeopardize an organization's exempt status
JW1559-000786
501 (c)(4) Social Welfare Organizations ,
In cases where a 501 (c)(4) organization provides an excess
economic benefit to a person who is in a position to exercise
substantial influence over its affairs, the organization has
engaged in an excess benefit transaction (see Reporting
Excess Benefit Transactions on page 8) that subjects
the person to possible excise taxes Go to the Life Cycle of
a 501 (c)(4) organization at www.irs.gov/eo for details about
inurement, private benefit, and excess benefit transactions
Political Campaign Activities ,

Section 501 (c)(4), (5) and (6) organizations may engage in
political campaign activities on behalf of or in opposition to
candidates for public office Political campaign activities are
those that influence or attempt to influence the selection,
nomination, election or appointment of an individual to a
federal, state, or local public office In order to retain its taxexempt status under section 501 (c)(4), (5) or (6), an organization must ensure that its political campaign activities do
not constitute the organizations primary activity

When a 501 (c)(4), (5) or (6) organizations communication
explicitly advocates the election or defeat of an individual
to public office, the communication is considered political
campaign activity A tax-exempt organization that makes
JW1559-000787
expenditures for political campaign activities shall be subject
to tax in an amount equal to it its net investment income for
the year or the aggregate amount expended on political
campaign activities during the year, whichever is less
Sometimes a 501 (c)(4), (5) or (6) organization takes positions
on public policy issues that divide candidates in an election
for public office In these situations, the organization needs
to consider all the facts and circumstances of the communication in order to determine whether the expenditure is directed
toward campaign intervention or is merely issue advocacy
related to the organizations exempt purpose

The IRS considers the following factors that tend to show an
advocacy communication is political campaign activity when
evaluating a communication on a public policy issue:
n
n
The communication identifies a candidate for public office;
The timing of the communication coincides with
an electoral campaign;
n
n
The communication targets voters in a particular election;
The communication identifies the candidates position on the
public policy issue that is the subject of the communication;
The position of the candidate on the public policy issue has
been raised as distinguishing the candidate from others in
the campaign, either in the communication itself or in other
public communications; and
The communication is not part of an ongoing series of
substantially similar advocacy communications by the
organization on the same issue
Factors that tend to show that an advocacy communication
on a public policy issue is not political campaign activity
include the following:
The absence of any one or more of the factors listed above;
The communication identifies specific legislation, or a
specific event outside the control of the organization, that
the organization hopes to influence;
The timing of the communication coincides with a specific
event outside the control of the organization that the
organization hopes to influence, such as a legislative vote
or other major legislative action (for example, a hearing
before a legislative committee on the issue that is the
subject of the communication);
JW1559-000788
The communication identifies the candidate solely as a
government official who is in a position to act on the public
policy issue in connection with the specific event (such as
a legislator who is eligible to vote on the legislation); and
The communication identifies the candidate solely in the
list of key or principal sponsors of the legislation that is the
subject of the communication
In lieu of using its own funds, a 501 (c)(4), (5) or (6) organization may establish a section 527 political organization, called
a separate segregated fund, to engage in political campaign
activities Separate segregated funds must give notice to the
IRS in order to be tax exempt unless the fund is required to
report to the Federal Election Commission as a political committee, it reasonably anticipates that it will always have less
than $25,000 in gross receipts for any taxable year or meets
one of the other exceptions Access www.irs.gov/polorgs for
additional information about political organizations
Legislative Activities ,
In general, section 501 (c)(4), 501 (c)(5) or 501 (c)(6) tax-exempt
organizations may engage in an unlimited amount of lobbying
(ie, attempting to influence legislation), provided that the
lobbying is related to the organizations exempt purpose An
organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members
or employees of a legislative body for purposes of proposing,
supporting or opposing legislation, or if the organization
advocates the adoption or rejection of legislation
There are non-tax related restrictions on lobbying that taxexempt organizations should be aware of as well Section 18
of the Lobbying Disclosure Act of 1995, P L1 04-65, prohibits
section 501 (c)(4) organizations from receiving federal grants,
loans, or other awards if they engage in lobbying activities,
even if they conduct the lobbying with their own funds
Review the Life Cycles of 501 (c)(4), 501 (c)(5) and 501 (c)(6)
organizations at www.irs.gov/eo for information about the
rules prohibiting substantial unrelated lobbying activities as
well as the notice and reporting requirements applicable to
certain organizations that incur nondeductible lobbying and
political expenses
JW1559-000789
What federal information returns,
tax returns and notices must be filed?
Most tax-exempt organizations have annual information
reporting obligations under the Code to ensure that they
continue to be recognized as tax-exempt And, although
they are exempt from federal income tax, they may be liable
for employment taxes, unrelated business income tax, excise
taxes, and certain state and local taxes, which could result in
additional filing requirements
Form 990 , Return of Organization Exempt From Income
Tax, Form 990-EZ , Short Form Return of Organization
Exempt From Income Tax and Form 990-N , Electronic
Notice (e-Postcard) for Tax-Exempt Organizations Not
Required To File Form 990 or 990-EZ ,

Tax-exempt organizations generally must file either a:
Form 990, Return of Organization Exempt From Income Tax;
Form 990-EZ, Short Form Return of Organization Exempt
From Income Tax; or
990-N, Electronic Notice (e-Postcard) for Tax-Exempt
Organizations Not Required To File Form 990 or 990-EZ
The type of form or notice required generally is determined
by the amount of the exempt organizations gross receipts or
total assets
Filing Thresholds,
In 2008, the IRS redesigned Form 990 and adjusted the filing
thresholds over a graduated three-year transition period to
allow organizations to become familiar with and prepare to
use the new form An organizations requirement to file the
redesigned Form 990 is determined by the amount of its gross
receipts or total assets Some tax-exempt organizations began
to use the new form in 2009 to report on activities for tax
year 2008 Others wont begin until they report on the 2010
tax year in 2011 The filing threshold for Form 990-N will also
change in 2010 The charts, above right, explain which Form
990 a tax-exempt organization is required to file in the coming
tax years
Filing Dates,
Forms 990, 990-EZ and 990-N must be filed by the 15th day
of the fifth month after the end of the organizations annual
accounting period For example, if an organizations tax period
ends on December 31, 2010, the form is due May 15, 2011
JW1559-000790
2009 Tax Year
(Filed in 201 0 or 2011 ) ,
Form
to File,
Gross receipts normally $25,000,
990-N,
Gross receipts > $25,000 and < $500,000,

and Total assets < $1.25 million ,
990-EZ
or 990,
Gross receipts $500,000, or
Total assets $1.25 million ,
2010 Tax Year and later
(Filed in 2011 and later) ,
990,
Form
to File,
Gross receipts normally $50,000,
990-N ,
Gross receipts > $50,000 and < $200,000, and

Total assets < $500,000,
990-EZ
or 990,
Gross receipts $200,000, or
Total assets $500,000,
990,
The due date for Form 990 and 990-EZ may be extended
automatically for three months by filing Form 8868,
Application for Extension of Time To File an Exempt
Organization Return , before the due date An additional
three-month extension may be requested on Form 8868
if the organization shows reasonable cause why the return
cannot be filed by the extended due date

An organization cannot request an extension for filing the
Form 990-N; however, there is no penalty for filing it late

See Filing Penalties and Revocation of Tax-Exempt Status
on page 9
Form 990 and Form 990-EZ ,
The Forms 990 and 990-EZ consist of a core form and
schedules Each organization that files the form must complete the entire core form Form 990 filers will determine
which schedules, if any, they must complete by answering
the questions in Part IV, Checklist of Required Schedules

Form 990-EZ filers may be required to file schedules as
well, as noted in the form instructions
Filing Exceptions,
Tax-exempt organizations not required to file Forms 990
or 990-EZ include:
Certain organizations affiliated with governmental units;
Organizations included in a group return;
Black Lung Benefit Trusts, which file the Form 990-BL;
Farmers Cooperative Associations, which file Form 1120-C;
and
JW1559-000791
Organizations whose annual gross receipts are normally
$25,000 or less ($50,000 or less for tax years 201 0 and
later) See Form 990-N, below
If a tax-exempt organizations gross receipts are normally
$25,000 or less ($50,000 or less for tax years 2010 and later),
and the organization elects to file the Form 990 or Form 990-EZ,
it must complete the entire return; otherwise, it must file the
Form 990-N An organization that only completes those items
of information on the Form 990 or Form 990-EZ that are
required to be provided on an electronic Form 990-N will not
be deemed to have met its electronic notice requirement

Reporting Excess Benefit Transactions ,
If a 501 (c)(4) social welfare organization believes it provided
an excess benefit to a person who is in a position to exercise
substantial influence over the organizations affairs, it must
report the transaction on Form 990 or Form 990-EZ Excess
benefit transactions are governed by section 4958 of the
Code Additional information can be found in the Form 990
and Form 990-EZ instructions

Form 990-N (e-Postcard) ,
An organization with gross receipts normally $25,000 or less
(increasing to $50,000 beginning with the 201 0 tax year) is
not required to file Form 990 (or Form 990-EZ) Instead, the
organization is required to electronically submit Form 990-N,
Electronic Notice (e-Postcard) for Tax-Exempt Organizations
Not Required To File Form 990 or 990-EZ

An organization is required to provide the following
information on Form 990-N:
the organizations legal name;
any other names the organization uses;
the organizations mailing address;
JW1559-000792
the organizations Web site address (if applicable);
the organizations taxpayer identification number (TIN);
name and address of a principal officer of the organization;
the organizations tax year;
a statement that the organizations annual gross receipts
are normally $25,000 or less ($50,000 or less beginning
with the 2010 tax year); and
if applicable, a statement that the organization has
terminated or is terminating (going out of business)
By submitting the electronic notice on Form 990-N, an
organization acknowledges that it is not required to file a
Form 990 or 990-EZ because its gross receipts are normally
$25,000 or less ($50,000 beginning with the 201 0 tax year)

In order to make this determination, the organization must
keep records that enable it to calculate its gross receipts
Filers may access the user-friendly filing system to file a
Form 990-N at www.irs.gov/eo or by going directly to the
filing system Web site at http://epostcard.form990.org Read
Filing Penalties and Revocation of Tax-Exempt Status,

below, for consequences for failure to file this annual
electronic notice, and www.irs.gov/eo for information about
the Form 990-N
FILING PENALTIES AND
REVOCATION OF TAX-EXEMPT STATUS ,

If a Form 990 or Form 990-EZ is not filed by its due date, the IRS
may assess penalties on the organization of $20 per day until it
is filed. This penalt y also applies when the filer fails to include
required information or to show correct information. The penalty
for failure to file a return or a complete return may not exceed the
lesser of $10,000 or 5 percent of the organizations gross receipts.
For an organization that has gross receipts of over $1 million for
the year, the penalty is $100 a day up to a maximum of $50,000.
The IRS may impose penalties on organization managers who do
not comply with a written demand that the information be filed.
There is no penalty for filing Form 990-N late.
Section 6033(j) of the Code provides that failure to file Form 990,
Form 990-EZ, or Form 990-N for three consecutive years results in
revocation of tax-exempt status as of the filing due date for the
third return. An organization whose exemption is revoked under
this section must apply for reinstatement by filing a Form 1024 and
paying a user fee, whether or not the organization was originally
required to file for exemption. Reinstatement of exemption may
be retroactive if the organization shows that the failure to file was
for reasonable cause. Information with respect to the implementation of Section 6033(j) is available at www.irs.gov/eo.
JW1559-000793
e-Filing Requirements ,
Certain tax-exempt organizations are required to electronically
file with the IRS, based on their financial activity
Tax-exempt organizations with $1 0 million or more in total
assets and that also file at least 250 returns in a calendar year,
(including income, excise, employment tax, and information
returns such as Forms W-2 and 1099), are required to electronically file Form 990
Tax-exempt organizations required to file Form 990-N must
do so electronically There is no paper form
Other filers may elect to file Form 990 electronically Click
on the IRS e-file logo on the IRS Web site to get the facts
on e-filing
Form 990-T, Exempt Organization
Business Income Tax Return ,
Even if a tax-exempt organization is not required to file a
Form 990 or Form 990-EZ, it must file a Form 990-T, Exempt
Organization Business Income Tax Return , if it has $1,000 or
more of gross income from an unrelated trade or business
during the year Gross income is gross receipts minus cost of
goods sold Net income from income-producing activities is
taxable if the activities:
constitute a trade or business;
are regularly carried on; and
are not substantially related to the organizations
exempt purpose
Special rules for organizations exempt under sections 501 (c)
(7), (9), (17), and (19) are described in Publication 598, Tax on
Unrelated Business Income of Exempt Organizations
A tax-exempt organization must pay quarterly estimated tax
on unrelated business income if it expects its tax for the year
to be $500 or more Form 990-W, Estimated Tax on Unrelated
Business Taxable Income for Tax-Exempt Organizations , is a
worksheet to determine the amount of estimated tax payments required

Exceptions and Special Rules ,
Income from certain business activities are excepted from the
definition of unrelated business income Earnings from these
sources are not subject to the unrelated business income tax

Exceptions generally include business income from:
10
JW1559-000794
activities, including fundraisers, that are conducted by
volunteer workers, or where donated merchandise is sold;
qualified conventions and trade shows;
qualified sponsorship payments; and
qualified bingo games
Income from investments and certain passive activities are
usually excluded from the calculation of unrelated business
activity Examples of this type of income include earnings from
routine investments such as certificates of deposit, savings
accounts, or stock dividends, royalties, certain rents from real
property, and certain gains or losses from the sale of property
Special rules apply to income derived from real estate or other
investments purchased with borrowed funds Such income is
called debt-financed income Debt-financed income generally is subject to the unrelated business income tax
See also Publication 598, Taxon Unrelated Business Income
of Exempt Organizations for special rules for organizations
exempt under sections 501 (c)(7), (9), and (17)
Patient Protection and Affordable Care Act (ACA) Small
Business Health Care Tax Credit Reported on Form 990-T ,
For the years 2010 to 2013, many small tax-exempt
organizations that provide health insurance coverage to
their employees may qualify for a special tax credit A
small tax-exempt employer may be entitled to a maximum
credit of 25% of the employers health insurance premium
expenses Eligible small tax-exempt employers described in
Code section 501 (c) may claim the refundable credit by filing
a Form 990-T with an attached Form 8941 showing the
calculation of the claimed credit A tax-exempt employer is
not eligible to claim the credit unless it is an organization
described in Code section 501 (c) that is exempt from tax
under Code section 501 (a) Consult IRS.gov for further
information
FORM 990-T FILING PENALTIES ,
An organization may be subject to interest and penalty charges
if it files a late return, fails to pay tax when due, or fails to pay
estimated tax, if required.
11
JW1559-000795
Proxy Tax Reported on Form 990-T ,
The Code imposes reporting and notice requirements on certain tax-exempt organizations described in sections 501 (c)(4)
other than veterans organizations, 501 (c)(5) other than labor
organizations, and 501 (c)(6) that incur nondeductible lobbying and political expenses See also Nondeductible Lobbying
and Political Expenditures on page 24

Organizations that do not provide notices of amounts of
membership dues allocable to nondeductible lobbying
and political campaign expenditures are subject to tax
(commonly called a proxy tax) under IRC section 6033 (e)(2)
on the amount of the expenditures An organization must
report the tax on Form 990-T, Exempt Organization Business
Income Tax Return (and proxy tax under section 6033(e)) , at
line 37 For information on computing the tax, please see the
Form 990-T instructions
To learn about unrelated business income, refer to Publication
598, Tax on Unrelated Business Income of Exempt Organizations ,
Form 990-T instructions, and Form 990-W instructions at
www.irs.gov
Employment Tax Returns ,
Like other employers, all tax-exempt organizations that pay
wages to employees must withhold, deposit, and pay employment tax, including federal income tax withholding and social
security and Medicare (FICA) taxes A tax-exempt organization
must withhold federal income and FICA taxes from employee
wages and pay FICA on each employee paid more than $100
12
JW1559-000796
in wages during a calendar year To know how much income
tax to withhold, an organization should have a Form W-4,
Employees Withholding Allowance Certificate , on file for each
employee Employment taxes are reported on Form 941,
Employers QuarterlyFederal Tax Return

If a small employer (one who has withheld employment taxes
of $1,000 or less during the year) has been instructed by
IRS to file Form 944, Employers Annual Federal Tax Return,

instead of Form 941, the employer must do so The employer
must File Form 944 even if there is no tax due or if the taxes
exceed $1,000 unless IRS tells it to file Form 941 (or it is filing
a final return) See the instructions to Form 944 for information on how to have the filing requirement changed from
Form 944 to Form 941

Any organization that fails to withhold and pay employment
tax may be subject to penalties In addition, if an individual
responsible for collecting and paying over employment taxes
willfully fails to so do, that person may be found personally
liable for the trust fund taxes (employees withholding and
their part of the FICA taxes)

Tax-exempt organizations (other than those described
in 501 (c)(3)) are also liable for tax under the Federal
Unemployment Tax Act (FUTA) for each employee whose
wages are $50 or more during a calendar quarter if, during
the current or preceding tax year, the organization had one
or more employees at any time in each of 20 calendar weeks
or the organization paid wages of $1,500 or more in any
calendar quarter
Tax-exempt organizations do not generally have to withhold
or pay employment tax on payments to independent contractors, but they may have information reporting requirements
If an organization incorrectly classifies an employee as an
independent contractor, it may be held liable for employment
taxes for that worker

The requirements for withholding, depositing, reporting and
paying employment taxes are explained in Publication 15,
Circular E, Employers Tax Guide For help in determining if
workers are employees or independent contractors, see
Publication 15-A, Employers Supplemental Tax Guide

Publication 557, Tax-Exempt Status for Your Organization ,
covers the employment tax responsibilities of public charities

These IRS publications can be downloaded at www.irs.gov
13
JW1559-000797
Why keep records?
In general, a tax-exempt organization must maintain books
and records to show that it complies with tax rules The organization must be able to document the sources of receipts and
expenditures reported on Form 990, Return of Organization
Exempt From Income Tax or Form 990-EZ, Short Form Return
of Organization Exempt From Income Tax, and Form 990-T,
Exempt Organization Business Income Tax Return See Prepare
Annual Information and Tax Returns , right

If an organization does not keep required records, it may not
be able to show that it qualifies for tax-exempt status Thus,
the organization may lose its tax-exempt status In addition, a
tax-exempt organization may not be able to complete its returns
accurately and may be subject to penalties described under Filing
Penalties and Revocation of Tax-Exempt Status on page 9

When good recordkeeping systems are in place, a tax-exempt
organization can evaluate the success of its programs, monitor
its budget, and prepare its financial statements and returns
Evaluate Programs ,
A tax-exempt organization can use records to evaluate the
success of its programs and determine whether they are
achieving desired results Good records can also help an
organization identify problem areas and determine what
changes it may need to make to improve performance
Monitor Budgetary Results ,
Without proper financial records, it is difficult for a tax-exempt
organization to assess whether the organization has been
successful in adhering to budgetary guidelines The ability to
14
JW1559-000798
monitor income and expenses and ensure that the organization is operating within its budget is crucial to successful
stewardship of a tax-exempt organization
Prepare Financial Statements ,
It is important to maintain sufficient financial information
in order to prepare accurate and timely annual financial
statements A tax-exempt organization may need these
statements when it is working with banks, creditors,
contributors, and funding organizations Some states
require tax-exempt organizations to make audited financial
statements publicly available
Prepare Annual Information and Tax Returns ,

Records must support income, expenses, and credits reported
on Form 990 series and other tax returns Generally, these
are the same records used to evaluate programs and prepare
financial statements Books and records of tax-exempt organizations must be available for inspection by the IRS If the IRS
examines a tax-exempt organizations returns, the organization must have records to explain items reported Having a
complete set of records will speed up the examination
Identify Sources of Receipts ,
Tax-exempt organizations may receive money or property
from many sources With thorough recordkeeping, an organization can identify the sources of receipts Organizations
need this information to separate program from non-program
receipts, taxable from non-taxable income and to complete
appropriate schedules of Form 990
Substantiate Revenues, Expenses and Deductions
for Unrelated Business Income Tax (UBIT) Purposes ,

A tax-exempt organization may need records to substantiate
the amount, if any, of unrelated business taxable income An
organization must appropriately track the financial revenues
and expenses subject to UBIT reporting in order to prepare
its unrelated business income tax return, Form 990-T, Exempt
Organization Business Income Tax Return
In addition to maintaining required records relating to
unrelated business taxable income, section 501 (c)(9) organizations (VEBAs) must also maintain records indicating the
amount contributed by each member and contributing
employer, and the amount and type of benefits paid by the
organization for each member
15
JW1559-000799
What records should be kept?
Except in a few cases, the law does not require a special
kind of record A tax-exempt organization can choose any
recordkeeping system, suited to its activities, that clearly
shows the organizations income and expenses The types of
activities a tax-exempt organization conducts determines the
type of records that should be kept for federal tax purposes

A tax-exempt organization should set up a recordkeeping
system using an accounting method that is appropriate for
proper monitoring and reporting of its financial activities for
the tax year If a tax-exempt organization has more than one
program, it should ensure that the records appropriately
identify the income and expense items that are attributable
to each program
A recordkeeping system should generally include a summary
of transactions This summary is ordinarily written in the
tax-exempt organizations books (for example, accounting
journals and ledgers) The books must show gross receipts,
purchases, expenses (other than purchases), employment
taxes, and assets For most small organizations, the checkbook might be the main source for entries in the books while
larger organizations would need more sophisticated ledgers
and records A tax-exempt organization must keep documentation that supports entries in the books
Accounting Periods and Methods ,
Tax-exempt organizations must keep their financial records
based on an annual accounting period, called a tax year, in
order to comply with annual reporting requirements
Accounting Periods A tax year is usually 12 consecutive
months There are two kinds of tax years
calendar tax year This is a period of 12 consecutive months
beginning January 1 and ending December 31.
fiscal tax year This is a period of 12 consecutive months ending
on the last day of any month except December.
16
JW1559-000800
Accounting Method An accounting method is a set of rules
used to determine when income and expenses are reported A
tax-exempt organization chooses an accounting method when
it files its first annual return There are two basic accounting
methods:
cash method Under the cash method, a tax-exempt organization reports income in the tax year received. It usually deducts
expenses in the year paid.
accrual method Under an accrual method, a tax-exempt
organization generally records income in the tax year earned,
(i.e., in the tax year in which a pledge is received, even though
it may receive payment in a later year.) It records expenses in the
tax year incurred, whether or not it pays the expenses that year.
For more information about accounting periods and methods,
see Publication 538, Accounting Periods and Methods, and the
instructions to Form 990 and Form 990-EZ
Supporting Documents ,
Organization transactions such as contributions, purchases,
sales, and payroll will generate supporting documents These
documentsgrant applications and awards, sales slips, paid
bills, invoices, receipts, deposit slips, and canceled checks
contain information to be recorded in accounting records It
is important to keep these documents because they support
the entries in books and the entries on tax and information
returns Tax-exempt organizations should keep supporting
documents organized by year and type of receipt or expense

Also, keep records in a safe place
17
JW1559-000801
RECORDS MANAGEMENT,
G ROSS RECEIPTS ,
Gross receipts are the amounts received from all sources,
including contributions. A tax-exempt organization should
keep supporting documents that show the amounts and sources
of its gross receipts. Documents that show gross receipts include:
donor correspondence, pledge documents, cash register tapes,
bank deposit slips, receipt books, invoices, credit card charge
slips, and Forms 1099-MISC, Miscellaneous Income.
PURCHASES, INCLUDING
ACCOUNTING FOR INVENTORY ,
Purchases are items bought, including any items resold to
customers. If an organization produces items, it must account for
any items resold to customers. Thus, for example, the organization
must account for the cost of all raw materials or parts purchased
for manufacture into finished products. Supporting documents
should show the amount paid, and that the amount was for
purchases. Documents for purchases include: canceled checks,
cash register tape receipts, credit card sales slips, and invoices.
These records will help an organization determine the value of its
inventory at the end of the year. See Publication 538, Accounting
Periods and Methods, for general information on methods for
valuing inventory.
EXPENSES ,
Expenses are the costs a tax-exempt organization incurs (other
than purchases) to carry on its program. Supporting documents
should show the amount paid and the purpose of the expense.
Documents for expenses include: canceled checks, cash register
tapes, contracts, account statements, credit card sales slips,
invoices, and petty-cash slips for small cash payments.
EMPLOYMENT TAX RECORDS ,
Organizations that have employees must keep records of
compensation and specific employment tax records. Information
related to independent contractors should also be maintained.
See Publication 15, Circular E, Employers Tax Guide, for details.
18
JW1559-000802
ASSETS & LIABILITIES ,
Assets are the property, (such as investments, buildings,
and furniture) an organization owns and uses in its activities.
Liabilities reflect the financial obligations of the organization.
A tax-exempt organization must keep records to verify certain
information about its assets and liabilities. Records should show:
when and how the asset was acquired ,
whether any debt was used to acquire the asset ,
documents that support mortgages, notes,
purchase price ,
cost of any improvements ,
deductions taken for depreciation, if any ,
deductions taken for casualty losses, if any,
loans or other forms of debt ,
such as losses resulting from fires or storms ,
how the asset was used ,
when and how the asset was disposed of ,
selling price ,
expenses of sale ,
Documents that may show the above information include:
purchase and sales invoices, real estate closing statements,
canceled checks, and financing documents. If a tax-exempt
organization does not have canceled checks, it may be able
to show payment with certain financial account statements
prepared by financial institutions. These include account
statements prepared for the financial institution by a third
party. All information, including account statements, must be
legible. The following defines acceptable account statements.
IF payment is by:
THEN statement must show:
check,
check number, amount, payees

name, and date the check amount
was posted to the account by the
financial institution ,
electronic funds transfer, amount transferred, payees
name, and date the transfer was

posted to the account by the
financial institution ,
credit card ,
amount charged, payees name,

and transaction date ,
19
JW1559-000803
How long should records be kept?
Tax-exempt organizations must keep records for federal tax
purposes for as long as they may be needed to document evidence of compliance with provisions of the Code Generally,
this means the organization must keep records that support
an item of income or deduction on a return until the statute
of limitations for that return runs The statute of limitations
has run when the organization can no longer amend its return
and the IRS can no longer assess additional tax Generally,
the statute of limitations runs three years after the date the
return is due or filed, whichever is later An organization may
be required to retain records longer for other legal purposes,
including state or local tax purposes
Record Retention Periods ,
Record retention periods vary depending on the types of
records and returns
Permanent Records Some records should be kept permanent-
ly These include the application for recognition of tax-exempt
status, the determination letter recognizing tax-exempt status,
and organizing documents, such as articles of incorporation and
by-laws, with amendments, as well as board minutes
Employment TaxRecords If an organization has employees,
it must keep employment tax records for at least four years
after the date the tax becomes due or is paid, whichever is later
Records for Non-TaxPurposes When records are no longer
needed for tax purposes, an organization should keep them
until they are no longer needed for non-tax purposes For example, a grantor, insurance company, creditor, or state agency
may require that records be kept longer than the IRS requires
How should changes be reported to the IRS?
Reporting Changes on the Annual Information Return ,
A tax-exempt organization that is required to file Form 990 or
Form 990-EZ must report name, address, structural and operational changes on its annual return Regardless of whether
a tax-exempt organization files an annual information return,
it may report these changes to the EO Determinations Office
at the mailing address set out in How to get IRS assistance
20
JW1559-000804
and information at the end of this publication; however,
such reporting does not relieve the organization from
reporting the changes on its annual return
Tip: Attach copies of any signed or state certified articles
of incorporation, or association, constitution or trust instrument or other organizational document, or the by-laws or
other governing document showing changes to your return

If signed or state certified copies of a governing document
are not available, an authorized officer may certify that the
governing document provided is a complete and accurate
copy of the original document
Determination Letters and Private Letter Ruling Requests ,
A tax-exempt organization may request a copy of a lost
exemption letter or an updated exemption letter that reflects
a name or address change from the EO Determinations office

See How to get IRS assistance and information , page 26,
for the appropriate address for the EO Determinations office
An organization may request a determination letter regarding the effect of certain changes on its tax-exempt status in
certain specific situations set out in Revenue Procedure
2009-4, updated annually However, the IRS will not make
any determination regarding any completed transaction

If a tax-exempt organization is unsure about whether a
proposed change in its purposes or activities is consistent
with its status as an exempt organization, it may want to
request a private letter ruling
The IRS issues private letter rulings on proposed transactions and on completed transactions if the request is submitted
before the return is filed for the year in which the transaction
was completed The IRS generally does not issue rulings to
tax-exempt organizations on completed transactions The IRS
will issue letter rulings to a tax-exempt organization on matters involving an organizations exempt status, as well as other
matters including issues under sections 501 through 514,
4958, 6033, 6104, 6113 and 6115 However, the Service may
decline to issue a ruling on certain matters
Consult www.irs.gov/eo for the appropriate procedures for
preparing and submitting requests for private letter rulings,
determination letters, a replacement exemption letter or
a letter reflecting a new name and address For general
information about reporting changes, you may contact EO
customer service at (877) 829-5500
21
JW1559-000805
What disclosures are required?
There are a number of disclosure requirements for tax-exempt
organizations Detailed information on federal tax law disclosure requirements for tax-exempt organizations can be found
in Publication 557, Tax-Exempt Status for Your Organization , on
the IRS Charities and Non-Profits Web site at www.irs.gov/eo

Information about disclosure requirements for 501 (c)(3) organizations may be found in Publication 4221 -PC, Compliance
Guide for 501(c)(3) Public Charities and Publication 4221 -PF,
Compliance Guide for 501(c)(3) Private Foundations
Public Inspection of Exemption Applications
and Annual Returns ,
A tax-exempt organization must make the following documents
available for public inspection and copying upon request
and without charge (except for a reasonable fee for copying)

The IRS also makes these documents available for public
inspection and copying Because certain forms by law must
be made publicly available by the IRS and the filer, do not
include any personal identifying information, such as social
security numbers not required by the IRS, on these forms

Exemption Application A non-501 (c)(3) tax-exempt
organization must make available for public inspection its
exemption application, Form 1 024, Application for Recognition
of Exemption Under Section 501(a), along with each of the
following documents:
n
n
all documents submitted with Form 1 024;
all documents the IRS requires the organization to submit
in support of its application; and
the exemption ruling letter issued by the IRS
Annual Information Return A tax-exempt organization must
disclose its annual information return (Form 990 series) with
schedules, attachments, and supporting documents filed with
the IRS The organization may not disclose the names and
addresses of contributors listed on Schedule B of Form 990

However, other information on Schedule B is open for public
inspection unless it clearly identifies the contributor Returns
need to be available for public inspection for only three years
after the due date or filing date of the return (or the filing date
of an amended return)
Disclosure Procedures A tax-exempt organization may
place reasonable restrictions on the time, place, and manner
22
JW1559-000806
of in-person inspection and copying, and may charge a reasonable fee for providing copies It can charge no more for the
copies than the per page rate the IRS charges for providing
copies See www.irs.gov/foia/index.html for current IRS copying
fees Although the IRS charges no fee for the first 1 00 pages,
the organization can charge a fee for all copies The organization can also charge the actual postage costs it pays to provide
copies A tax-exempt organization does not have to comply
with individual requests for copies if it makes the documents
widely available This can be done by posting the documents on
a readily accessible Web site For details on disclosure rules and
procedures for non-501 (c)(3) tax-exempt organizations, see the
Life Cycles of section 501 (c)(4), (5) and (6) organizations and
the instructions to Forms 990 and 1 024 at www.irs.gov/eo

All publicly-available information may be obtained from the IRS
for a fee by using Form 4506-A, Request for Public Inspection or
Copyof Exempt or Political Organization IRS Form An organization may obtain a complete copy of its own application by filing
Form 4506, Request for Copyof Tax Return
Sale of Free Government Information ,
If a tax-exempt organization offers to sell, or solicits money for,
goods, information or services that are available free from the
federal government, the organization must make an express
statement at the time of solicitation about the free service

An organization that intentionally disregards this requirement
is subject to a penalty
Solicitation Notice ,
Certain tax-exempt organizations that are not eligible to receive
tax-deductible contributions must disclose, in any fundraising
solicitation, in an express statement (in a conspicuous and easily recognizable format), that contributions to the organization
are not deductible for federal income tax purposes This applies
to organizations that are not eligible to receive deductible charitable contributions and are described in sections 501 (c), 501 (d)
and 527 Safe harbors for meeting these requirements are set
out in Notice 88-120, 1988-2 C B 454
PENALTIES ,
Penalties apply to organizations that do not comply with disclosure
requirements and to persons responsible for the failure to comply.
23
JW1559-000807
This disclosure requirement applies to a fundraising solicitation: if the organization soliciting the funds normally has gross
receipts over $100,000 per year, the solicitation is part of a
coordinated fundraising campaign that is soliciting more than
ten persons during the year, and the solicitation is made in
written or printed form, by television or radio, or by telephone
Note: If an organization fails to include the required disclosure of
the non-deductibility of contributions in fundraising solicitations,
a penalty of $1,000 for each day on which such a failure occurs,
up to a maximum annual penalty of $10,000, may be imposed. No
penalty will be imposed if the failure is due to reasonable cause.
In cases where the failure to make the required disclosure is due
to intentional disregard of the law, the $10,000 per year limitation
does not apply and more severe penalties based on up to 50 percent
of the aggregate cost of the solicitations are applicable.
Nondeductible Lobbying and Political Expenditures ,
A tax-exempt organization must notify anyone paying dues
that any portion used for lobbying or political activities is not
deductible An organization must provide the notice if it is one
of the following:
a social welfare organization described in section 501 (c)(4)
that is not a veterans organization;
an agricultural or horticultural organization described in
a business league, chamber of commerce, real estate board,
section 501 (c)(5); or
or other organization described in section 501 (c)(6)
Nondeductible lobbying and political expenditures include
expenditures paid or incurred in connection with influencing
legislation, participating or intervening in any political campaign on behalf of (or in opposition to) any candidate for
public office, attempting to influence the general public with
respect to elections, legislative matters, or referendums; and
any direct communication with a covered executive branch
official in an attempt to influence the persons official actions
or positions
If an organization is subject to the reporting and notice
requirement it has several options:
It may provide a notice to its members when they pay dues
that contains a reasonable estimate of the amount allocable
to lobbying and political expenditures;
If it does not give notification, it must pay a proxy tax at the
highest corporate rate imposed by the Code (currently 35%)
on its lobbying and political campaign expenditures up to the
amount of dues and similar payments received by the organization during the tax year; or
24
JW1559-000808
If the organization does provide notices to its members but
underestimates the actual amount of lobbying and political
campaign expenditures, it is subject to the proxy tax on the
excess lobbying expenditures paid during the tax year that
were not included in the notices However this tax may be
waived if the organization agrees to include the excess lobbying and political campaign expenditures in the following
years notices
An organization described above does not have to provide the
notice if it establishes that substantially all the dues paid to it
are not deductible (regardless of whether those dues are used
for lobbying or political activities) anyway or if certain other
conditions are met

If an organization elects the proxy tax option, it must report
the tax on Form 990-T, as described on page 12, in Proxy Tax
Reported on Form 990-T
Charitable Contributions ,
In general, contributions to 501 (c) organizations other than
organizations described in section 501 (c)(3) of the Code are
NOT deductible as charitable contributions for federal income
tax purposes Donations to certain non-501 (c)(3) organizations are deductible as charitable contributions
These include donations to:
n 501 (c)(4) fire companies (for public purposes),
cemetery companies which are not earmarked
for the care of a particular lot or crypt,
fraternal organizations for certain 501 (c)(3)
purposes, and
veterans organizations (if 90% or more of the
organizations are war veterans)
In addition, a non-501 (c)(3) tax-exempt organization may
establish a charitable fund, contributions to which are deductible However, such a fund itself must meet the requirements
of section 501 (c)(3) and the related notice requirements of
section 508(a)
If the contributions are deductible as charitable contributions,
substantiation and disclosure requirements may apply Read
Publication 1771, Charitable Contributions Substantiation
and Disclosure Requirements, and Publication 526, Charitable
Contributions, for details on the federal tax law for organizations that may receive tax-deductible charitable contributions
and for taxpayers who make contributions
25
JW1559-000809
How to get
IRS assistance
and information,
The IRS offers help that is accessible
either online, via mail by telephone,
and at IRS walk-in offices in many
areas across the country IRS forms
and publications can be downloaded
from the Internet and ordered
by telephone
Specialized Assistance for
Tax-Exempt Organizations ,
Get help with questions about applying
for tax-exempt status, annual filing
requirements, and information about
exempt organizations through the IRS
Exempt Organizations (EO)
EO Web site,
www.irs.gov/eo ,
Highlights :
The Life Cycle of an Exempt Organization describes the
compliance obligations of section 501 (c)(3), (4), (5) and
(6) organizations
n
n
Information on Other Non-Profits
Subscribe to the EO Update, an electronic newsletter
with information for tax-exempt organizations and tax
practitioners who represent them
Web based training ,

Web based
training modules:
n
n
Tax Exempt Status ,
Unrelated
Business income ,
www.stayexempt.org ,
Employment Issues ,
Form 990,
Required Disclosures ,
Mini-Courses on
topics of interest ,
EO Customer Service ,
(877) 829-5500 ,
EO Determinations Office mailing address ,
Internal Revenue Service ,
TE/GE, EO Determinations Office ,
PO Box 2508,
Cincinnati, OH 45201 ,
26
JW1559-000810
Tax Publications for Exempt Organizations ,

Get publications via the Internet or by calling the IRS
at (800) 829-3676
Pub 15, Circular E, Employers Tax Guide ,
Pub 15-A , Employers Supplemental Tax Guide ,
Pub 463, Travel, Entertainment, Gift, and Car Expenses ,
Pub 517, Social Security and Other Information for Members
of the Clergy and Religious Workers,
Pub 538, Accounting Periods and Methods,
Pub 557, Tax-Exempt Status for Your Organization ,
Pub 583, Starting a Business and Keeping Records,
Pub 598, Tax on Unrelated Business Income of
Exempt Organizations,
Pub 1771 , Charitable Contributions Substantiation and
Disclosure Requirements,
Pub 1828, Tax Guide for Churches and Religious Organizations ,
Pub 3833, Disaster Relief, Providing Assistance Through
Charitable Organizations,
Pub 4220, Applying for 501(c)(3) Tax-Exempt Status,
Pub 4221-PC, Compliance Guide for 501(c)(3) Public Charities ,
Pub 4302, A Charitys Guide to Vehicle Donations ,
Pub 4303, A Donors Guide to Vehicle Donations,
Pub 4573, Group Exemptions,
Pub 4630, Exempt Organizations Products and
Services Navigator,
Forms for Exempt Organizations
Get forms via the Internet or by calling the IRS at
(800) 829-3676
Form 941, Employers Quarterly Federal Tax Return ,
Form 944, Employers Annual Federal Tax Return ,
Form 990, Return of Organization Exempt From Income Tax,
Form 990-EZ, Short Form Return of Organization Exempt
From Income Tax,
Form 990-PF, Return of Private Foundation or Section
4947(a)(1) Nonexempt Charitable Trust Treated as a
Private Foundation ,
27
JW1559-000811
Form 990-N, Electronic Notice (e-Postcard) For Tax-Exempt
Organizations Not Required To File Form 990 or 990-EZ
(only available electronically) ,
Form 990-T, Exempt Organization Business Income Tax Return ,
Form 990-W, Estimated Tax on Unrelated Business Taxable
Income for Exempt Organizations,
Form 1023, Application for Recognition of Exemption
Under Section 501(c)(3) of the Internal Revenue Code ,
Form 1024, Application for Recognition of Exemption
Under Section 501(a),
Form 1041, U.S. Income Tax Return for Estates and Trusts ,
Form 4506, Request for Copy of Tax Return ,
Form 4506-A , Request for Public Inspection or Copy of
Exempt or Political Organization IRS Form ,
Form 4720, Return of Certain Excise Taxes Under
Chapters 41 and 42 of the Internal Revenue Code ,

Form 5578, Annual Certification of Racial Non-Discrimination
for a Private School Exempt from Federal Income Tax ,
Form 5768, Election/Revocation of Election by an Eligible
Section 501(c)(3) Organization To Make Expenditures to
Influence Legislation ,
Form 8282, Donee Information Return ,

Form 8283, Noncash Charitable Contributions,
Form 8868, Extension of Time To File an Exempt
Organization Return ,
General IRS Assistance
Get materials on the latest tax laws, assistance with forms
and publications, and filing information
IRS Web site,
www.irs.gov,
Federal tax questions ,
(800) 829-4933,
Employment tax questions ,
(800) 829-4933,
Order IRS forms and publications ,
(800) 829-3676,
28
JW1559-000812
Tax-Exempt Organization Reference Chart ,
Code
Section ,
Type of
Organization ,
Type of
Activities,
Annual
Filing
Requirement ,
Contributions
Deductible ,
501 (c)(1 ) ,
Instrumentalities
of the
United States,
Corporate
instrumentalities
of the United States
organized under an
Act of Congress ,
none,
Yes, if
for public
purposes,
501 (c)(2) ,
Title Holding
Corporation
for Exempt
Organizations ,
Holds title to
exempt organization
property. Collects and
pays income from
property to exempt
organization ,
990,
990-EZ,
990-N,
No,
501 (c)(3) ,
Religious,
Educational,
Charitable,
Literary, Testing
for Public Safety,
to Foster National
or International
Amateur Sports
Competition,
or Prevention
of Cruelty to
Children or Animals
Organizations ,
Activities of
nature implied by
description of class
of organizations ,
990,
990-EZ,
990-N,
990-PF,
Yes,
generally
(testing for
public safety
excluded),
501 (c)(4) ,
Civic Leagues,
Social Welfare
Organizations ,
Promotion of
community
welfare; charitable,
educational or
recreational,
990,
990-EZ,
990-N,
No,
generally,
501 (c)(5) ,
Labor, Agricultural
and Horticultural
Organizations ,
Educational or
instructive, the
purpose being to
improve conditions
of work and
improve products
or efficiency,
990,
990-EZ,
990-N,
No,
501 (c)(6) ,
Business Leagues,
Chambers of
Commerce, Real
Estate Boards ,
Improvement of
business conditions
of one or more
lines of business ,
990,
990-EZ,
990-N,
No,
501 (c)(7) ,
Social and
Recreational Clubs ,
Pleasure,
recreation, social
activities,
990,
990-EZ,
990-N,
No,
501(c)8) ,
Fraternal Beneficiary
Provides for payment
Societies, Orders or
of life, sickness,
Associations ,
accident or other
benefits to members ,
990,
990-EZ,
990-N,
Yes, if
for certain
(c)(3)
purposes,
29
JW1559-000813
Code
Section,
Type of
Organization ,
Type of
Activities ,
Annual
Filing
Requirement ,
Contributions
Deductible ,
501 (c)(9) ,
Voluntary
Employees
Beneficiary
Associations
(VEBA),
Provides for
payment of life,
sickness, accident
or other benefits
to members,
dependents or
beneficiaries ,
501 (c)(1 0) ,
Domestic Fraternal
Societies, Orders
or Associations ,
Lodge devoting
990,
its net earnings to
990-EZ,
charitable, fraternal
990-N,
or other specified
purposes. No life,
sickness or accident
benefits to members ,
Yes, if for
certain
(c)(3)
purposes,
501 (c)(1 1) ,
Teachers
Retirement Funds ,
Local teachers
association for payment of retirement
benefits funded from
specific sources ,
990,
990-EZ,
990-N,
No,
501(c)(1 2) ,
Local Benevolent
Life Insurance
Associations, Mutual
Ditch or Irrigation
Companies, Mutual
or Cooperative
Electric or Telephone
Companies, and
Like Organizations ,
Conducts activities
990,
of a mutually
990-EZ,
beneficial nature
990-N,
similar to those
implied by the
description of the
class of organization ,
No,
501(c)(1 3) ,
Cemetery
Companies,
Provides burial and
incidental services ,
990,
990-EZ,
990-N,
Yes,
generally,
501(c)(14) ,
State Chartered
Credit Unions ,
Operates without
profit for mutual
benefit of its
members,
990,
990-EZ,
990-N,
No,
501(c)(15) ,
Small Insurance
Companies or
Associations,
Provides insurance
to members
substantially at cost ,
990,
990-EZ,
990-N,
No,
501(c)(16) ,
Cooperative
Organizations
to Finance Crop
Operations ,
Finances crop
operations in
conjunction with
activities of a
section 521
marketing or
purchasing
association,
990,
990-EZ,
990-N,
No,
990,
990-EZ,
990-N,
No,
30
JW1559-000814
Annual
Filing
Requirement ,
Code
Section,
Type of
Organization ,
501 (c)(1 7) ,
Supplemental
Unemployment
Benefit Trusts ,
Provides for payment
of supplemental
unemployment compensation benefits
as part of a plan ,
990,
990-EZ,
990-N,
No,
501 (c)(1 8) ,
Employee Funded
Pension Trusts
(created before
1959),
Payment of pension
990,
or retirement benefits
990-EZ,
under a plan funded

990-N,
only by employees ,
No,
501 (c)(1 9) ,
War Veterans
Organizations ,
Activities implied
by nature of
organization,
990,
990-EZ,
990-N,
No,
generally,
501 (c)(21) ,
Black Lung
Benefit Trusts ,
Irrevocable domestic
trust funded by coal
mine operators to
satisfy their liability
for disability or death
due to black lung
diseases,
990-BL,
No,
501 (c)(22) ,
Withdrawal Liability
Payment Fund ,
Provides funds
to meet the liability
or employers
withdrawing from
a multiemployer
pension fund ,
990,
990-EZ,
990-N,
No,
501 (c)(23) ,
Veterans
Organizations
(created before
1880),
Provides insurance
and other benefits
to veterans ,
990,
990-EZ,
990-N,
No,
generally,
501 (c)(25) ,
Title Holding
Corporations or
Trusts with Multiple
Parents,
Holds title and
pays over income
from real property
to 35 or fewer
shareholders or
beneficiaries,
990,
990-EZ,
990-N,
No,
501 (c)(26) ,
State-Sponsored
Organization
Providing Health
Coverage for HighRisk Individuals ,
Provides health care
coverage to high risk
individuals,
990,
990-EZ,
990-N,
No,
501 (c)(27) ,
State-Sponsored
Workers
Compensation
Reinsurance
Organization,
Reimburses
members for
losses under
local workers
compensation acts ,
990,
990-EZ,
990-N,
No,
Type of
Activities ,
Contributions
Deductible ,
31
JW1559-000815
Code
Section ,
Type of
Organization ,
Type of
Activities,
Annual
Filing
Requirement ,
Contributions
Deductible ,
501(c)(28) ,
National Railroad
Retirement
Investment
Trust,
Manages and invests
the assets of the
Railroad Retirement
Account,
Not
determined,
No,
501(d),
Religious &
Apostolic
Organizations ,
Communal religious
community,
1 065,
No,
501(e),
Cooperative
Hospital Service
Organizations ,
Performs specific
activities for
hospitals on a
centralized basis ,
990,
990-EZ,
990-N,
Yes,
501 (f),
Cooperative
Service
Organizations
of Operating
Educational
Organizations ,
Performs collective
investment services
for educational
organizations ,
990,
990-EZ,
990-N,
Yes,
501 (k),
Child Care
Organizations ,
Provides care
for children of
working parents.
Open to public,
990,
990-EZ,
990-N,
Yes,
501 (n),
Charitable
Risk Pools,
Pools certain
insurance risks
of 501(c)(3)s ,
990,
990-EZ,
990-N,
Yes,
521 (a),
Farmers
Cooperative
Organizations ,
Cooperative
marketing and
purchasing for
agricultural
procedures,
1 1 20-C,
No,
527,
Political
Organizations ,
A party, committee,
fund, association,
etc., that directly or
indirectly accepts contributions or makes
expenditures for
political campaigns ,
11 20-POL,
990 or
990EZ,
No,
Note that neither this chart nor this publication is intended to be a comprehensive source of information about the compliance responsibilities
of all tax-exempt organizations. Also, an organization exempt under a
subsection of Section 501 other than section 501 (c) (3) may establish a
separate charitable fund, contributions to which are deductible. Such a
fund must meet the requirements of section 501 (c) (3) and the related
notice requirements of section 508(a) . See Publication 4220 , Applying for
501(c)(3) Tax-Exempt Status and Publication 557, Tax-Exempt Status for
Your Organization .
32
JW1559-000816
33
JW1559-000817
Publication 4221 -NC , (Rev. 1 2-201 0) , Catalog Number, 52447N,
Department of the Treasury , Internal Revenue Service ,

www.irs.gov
JW1559-000818
D E P A R T M E N T O F T H E TR E A S U R Y
IN T E R N A L R E V E N U E S E R V IC E
W A S H IN G T O N , D .C . 2 0 2 2 4
TA X E X E M P T A N D
G O V E R N M E N T E N T IT IE S
D IV IS IO N
JUL 13 2011
The H onorable C arl Levin

U nited States Senate
W ashington, D .C . 20510
D ear Senator Levin:
Iam responding to your letter to C om m issioner Shulm an dated June 13, 2012,
requesting the IR S to rem ind section 501 (c)(4) organizations regarding the lim itations of
engaging in non-exem pt political activities. W e appreciate your intereston this issue.
The IR S recognizes the im portance ofoutreach and educational m aterials to ensure
thatsection 501 (c)(4) organizations are aw are ofthe requirem ents under the tax law .
The IR S takes steps to continually inform organizations oftheir responsibilities as social
w elfare organizations to help them avoid jeopardizing their tax-exem pt status. For
those seeking inform ation on the requirem ents for section 501 (c)(4) tax exem pt status,
w e provide educational m aterials and published resources on ourw ebsite at
w w w .IR S .gov/charities, including the responsibilities and lim itations ofthese
organizations. For instance, the w eb-page w ith general inform ation on SocialW elfare
O rganizations contains the follow ing narrative w ith w eb links to educational resources:
The prom otion of social w elfare does not include direct or indirect
participation or intervention in political cam paigns on behalf of or in
opposition to any candidate for public office. H ow ever, a section
501 (c)(4) social w elfare organization m ay engage in som e political
activities, so long as that is not its prim ary activity.
H ow ever, any expenditure it m akes for political activities m ay be subject
to tax under section 527(f). For further inform ation regarding political and
lobbying activities ofsection 501 (c) organizations, see Election Year
Issues, Political C am paign and Lobbying Activities of IRC 501 (c)(4),
(c)(5), and (c)(6) O rganizations, and R evenue R uling 2004-6.
Enclosed are print-outs ofsom e ofthe aforem entioned publicly-accessible pages on
socialw elfare organizations and political activity lim itations on the IR S w ebsite. These
inform ative w eb-pages are regularly updated.
The IR S also addresses the issue ofpolitical activities during the application process.
JW1559-000819
In Form 1024,Application forRecognition ofExem ption underSection 501(a), under

Schedule B: O rganizations Described in Section 501 (c)(4), the firstquestion touches on
the issue ofpoliticalactivity, and the Form Instructions references Publication 557, Tax
Exem ptStatus for YourO rganization, which also addresses politicalactivity underthe
chapterthatincludes specific inform ation on section 501 (c)(4) organizations. For
instance, page 51 ofPub. 557, specifically states:
Political activity. Prom oting social welfare does not include direct or
indirect participation or intervention in political cam paigns on behalfofor
in opposition to any candidate for public office. However, if you subm it
proof that your organization is organized exclusively to prom ote social
welfare, it can obtain exem ption even if it participates legally in som e
political activity on behalf of or in opposition to candidates for public
office. See the discussion in chapter 2 under Political O rganization
Incom e Tax Return.
W hen an applicant is recognized as tax-exem pt, the IRS sends an approved
determ ination letter, along with an educational booklet, Publication 4221-NC,
Com pliance G uide for Tax-Exem pt O rganizations (O therthan 501(c)(3) Public Charities
and Private Foundations), aboutthe various tax law requirem ents applicable to section
501(c)(4) organizations. This bookletcontains usefulinform ation to ensure
organizations understand their responsibilities underthe tax law, including activities that
m ay jeopardize exem ptstatus and the lim itations on political activities.
W e also address the issue ofpoliticalactivities in the Form s 990 and 990-EZ, the
annual inform ation returns filed by tax-exem pt organizations under section 501 (c)(4).
O rganizations thatengage in director indirectpoliticalcam paign activities are required
to com plete a separate schedule (Schedule C).
As the above illustrates, the IRS actively educates section 501 (c)(4) organizations at
m ultiple stages in their developm ent abouttheir responsibilities underthe tax law. W e
believe this approach is the appropriate m ethod by which to educate organizations on
their responsibilities.
Ihope this inform ation is helpful. Ifyou have questions, please contact m e orhave your
staffcontactC atherine Barre at(202) 622-3720.
Sincerely,
~ ~ r f ~
D irector, Exem pt O rganizations
Enclosures (2)
JW1559-000820
C /,R llEV IN
]lolted totrseScnatr
June 13,lO ll
RECEIVED
The Ilonorable D ouglas H.Shulm an
Com m issioner
InternalRevenue Service
lOlh Streetand Pennsylvania A venue.N \V
W ashington,D.C. 20004
JUN 142012
CONG.CORR.BR
CL:LA
D ear Com m issioner Shulm an:

Thank you for the June 4,2012,response by Steven M iller, D eputy Com m issioner for
Services and Enforcem ent, to my M arch 30,2012.letter. Internal Revenue Code Section
501(c)(4) organizations arc increasingly active in partisan political cam paigns. These
organizations, w orking in conjunction with independentexpenditure com m ittees,or"Super
PA Cs" thatcan raise unlim ited am ounts ofm oney l1'om individuals,corporations and unions,arc
able to avoid revealing their funding sources by hiding behind their tax-exem ptstatus. This
trend ofusing ourtax code to lim itcam paign disclosure is deeply troubling.
A 1997 letter from the IRS denying tax-exem pt status to the N ational Policy Forum ,
which was included in m y M arch 30 letter,indicates thatthe IRS based its denialon the fact that
the organization w as engaged in partisan politicalactivity, stating that "partisan politicalactivity
does notprom ote social \vc1fare as defined in section 501 (c)(4)," and thatthe applicant
"benefitls] select individuals or groups,instead ofthe com m unity as a \vhak"
The June 4 response from M r.M illerhas a som ew hat w eaker interpretation,as follows:
"To qualify for exem ption as a social welfhrc organization described in section 501
(c)(4),the organization m ust be prim arily engaged in the prom otion ofsocial w elfare.not
organized oroperated for profitand the netearnings ofw hich do notinure to the benefit
ofany private shareholder or individuals The prom otion ofsocial w elfare dOl:s not
include direct orindirect participation orintervention in politicalcam paigns on behalfof
orin opposition to any candidate for public office. N evertheless,a section 50 I (c)(4)
social \vdfare organization can engage in political activities as long as itis prim arily
engaged in 4lctivitics that prom ote social wcltiuc."
Ata m inim um .undereither the J997 letterorM r.M iller's interpretation.a m essage
needs to be sent to Section 50 I(c)(4) entities on an urgent basis to ensure lhey understand that
any politicalactivities they undertake m ustconstitute a secondary and not the prim ary activity of
theirorganization. To m ake thatm essage crystalclear, Iurge the IRS to rem ind all 50 J(c)(4)
JW1559-000821
The Honorable Douglas H.Shulman
June 13,2012
Page Two
organizations abouttheirobligation to observe thatrestriction on theiractivities ifthey wantto

retain theirtax exem ptstatus.
Ihope you willdo thatwithin the next30 days. Please letme know whatyourdecision
is. Ifyou haveany questions,pleasecontactme,orhaveyourstaffcontactKayeM eierofmy
staffatkaye m eier@ levin.senate.gov or202-224-9]]O. Thanks.
Sincerely.
CarlLevin
JW1559-000822
Page 1 of1
Hinton Irm a 0
From :
Barre C atherine M
Sent:
W ednesday, June 13, 2012 4:11 PM
H inton Irm a 0
To:
N orton W illiam G Jr; Sinno Suzanne
Cc:
SUbject:
FW : Letter to C om m issioner Shulm an
Attachm ents: IR Sletter61312.pdf
Another one for Lois
From : M eier, Kaye (Levin) [m ailto:Kaye_M eier@ levin.senate.gov]

sent: W ednesday, June 13, 2012 3:44 PM
To: Barre Catherine M
Subject: Letter to Com m issioner Shulm an
Iw illputa hard copy ofthis letterin the m ailtoday Thanksl
K aye M eier
Senior C ounsel
U .S. Senator C arl Levin
202-224-9110
RECEIVED
JUN 142012
CONGo CORR. BR
CL:LA
6/14/2012
JW1559-000823
JW1559-000824
JW1559-000825
JW1559-000826
JW1559-000827
JW1559-000828
JW1559-000829
D E P A R TM E N T O F TH E TR E A S U R Y
W A S H IN G T O N , D .C . 2 0 2 2 4
D E P U T Y C O M M IS S IO N E R
August 24,2012

C hairm an
Perm anent Subcom m ittee on Investigations
Senate C om m ittee on H om eland Security
and G overnm entAffairs
W ashington, D .C. 20515
Iam responding to your letter to C om m issioner Shulm an dated July 27, 2012,
requesting additional inform ation aboutsection 501 (c)(4) organizations. This response
supplem ents the previous responses dated June 4,2012 and July 13, 2012, and
addresses the additionalquestions raised in your recent letter.
Q uestion 1. H ow can the IR S interpretthe explicit language in 26 U .S.C .

501(c)(4), w hich provides that510(c)(4) entities m ustoperate "exclusively" for
the prom otion ofsocialw elfare, to allow any tax exem ptpartisan political activity
by 501 (c)(4) organizations?
W e note thatthe current regulation has been in place for over 50 years. M oreover,
unlike Internal R evenue C ode section 501 (c)(3), w hich specifically provides that
organizations m ay "notparticipate in, or intervene in ... any political cam paign on
behalfof (or in opposition to) any candidate for public office."), section 501 (c)(4) does
notcontain a specific rule or lim itation on political cam paign intervention by social
w elfare organizations.
Q uestion 2. S ince partisan political activity does notm eetthe IRS definition of
"prom oting socialw elfare," how can an organization that participates in any
partisan political activity be "organized exclusively to prom ote socialw elfare?"
As stated above, long standing Treasury R egulations have interpreted "exclusively" as
used in section 501 (c)(4) to m ean prim arily. Treasury R egulation 1.501 (c)(4)
1(a)(2)(i), prom ulgated in 1959, provides: "An organization is operated exclusively for
the prom otion ofsocialw elfare ifitis prim arily engaged in prom oting the com m on good
and generalw elfare ofthe people ofthe com m unity." Applying this Treasury
R egulation, R evenue R uling 81-95, 1981-1 C .B. 332, concluded that"an organization
m ay carry on law ful political activities and rem ain exem pt under section 501 (c)(4) as
long as it is prim arily engaged in activities that prom ote socialw elfare."
JW1559-000830
Q uestion 3. The E xem ptO rganizations 2011 Annual R eportand 2012 W ork Plan
states: "A s in any election year, EO w illcontinue its w ork to enforce the rules
relating to political cam paigns and cam paign expenditures. In FY 2012, EO w ill
com bine w hatithas learned from pastprojects on politicalactivities w ith new
inform ation gleaned from the redesigned Form 990 to focus its exam ination
resources on serious allegations ofim perm issible political intervention."
a. Typically, how long after a com plaintto the IRS does a com pliance review
begin?
b. W hatapproxim ate tim e does ittake to review the com plaint?
The IRS routinely receives exam ination referrals from a variety ofsources including
the public, m edia, M em bers ofCongress ortheir staff, and has a long standing
process for handling referrals so thatthey receive an im partial, independent review
from careerem ployees. W hen the IRS receives a referralabouta particular
organization, itis prom ptly forwarded to the C lassification unitofthe Exem pt
O rganizations (EO ) Exam ination office in Dallas,Texas. Pursuantto IRM
4.75.5.4(1), within 30 days ofreceiving the referral, the C lassification staffbegins
evaluating w hetherthe referralhas exam ination potential, should be considered in a
future year, needs additionalinform ation to m ake a decision, orfalls within the
categories ofm atters thatare referred for EO ReferralC om m ittee review .' Although
IRM 4.75.5.4(1) sets a goalof90 days to com plete reviews ofreferrals, the tim e it
takes to fully review a particular referralvaries, depending on such factors as the
issues involved and the availability ofrelevant inform ation (i.e. organization's Form s
990, externalsources such as m edia reports, internetsearches, etc.).
In those cases in which the IRS needs additional inform ation aboutthe subjectofa
referralthat is notreadily available, such as its Form 990 that has notbeen filed yet
for the tax year atissue, Classification m ay suspend classifying the referral and
places itin the follow -up category untilthe additionalinform ation is available. O nce
the additionalinform ation is received, reviewed, and supports the referral being
classified as having exam ination potential, the referralis sentto unassigned
inventory, untila revenue agentwith the appropriate levelofexperience forthe
issues involved in the m atter is available to conductan exam ination.
O nce in inventory, there are num erous factors thatcan affecthow long ittakes to
com plete the exam ination process. W hile itis difficultto predicthow long any single
exam ination willtake, for cases closed in FY 2011, the average tim e ittook to close
a case was 210 days.
c. H ow m any persons are involved in the enforcem ent ofthe 501 (c)(4) rules?
1 PursuantIRM 4.75.5(4), cases forwarded for C om m ittee review include those: containing
evidence orallegations ofpoliticalorlobbying activities; involving sensitive inform ation subm itted,
by an elected official or a M em ber ofC ongress (orC ongressional staff); or involving other factors
indicating thatreview by the EO ReferralC om m ittee would be desirable for reasons offairness or
integrity.
JW1559-000831
The Exem ptO rganizations (EO ) function is responsible for the enforcem ent of
section 501 (c)(4) statutory rules and regulations as wellas those applicable to all
other types oftax-exem ptorganizations.
For FY 2011, the total num ber ofEO staffwas 889. O therthan the 14 em ployees in
the Director's office, the three EO offices are staffed as follows:
Rulings and Agreem ents (R &A), which includes EO Determ inations and EO
Technical, ensures organizations m eetlegalrequirem ents during the
application or private letter ruling process, and through guidance. In FY 2011,
R &A had 332 em ployees.
EO Exam inations (Exam ) is com prised ofvarious units, including the
Classification unit, the EO Com pliance Unit, and the Review ofO perations
unit. Exam develops processes to identify areas ofnoncom pliance, develops
corrective strategies, and coordinates with other EO functions to ensure
com pliance, so thatorganizations m aintain theirexem ptstatus. In FY 2011,
Exam had 531 em ployees.
EO C ustom er Education and O utreach (CE&O ) coordinates, assists and
supports the developm entofeducationalm aterials and outreach efforts for
organizations to understand their responsibilities underthe tax law. In
FY 2011, CE&O had a staffof12 em ployees.
The em ployees in these functions are responsible forthe regulation ofalltypes of
tax-exem pt organizations, including section 501 (c)(4) organizations.
Q uestion 4. The Exem ptO rganizations 2011 Annual R eportand 2012 W ork Plan
states that501 (c)(4) organizations "can declare them selves tax-exem ptw ithout
seeking a determ ination from the IRS. EO w ill review organizations to ensure that
they have classified them selves correctly and thatthey are com plying w ith
applicable rules."
a. W hy does the IRS allow 501 (c)(4) organizations to self-declare?
The InternalRevenue Code expressly provides thatcertain tax-exem pt
organizations m ustgive notice to the IRS, by filing an application for exem ption,
in orderto claim tax-exem ptstatus. The InternalRevenue Code does notrequire
an organization to provide notice to the IRS to be treated as described in section
501 (c)(4). By contrast, for exam ple, Section 508 generally requires an
organization to provide notice to the IRS before itwillbe treated as described in
section 501 (c)(3).
b. W hen an organization "selfdeclares" as a 501 (c)(4) organization, how does
the IRS getnotice and how long does ittake the IRS to conductthe review to
ensure thatthe organization has classified itselfcorrectly?
As with othertax exem ptorganizations, organizations claim ing to be tax-exem pt
JW1559-000832
undersection 501 (c)(4) generally are required to file a Form 9902 on an annual
basis?
The Exem ptO rganizations office ofthe IRS is responsible for the com pliance ofover
one m illion organizations with diverse goals and purposes. In orderto ensure the
highestdegree ofcom pliance with tax law while working with lim ited resources, EO
m aintains a robust and m ulti-faceted post-filing com pliance program thatconducts
reviews ofexem ptorganizations in various ways, such as:
Review ofO perations (RO O ) reviews: Because a RO O review is notan
audit, the RO O carries outits post-filing com pliance w ork w ithout
contacting taxpayers. Instead, the RO O looks atan organization's Form
990, website, and other publicly available inform ation to see w hatitis
doing and w hether itcontinues to be organized and operated for tax
exem ptpurposes. Ifitappears from a RO O review thatan organization

m ay notbe com pliant, the organization is referred for exam ination.
Com pliance checks: In a com pliance check, IRS contacts taxpayers by
letterwhen we discover an apparenterroron a taxpayer's return orwish to
obtain further inform ation or clarification. A com pliance check is an
efficient and effective w ay to m aintain a com pliance presence w ithoutan
exam ination. W e also use com pliance check questionnaires to study
specific parts ofthe tax-exem ptcom m unity orspecific cross-sector
practices.
Exam inations: Exam inations, also known as audits, are authorized under
Section 7602 ofthe Code. For exem ptorganizations, an exam ination
determ ines an organization's continued qualification for tax-exem pt status.
W e conducttwo differenttypes ofexam inations: correspondence and
field.
Because the IRS cannot review every existing organization in every tax year, we
use the review techniques described above to m axim ize ourcoverage ofthe tax
exem ptsector in both ourgeneralprogram work and our projectwork. The
projectwork, which results from ourstrategic planning process, is designed to
focus on specific areas affecting the EO sector and to directm ore effective use of
our resources in the effortto strengthen com pliance and im prove tax
adm inistration. Described in the EO 2012 W ork Plan, the sections 501 (c)(4),(5)
and (6) Self-Declarers is one such project. This projectfocuses on organizations
that hold them selves outas being tax-exem pt rather than seeking IRS
recognition oftheir exem ptstatus.
Q uestion 5. The IRS C om pliance G uide for Tax-Exem ptO rganizations states:
Reference to the Form 990 includes the entire applicable Form 990-series annual inform ation
returns, such as Form s 990, 990-EZ, 990-PF, and 990-N e-postcard.
3 Treas. Reg. 1.6033-1 (a)(1).
2
JW1559-000833
"W hen a 501 (c)(4), (5) or (6) organization's com m unication explicitly advocates
the election or defeatofan individualto public office, the com m unication is
considered politicalcam paign activity. A tax-exem ptorganization thatm akes
expenditures for politicalcam paign activities shallbe subjectto tax in an am ount
equalto its netinvestm entincom e for the year orthe aggregate am ount
expended on political cam paign activities during the year, w hichever is less."
a. H ow does the IRS keep track ofthese explicitcom m unications and ensure that
the organization pays this tax?
Tax-exem pt organizations filing Form s 990 or 990-EZ are required to reportpolitical
activities. O rganizations thatengage in director indirectpolitical cam paign activities
are also required to com plete Schedule C ofForm 990 or990-EZ. O rganizations
subjectto tax undersection 527(f) are required to com ply with the statutory reporting
and paym ent rules. The IRS atso receives referrals regarding such activities from a
variety ofsources thatare handled through an im partial, independent review. See
the response to question 3 for the description on the IRS referralprocess.
b. W hatis the reason for the requirem entthatthe tax w ill be based on
"w hichever is less" betw een its netinvestm entincom e for the year orthe
aggregate am ountexpended on politicalcam paign activities?
The statute undersection 527(f) explicitly states thata 501 (c) organization is subject
to its tax based on "an am ountequalto the lesser of- (A) the netinvestm entincom e
ofsuch organization for the taxable year, or (8) the aggregate am ountexpended
during the taxable yearfor such an exem ptfunction."
c. W hattax w ould an organization have to pay ifitspends allits incom e on

political advertising (therefore ithas NO netinvestm ent incom e)?
U nderthe statute cited above, an organization thatotherw ise m eets the
requirem ents ofsection 501 (c)(4) socialw elfare tax-exem ptstatus, which spends all
its incom e on politicaladvertising and has no netinvestm entincom e w ould notow e
any tax undersection 527(f). Itm ay however, through such spending (and
depending on the otherwise applicable facts ofthe case), no longerqualify as an
organization thatis tax-exem ptundersection 501 (c)(4) .
Q uestion 6. M s. Lerner's letter quotes the IRS w ebpage on SocialW elfare

O rganizations:
"The prom otion ofsocialw elfare does notinclude director indirect
participation or intervention in politicalcam paigns on behalfofor in
opposition to any candidate for public office. H ow ever, a section 501 (c)(4)
socialw elfare organization m ay engage in som e politicalactivities,so long as
that is notits prim ary activity. H ow ever, any expenditure itm akes for political
activities m ay be subjectto tax undersection 527(f). [Em phasis added.]
JW1559-000834
a. W hatis the statutory basis ofthe language thatallow s 501 (c)(4) organizations
to engage in som e politicalactivities?
Please see responses to questions 1 and 2, above.
b. H ow does the IRS keep track ofthese politicalactivities and ensure thatthe
organization pays the tax undersection 527(f)?
Section 501 (c)(4) organizations filing Form s 990 or 990-EZ are required to report
political activities. O rganizations thatengage in director indirectpolitical cam paign
activities are also required to com plete Schedule C ofForm 990 or990-EZ.
O rganizations subjectto tax undersection 527(f) are required to com ply with the
statutory reporting and paym entrules. The IRS also receives referrals regarding
such activities from a variety ofsources thatare handled through an im partial,
independentreview . See the response to question 3 forthe description on the IRS
referral process.
Q uestion 7. In herJuly 13 letter, M s. Lernerstates thatthe IRS also addresses

the issue ofpoliticalactivities in the Form s 990 and 990-EZ.
Are Form s 990 and 990-EZ m ade public? Ifso,w here can they be accessed?
Yes, Form s 990 and 990-EZ are m ade public. Tax-exem pt organizations are required
to m ake their returns w idely available for public inspection.4 O rganizations are required
to allow the public to inspectthe Form s 990, 990-EZ, 990-N, and 990-PF they have filed
with the IRS fortheirthree m ostrecenttax years.5 Exem ptorganizations also are
required to provide copies ofthese inform ation returns w hen requested, or m ake them
available on the Internet.6 The annualinform ation returns also are available from the
IRS,? as wellas from third-party sources thatpostthem on theirwebsites.
Q uestion 8. InternalR evenue Services Publication 557 states that, ifa 501 (c)(4)
entity can "subm itproofthat[the] organization is organized exclusively to
prom ote socialw elfare, itcan obtain an exem ption even ifitparticipates legally in
som e political activity on behalfofor in opposition to candidates for public
office."
H ave the follow ing 501(c)(4) organizations a) applied for; and ifso, b) received
the described exem ption for politicalactivity from the IR S?
a. C rossroads G rassroots Policy Strategies
b. Priorities U.S.A.
1RC 6104(d); Treas. Reg 301.6104(d)-1 and -2.
slR C 6104(d)(2); Treas. Reg. 301.6104(d)-1(a).
6 IRC 61 04(d)(1); Treas. Reg. 301.61 04(d)-2.
7 1RC 6104(b); Treas. Reg. 301.6104(b)-1. Due to disclosure laws, an organization m ust
subm itForm 4506-A, R equestforPublic Inspection orC opy ofExem ptorPoliticalO rganization
IRS Form , to the IRS office indicated on the form or accom panying instructions.
JW1559-000835
c. A m ericans Elect
d. A m erican A ction N etw ork
e. A m ericans for P rosperity
f. A m erican Future Fund
g. A m ericans for Tax R eform
h. 60 Plus A ssociation
i. P atriotM ajority U SA
j. C lub for G row th
k. C itizens for a W orking Am erica Inc.
I. Susan B.A nthony List
Initially, to clarify, section 501 (c)(4) organizations do notreceive "exem ption for
politicalactivity." Rather, organizations are recognized undersection 501 (c)(4) as
tax-exem ptwhen they dem onstrate thatthey plan to be prim arily engaged in
activities thatprom ote socialwelfare. Ifthey m eetthatstandard, the factthatthey
engage in other activities thatdo notprom ote socialwelfare, such as political
cam paign intervention, willnotpreclude recognition oftheir tax-exem pt status.
W hether an organization m eets the statutory and regulatory requirem ents ofsection
501 (c)(4) depends upon allofthe facts and circum stances, and no one factor is
determ inative.
As discussed in our response to you dated June 4,2012, section 6103 ofthe
Internal R evenue Code prohibits the disclosure ofinform ation aboutspecific
taxpayers unless the disclosure is authorized by som e provision in the Internal
R evenue Code. The IRS cannot legally disclose w hetherthe organizations on your
listhave applied for tax exem ption (unless and untilsuch application is approved).
Section 6104(a) ofthe C ode perm its public disclosure ofan application for
recognition oftax exem ptstatus only afterthe organization has been recognized as
exem pt.
Searching the nam es exactly as provided, our records show thatthe follow ing
organizations have been recognized by the IRS as tax exem pt undersection
501 (c)(4).
Am ericans For Prosperity
Am erican Future Fund
60 Plus Association
PatriotM ajority U SA
Citizens for a W orking Am erica Inc.
W ith respectto the otherorganizations for which you inquired, we willbe able to
determ ine ifthey have been recognized by the IRS as tax-exem ptwith additional
inform ation, such as an address or EIN, thatspecifically identifies the
organization. O rganizations often have sim ilar nam es or m aintain m ultiple
chapters with variations ofthe sam e nam e. W ith respectto m any ofthe other
organizations you identified, num erous organizations in our records have very
sim ilar nam es. IRS staffcan w ork with your staffin identifying the specific
JW1559-000836
organizations for which you are interested. IRS staffis also available to assist
your staffto navigate searchable databases on the IRS public website. As
previously discussed, inform ation on organizations with applications currently
pending legally cannotbe provided unless and untilthe application is approved.
Please note thatorganizations thathold them selves outas tax-exem ptw ithout
IRS recognition and organizations thathave pending applications for recognition
are required to file annual returns/notices.
Q uestion 9. H ave you rem inded 501 (c)(4)s w hich publicly seem to be
operating in the partisan politicalarena as to the factors you w illconsider in
determ ining w hether they are engaging in partisan political activity? Ifnot,
w hy not?
As described in the July 13,2012 response, the IRS takes severalsteps to
continually educate organizations ofthe requirem ents underthe tax law and
inform them oftheir responsibilities to avoid jeopardizing their tax-exem pt status.
W e believe these steps ensure the IRS adm inisters the nation's tax laws in a fair
and im partialm anner.
Ihope this inform ation is helpful. Ifyou have questions, please contact m e or have
yourstaffcontactC atherine Barre at(202) 622-3720.
Sincerely,
Steven T. M iller
D eputy C om m issioner
for Services and Enforcem ent
JW1559-000837
Page 1 of1
H aw kins A nn K
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- - - _
_._._
..__...
H inton Irm a D
From :
M onday, July 30, 2012 12:35 PM
S ent:
To:
FW : Letter from Sen. C arlLevin to IR S C om m . Shulm an (July 27 2012)
S ubject:
A ttachm ents: H ow to U N ZIP .htm l; SecureZIP Attachm ents.zip
..
b(6) and b(7)(C)\person...
pis process
From : Barre catherine M
sent: Friday, July 27, 2012 4:35 PM
To: H inton Irm a D; G rodnitzky Steven; O rtez C um buka I; G raves D iane M

Subject: Fw: Letter from sen. carl Levin to IRS C om m . Shulm an (July 27 2012)
RECEIVED
JUL 30 2012
Sentusing BlackBerry
From : R obertson, M ary (HSG AC) [m ailto:M ary_R obertson@ hsgac.senate.gov]
CONG.CORR.BR
CL:LA
sent: Friday, July 27,2012 02:51 PM
To: Barre catherine M

C c: M eier, Kaye (LeVin) <Kaye_M eier@ levin.senate.gov>; Bean, Elise (HSG AC)
<Elise_Bean@ hsgac.senate.gov>; Barkley, C hris (HSG AC) <C hris_Barkley@ hsgac.senate.gov>;
R obertson, M ary (HSG AC) <M ary-R obertson@ hsgac.senate.gov>
Subject: Letter from Sen. carl Levin to IRS Com m . Shulm an (July 27 2012)
A ttached please find a letter for IR S C om m issioner Shulm an from Senator C arlLevin. C hairm an of
the Senate Perm anent Subcom m ittee on Investigations. The original w illbe dropped in the m ail this
afternoon.
It w ould be appreciated ifyou could m ake sure that M s. Lois Lerner, D irector ofExem pt
O rganizations, also receives a copy ofthis letter.
PLEA SE A CK N O W LED G E R EC EIPT O F TH IS M ESSA G E & A TTA CH M EN T. Thank

you.
M ary D. R obertson
C hiefC lerk
C.S. Senate Perm anent Subcom m ittee on Investigations
199 R ussellSenate O ffice B uilding
W ashington, D .c. 20510
202/224-98G 8 . D irect
202/224'950;') -M .ain
202/2247042 -Fax
RECEIVED
7/30/2012
JW1559-000838
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July 27,2012
VIA U.S.M A IL & EM A IL (Cathcrine.M .Barre@ irs.gov)
The H onorable D ouglas H.Shulm an
Com m issioner
lO th Streetand Pennsylvania A venue,N W
W ashington,D .C. 20004
RECEIVED
JUL 3020\2
CONG.CORR.BR
CL:LA
D earCom m issioner Shulm an:

Iam w riting to express m y concern abouthow the IRS interprets the law regarding the extentto
w hich 501(c)(4) "social w elfare" organizations can engage in partisan political activity. The July 13.
2012 response by Lois G.Lerner, D irector ofExem ptO rganizations,to m y June 13,2012 Icttcr w as
unsatisfactory.
In the response, M s. Lernerstated that"The IRS takes steps to continually inform
organizations oftheir responsibilities as social w elfare organization to help them avoid jeopardizing
theirtax-exem pt status," and "actively educates section 50I(c)(4) organizations atm ultiple states in
theirdevelopm ent abouttheir responsibilities under the tax law ." [Em phasis added.]
H erdiscussion does notdescribe an IRS initiative to "continually inform " or"actively
educate." Rather, itshow s the IRS is passively m aking som e infom lation available once a 50 I(c)(4)
entity is already in existence. Further, herdiscussion ofthe explanatory m aterials available to the
public,and the m aterials them selves, are confusing. This leads to a predictable result: organizations
are using Internal Revenue Code Section 501(c)(4) to gain tax exem ptstatus w hile engaging in
partisan politicalcam paigns. There is an absurd tangle ofvague and contradictory m aterials that the
IRS provides. M aking the problem w orse is that the IRS know s there is a problem because ofthe
public nature ofthe activity, but has failed to address it.
First,the law .
26 U .S.C.50 I(c)(4) states that"Civic leagues ororganizations notorganized for pro litbut
operated exclusively for the prom otion ofsocialw elfare,or local associations ofem ployees,the
m em bership ofw hich is lim ited to the em ployees ofa designated person or persons in a particular
m unicipality,and the netearnings ofw hich are devoted exclusively to charitable,educational.or
recreationalpurposes" are exem pt from taxation.I [Em phasis added.] M erriam -W ebster defines
"exclusively" as "single,sole; w hole; undivided." Therefore.itw ould appear thatthe law prevents
entities thatorganize underSection 501(c)(4) from allY activity that is notoperated exclusively for the
prom otion ofsocial w elfare or an association ofem ployees.
1
26 U .S.c.501(c)(4).
JW1559-000839
Consistentwith the law isa 1997 letterfrom the IRS denying tax-exem ptstatus to agroup
called the NationalPolicy Forum . The letterindicates thatthe IRS based itsdenialon the factthatthe
organization wasengaged in partisan politicalactivity,stating that"partisan politicalactivity doesnot
prom ote socialwelfare asdefined in section 501(c)(4)," and thatthe applicant"benefit[s]select
individuals orgroups,instead ofthe com m unity asa whole.2
One partofInternalRevenue Service Publication 557 in its guidance states,consistentwith the
law,that:
"Ifyourorganization isnotorganized forprofitand willbe operated only to prom ote social
welfare to benefitthe com m unity,you should file Form 1024 to apply forrecognition ofexem ption
from federal income tax undersection 501(c)(4).,,3 [Emphasis added.]
AnotherpartofInternalRevenue Service Publication 557 starts offby agreeing with the law
and states,"Prom oting socialwelfare does notinclude directorindirectparticipation orintervention in
politicalcam paigns on behalfoforin opposition to any candidate forpublic office.'''' The IRS is
accurately and clearly stating,in som e placesatleast,that"socialwelfare" advocacy doesnotinclude
cam paigning fororagainstacandidate orcandidates.
So far,so good -.untilthatsam e Publication 557 states:"However,ifyou subm itproofthat
yourorganization isorganized exclusively to prom ote socialwelfare,itcan obtain an exem ption [from
taxes]even ifitparticipates legally in som e politicalactivity on behalfoforin opposition tocandidates
forpublic office.,,5
Thatlanguage seem s inconsistentwith the otherreferenced partsofPublication 557 (aswellas
being inconsistentwith law and precedent),unless itmeans thatthe exem ption isn'tavailable forthe
politicalactivity portion funded by 501(c)(4)receipts.
Further,an IRS regulation thatinterprets Section 50I(c)(4)states that."An organization is
operated exclusively forthe prom otion ofsocialwelfareifitis prim arily engaged inprom oting in
som e way the com mon good and generalwelfareofthe peopleofthe com m unity.',6 [Emphasis
added.]
So the IRS regulation says the law's requirem entof"exclusively" really m eans"prim arily,"
som ething very differentfrom "exclusively."
The IRS webpage citesan internaltraining article which states:
"'[Slocialwelfare'is inherently an abstruse conceptthatcontinues to defy precise definition.
Carefulease-by-ease analyses and closejudgm entsare stillrequired.,,7 [Emphasis added]
Fairenough.
2 InternalRevenue service lenerto the NationalPolicy Forum,February 21, 1997.
) Publication SS7 (Rev.October201 I),pg.51.
Id
s Id
6 Treasury Regulations,SubchapterA,Sec. 1.501(c)(4)-1.
7 hItDjl/www.irs.gov/charitieslnonprofitslarticlelO .
.id=156372.OO.html.
JW1559-000840
In itsCom pliance Guide forTax-Exem ptOrganizations,the IRS gives direction regarding how to
make a case-by-case evaluation whethera com m unication ispolitical.8 ThatGuide saysthatthe
following factors indicate thatan advocacy com m unication is politicalcam paign activity:
The com m unication identifies a candidate forpublic office;

The tim ing ofthe com m unication coincides with an electoralc a m p a i g n ~
The com m unication targets voters in a particularelection;

The com m unication identifies the candidate's position on the public policy issue thatisthe
subjectofthe com m unication;
The position ofthe candidate on the public policy issue has been raised as distinguishing the
candidate from others in the cam paign,eitherin the com m unication itselfor in otherpublic
com m unications;and
Thecom m unication isnotpartofan ongoing series ofsubstantially sim ilaradvocacy
com m unications by the organization on the sam e issue.
The guide further lays outthe factors thatindicate when an advocacy com m unication i!.!!!!!political
cam paign activity:
Theabsence ofanyoneorm oreofthefactors listed above;
The com m unication identifies specific legislation,ora specific eventoutside the controlofthe
organization,thatthe organization hopes to influence;
The tim ing ofthe com m unication coincides with a specific eventoutside the controlofthe
organization thatthe organization hopes to influence,such as a legislative vote orotherm ajor
legislative action (forexam ple,a hearing before a legislative com m ittee on the issue thatis the
subjectofthe com m unication);
The com m unication identifies the candidate solely as a governm entofficialwho is in a position
to acton the public policy issue in connection with the specific event(such as a legislatorwho
iseligible to vote on the legislation);and
Thecom m unication identifies thecandidatesolely in the listofkey orprincipalsponsors ofthe
legislation thatis the subjectofthe com m unication.
Itisclear from the application ofthose factors thatwhatis going on in the U.S.with certain
50I(c)(4)organizations in theirtelevision advertisem ents are politicalcam paign activities.
Below are two transcriptsofadvertisem ents thatwereputon television by 501(c)(4)
organizations. As you can see,the subjectofAdvertisem ent#1 is a Dem ocratic Senator,and the
subjectofAdvertisem ent#2 isa Republican Senator. This is nota partisan issue.
Television Advertisem ent# I:
"It'stim eto play:W ho isthe biggestsupporteroftheObam aagenda in Ohio.It'sSherrod
Brown.Brown backed O bam a's agenda a whopping 95 percentofthe tim e.He voted for
budgetbusting Obam aCare thatadds $700 billion to the deficit.ForO bam a's $453 billion tax
increase.And even supported cap-and-trade which could have costOhio over 100,000 jobs.
TellSherrod Brown,forrealjob growth,stop spending and cutthe debt.Supportthe new
m ajority agenda atnewm ajorityagenda.org."
Com pliance Guide forTax-Exem ptOrganizations, pgs.4-5.
JW1559-000841
Television Advertisem ent#2:

"Before W allStreetgave him $200,000 in campaign cash. Before he voted to
letbank CEOstake m illions in taxpayerfunded bonuses. Dean Hellerwasa
stockbroker.No wonderhe voted againstW allStreetrefonn;againstholding
the big banksaccountable.Hellereven voted to risk yourSocialSecurity here,
in the stock market.Dean Heller:he votes like he stillworks forW allStreet,
and that's bad foryou."
Those ads,and so many like them,clearly fitthe factors the IRS has laid outin itsguide for
whatconstitutesa politicalcam paign activity. The advertisem ents m ake no pretense at
nonpartisanship;they are blatantly and aggressively partisan com m unications.
Entities thatfile underSection 50I(c)(4)ofthe InternalRevenue Code and takeadvantage of
itstax exem ption benefits should have to make a choice: eitherlose theirexem ptstatus (and pay
taxes)orelim inate the partisan politicalactivity.
The IRS needs to im m ediately review the activities of501(c)(4)entitiesengaging in running
partisan politicaladsorgiving funds to Section 527 organizations thatrun such ads. The IRS needsto
advise50I(c)(4)entitiesofthelaw inthisarea and thefactors itwilllook atin reviewing 50I(c)(4)
statusand tax exem ption issues.
Please provide me with the following information no laterthan August 10,2012:
I. How can the IRS interpretthe explicitlanguage in 26 U.S.C.501(cX4),which provides
that510(c)(4)entities m ustoperate "exclusively" forthe prom otion ofsocialwelfare,to
allow any tax exem ptpartisan politicalactivity by 501(c)(4)organizations?
2. Since partisan politicalactivity does notmeetthe IRS definition of"prom oting social
welfare," how can an organization thatparticipates in any partisan politicalactivity be
"organized exclusively to prom ote socialwelfare?"
3. The ExemptOrganizations 2011 AnnualReportand 2012 W ork Plan states:"As in any
election year,EO willcontinue its work to enforce the rules relating to politicalcam paigns
and cam paign expenditures.In FY 2012,EO willcom bine whatithas learned from past
projects on politicalactivitieswith new inform ation gleaned from the redesigned Form 990
to focus itsexam ination resources on seriousallegations ofim pennissible political
intervention.,,9
a. Typically,how long aftera com plaintto the IRS does a com pliance review begin?
b. W hatapproxim ate tim e does ittake to review the com plaint?
c. How many personsare involved in the enforcem entofthe 501(c)(4)rules?
4. The ExemptOrganizations 2011 AnnualReportand 2012 W ork Plan states that501(c)(4)
organizations"can declare them selves tax-exem ptwithoutseeking adetennination from the
9
ExemptOrganizations 2011 AnnualReportand 2012 W ork Plan.pg.8.
JW1559-000842
IRS.EO willreview organizations to ensure thatthelhave classified them selves correctly

and thatthey are com plying with applicable rules."I
a. W hy does the IRS allow 501(c)(4)organizations to self-declare?
b. W hen an organization "selfdeclares" asa50I(c)(4)organization,how does the IRS get
notice and how long does ittake the IRS to conductthe review to ensure thatthat
organization hasclassified itselfcorrectly?
5. The IRS Com pliance Guide forTax-Exem ptOrganizations states:
"W hen a 501(c)(4),(5)or(6)organization's com m unication explicitly advocates the
election ordefeatofan individualto public office,the com m unication isconsidered
politicalcam paign activity.A tax-exem ptorganization thatm akesexpenditures forpolitical
cam paign activities shallbe subjectto tax in an am ountequalto itits netinvestm entincom e
forthe yearorthe a g g r e ~ a t e am ountexpended on politicalcam paign activities during the
year,whichever is less." I
a. How does the IRS keep track ofthese explicitcom m unications and ensure thatthe
organization pays this tax?
b. W hatis the reason forthe requirem entthatthe tax willbe based on "w hicheveris less"
between its netinvestm entincom e forthe yearorthe aggregate am ountexpended on
politicalcam paign activities?
c. W hattax would an organization have to pay ifitspends allofits incom e on political
advertising (therefore ithas NO netinvestm entincom e)?
6. M s.Lerner's letterquotes the IRS webpage on SocialW elfare Organizations:
"The prom otion ofsocialwelfare does notinclude directorindirectparticipation or
intervention in politicalcam paigns on behalfoforin opposition to any candidate forpublic
office.However,a section 501(c)(4) socialwelfare organization m ay engage in som e
politicalactivities,so long as thatis notits prim ary activity.However,any expenditure it
m akes forpoliticalactivities m ay be subjectto tax undersection 527(t):'[Emphasis
added]
a. W hatis the statutory basis ofthe language thatallows 50I(c)(4)organizations to engage
in some politicalactivities?
b. How does the IRS keep track ofthese politicalactivities and ensure thatthe
organization pays the tax undersection 527(t)?
7. In herJuly 13 letter,M s.Lernerstates thatthe IRS also addresses the issue ofpolitical
activities in the Form s 990 and 990-EZ.
Are Form s 990 and 990-EZ m ade public? Ifso,where can they be accessed?
8. InternalRevenue Service Publication 557 statesthat,ifa50I(c)(4)entity can "subm itproof

that[the] organization is organized exclusively to prom ote socialwelfare,itcan obtain an
10
II
Id.
Com pliance Guide forTax-Exem plOrganizations.pgs.3-4.
JW1559-000843
exem ption even ifitparticipates legally in som e politicalactivity on behalfoforin

opposition to candidates forpublic office."12
Have the following 501 (c)(4) organizations a)applied for;and ifso,b)received the
described exem ption forpoliticalactivity from the IRS?
a.
b.
c.
d.
e.
f.
g.
h.
i.
J.
k.
I.
Crossroads G rassroots Policy Strategies

Priorities U.S.A.
Am ericans Elect
Am erican Action N etw ork
Am ericans forProsperity
Am erican Future Fund
Am ericans forTax Reform
60 Plus Association
PatriotM ajority U SA
Club forG row th
Citizens fora W orking A m erica Inc.
Susan B.A nthony List
9. Have you rem inded 501 (c)(4)s which publicly seem to be operating in the partisan political
arena as to the factors you willconsider.in determ ining w hetherthey are engaging in
partisan politicalactivity? Ifnot,why not?
Ihave enclosed a copy ofM s.Lerner's letter. Ifyou have any questions,please contactm c,or
have yourstaffcontactKaye M eierofmy staffatkave m eier@ levin.senate.gov or202/224-911 O.
Again,itis urgentthatIreceive youranswers by August 10,2012.

Sincerely,
Carl Levin
Chainllan
cc: Dr.Tom Coburn
M s.Lois G.Lerner
Publication 557 (Rev.O ctober2011),pg.51.
JW1559-000844
JW1559-000845
JW1559-000846
D EPA RTM EN T O F TH E TREA SU RY

W A S H IN G T O N , D .C . 2 0 2 2 4
Septem ber 14, 2012
The H onorable C arlLevin

C hairm an
Perm anentSubcom m ittee on Investigations
Iam responding to your letterto C om m issioner Shulm an dated August31, 2012,
requesting additionalinform ation aboutsection 501(c)(4) organizations. This response
supplem ents the previous responses dated June 4,2012, JUly 13,2012 and
August24,2012, and addresses the additional questions raised in your recent letter.
Q uestion 1. Ifthe IRS determ ines thatan organization thathas been given
501 (c)(4) status has notengaged prim arily in socialw elfare activities, butinstead
w as prim arily engaged in activity w ithin the scope ofsection 527,w hatare the
consequences forthe organization? W hatare the consequences forsuch an
organization having notfiled tim ely Form s 8871 and 8872? M ustthey file such
form s afterthe fact? W hattaxes w illbe due? W illcontributions thatalready haYe
been m ade to thatorganization be taxable to thatorganization?
Ifan IR S auditorexam ination concludes thata section 501 (c)(4) organization does not
engage prim arily in socialw elfare activities, the IR S m ay revoke the tax-exem pt status
ofthatorganization. Ifthe tax-exem ptstatus is revoked, the organization is a taxable
entity effective, in general, as ofthe firstday ofthe tax year underexam ination. The
organization is required to file Federalincom e tax returns, generally a Form 1120, U .S.
C orporation Incom e Tax. The tax treatm entofthe organization's contributions and
otherincom e is determ ined undernorm alrules ofSubtitle A.
W hetheran organization no longer qualifies to be tax-exem pt undersection 501 (c)(4)
does notdeterm ine w hether itis a political organization undersection 527. Section
527(e)(1) defines a politicalorganization as a party, com m ittee, or otherorganization
thatis organized and operated prim arily for the purpose ofdirectly or indirectly
accepting contributions orm aking expenditures for an exem ptfunction (as defined in
527(e)(2)). Ifan organization m eets this definition, then its tax status is determ ined
undersection 527.
JW1559-000847
Subjectto certain exceptions, to be tax-exem pt undersection 527,1 a political

organization is required to give notice electronically to the Service.2 The required notice
form is Form 8871, PoliticalO rganization Notice ofSection 527 Status. To be tax
exem pt, the politicalorganization m ustfile Form 8871 within 24 hours afterthe date on
w hich itw as established. Ifthe organization has a m aterialchange in any ofthe
inform ation reported on Form 8871, itm ustfile an am ended Form 8871 w ithin 30 days
ofthe m aterialchange to m aintain its tax-exem ptstatus. W hen the organization
term inates its existence, itm ustfile a finalForm 8871 within 30 days ofterm ination.3
An organization thatis required to file Form 8871, butfails to file on a tim ely basis,w ill
notbe treated as a tax-exem pt politicalorganization forany period before the date Form
8871 is filed.4 The taxable incom e ofthe organization forany period in w hich itfailed to
file Form 8871 (or, in the case ofa m aterialchange, the period beginning with the date
ofthe m aterialchange and ending on the date itsatisfies the notice requirem ent) is
subjectto tax and m ustbe reported on the annualincom e tax return Form 1 1 2 ~ P O L . 5
The tax is com puted by m ultiplying the organization's taxable incom e by the highest
federalcorporate tax rate,6 currently 35 percent. For purposes ofcom puting its taxable
incom e for any period, the organization includes its exem ptfunction incom e (including
contributions received, m em bership dues, and politicalf u n d r a i s i n ~ receipts), m inus any
deductions directly connected w ith the production ofthat incom e, butm ay notdeduct
its exem ptfunction expenditures forthe period.8
G enerally, tax-exem pt political organizations thathave, orexpectto have,
contributions orexpenditures exceeding $25,000 during a calendaryear are required
to file Form 8872, PoliticalO rganization R eportofC ontributions and Expenditures,
beginning w ith the firstm onth orquarter during the calendar year in w hich they
acceptcontributions orm ake expenditures.9 A tax-exem pt political organization
subjectto the periodic reporting requirem entm ay choose to file Form 8872 on a
m onthly basis oron a quarterly/sem iannual basis, butitm ustfile on the sam e basis
forthe entire calendar year. In addition, tax-exem ptpoliticalorganizations thatm ake
, Tax-exem pt politicalorganizations generally are sU bjectto tax on the excess oftheir gross
incom e (excluding any exem ptfunction incom e) over allow able deductions thatare directly
connected w ith the production ofthe gross incom e (excluding exem ptfunction incom e). IR C
~ 527(c).
IR C 527(i)(1)(A), (i)(5), (i)(6); R ev. R ul. 2003-49, 2003-1 C. B. 903.
3 IR C 527(i)(2).
4 IR C 527(i)(1)(B).
51RC 527(i)(4). A politicalorganization, w hether or nottax-exem pt, thathas taxable incom e in
excess ofthe $100 specific deduction allow ed under 527 is required to file an annual incom e
tax return on Form 1120-PO L, U .S. Incom e Tax R eturn for C ertain PoliticalO rganizations. IR C
6012(a)(6); R ev. R ul. 2003-49.
6 IR C 527(b); R ev. R ul. 2003-49.
7 IR C 527(i)(4); R ev. Rul. 2003-49.
B IR C 162(e) denies a deduction for politicalcam paign expenditures.
9 IR C 5270); R ev. Rul. 2003-49. Alltax-exem pt politicalorganizations are SUbjectto the
reporting requirem ents ofIR C 5270), exceptfor those politicalorganizations described in
527(j)(5).
JW1559-000848
contributions orexpenditures with respectto an election forfederaloffice ~ a s defined

in 527G ){6 m ay be required to file pre-election reports forthatelection. 0
A tax-exem pt politicalorganization thatdoes nottim ely file the required Form 8872,
orthatfails to include the inform ation required on the Form 8872, m ustpay an
am ountcalculated by m ultiplying the am ountofcontributions and expenditures that
are notdisclosed by the highestfederal corporate tax rate,11 currently 35 percent.
Q uestion 2. H ow m any 501 (c)(4) organizations w hich appearto be prim arily

engaged in politicalactivity have been noti'fied by the IRS w ithin the last6 m onths
thatthey m ay be in violation ofthe law ?
W hen the IR S exam ines a section 501 (c){4) organization, the objective ofthe audit
is to determ ine w hetherthatorganization qualifies fortax-exem pt status as a social
w elfare organization. As discussed in ourJune 4,2012 response to your
M arch 30, 2012 letter, thatdeterm ination looks to w hetherthe organization is
prim arily engaged in activities thatprom ote socialw elfare, notorganized or operated
forprofit, and the netearnings ofw hich do notinure to the benefitofany private
shareholderor individual. The exam ination looks atthe activities engaged in during
the com plete taxable year atissue. Although the prom otion ofsocialw elfare does
notinclude director indirectparticipation or intervention in politicalcam paigns on
behalfofor in opposition to any candidate for public office, a section 501 (c){4) social
w elfare organization can engage in politicalactivities as long as itis prim arily
engaged in activities thatprom ote socialw elfare.
Ifthe IR S believes thatan organization does notm eetthe requirem ents under
section 501 (c){4), the IR S notifies the organization ofits intention to revoke the
organization's exem ptstatus, explaining the law and reasons for the proposed
revocation. The organization has 30 days from the date ofthat letterto protestor
appealthe determ ination before a final revocation letter is issued to the organization.
D uring the pastsix m onths, no notices ofproposed orfinalrevocation w ere issued to
section 501 (c){4) organizations. N ote thatthe IR S currently has m ore than 70
ongoing exam inations ofsection 501 (c){4) organizations (this includes exam inations
fora variety ofissues, som e ofw hich include w hetherthe organization is prim arily
engaged in activities thatprom ote socialw elfare). Itis also im portantto note that
the Service also m aintains a determ ination process to review the operations ofan
organization to determ ine w hether itshould be recognized as tax exem pt. In this
area,w e also review com pliance w ith the legalrequirem ents, including w hether an
organization is prim ary engaged in activities thatprom ote socialw elfare. There are
currently m ore than 1,600 organizations in the determ ination process seeking
recognition as a section 501 (c){4) organization. The levelofpoliticalactivity is an
issue in a num berofthese determ ination cases.
10 IR C
11 IR C
5270)(2)(A)(i)(II); R ev. Rul. 2003-49.

527U )(1).
JW1559-000849
Ihope this inform ation is helpful. Ifyou have questions, please contactm e orhave your
staffcontactCatherine Barre at(202) 622-3720.
Sincerely,
r / ~
/
Steven 1. M iller
JW1559-000850
From:
Lerner Lois G
Sent:
To:
Subject:
Attachments:
36251_Final_Levin_Attachments.pdf; 36251_Final_Response_Levin.pdf; 36251
_Incoming_Levin.pdf; 36251_Incoming_Levin_36251.pdf
Please print all more to come
Lois G. Lerner
From: Sinno Suzanne
JW1559-000851
JW1559-000852
JW1559-000853
JW1559-000854
JW1559-000855
JW1559-000856
JW1559-000857
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JW1559-000859
JW1559-000860
JW1559-000861
JW1559-000862
JW1559-000863
JW1559-000864
JW1559-000865
JW1559-000866
JW1559-000867
JW1559-000868
JW1559-000869
JW1559-000870
JW1559-000871
JW1559-000872
JW1559-000873
JW1559-000874
JW1559-000875
JW1559-000876
JW1559-000877
JW1559-000878
JW1559-000879
JW1559-000880
JW1559-000881
JW1559-000882
JW1559-000883
JW1559-000884
JW1559-000885
JW1559-000886
JW1559-000887
JW1559-000888
JW1559-000889
JW1559-000890
JW1559-000891
JW1559-000892
JW1559-000893
JW1559-000894
JW1559-000895
JW1559-000896
JW1559-000897
D EPA RTM EN T O F TH E TREA SU RY

W A S H IN G T O N , D .C . 2 0 2 2 4
O ctober 17,2012

C hairm an
C om m ittee on H om eland Security
W ashington, D C 20510
D earM r.C hairm an:
Iam responding to your letter to C om m issioner Shulm an dated Septem ber 27,2012,
requesting additional inform ation about section 501(c)(4) organizations. This response
supplem ents the previous responses dated June 4,2012, July 13,2012, August24,2012, and
Septem ber 14,2012, and addresses the additional questions raised in your recent letter.
Q uestion 1. Q uestion #15 on the IR S A pplication for R ecognition ofE xem ption U nder
S ection 501(a)states:
"H as the organization spentor does itplan to spend any m oney attem pting to influence
the selection, nom ination, election or appoinbnentofany person to any Federal, state,
or localpublic office to an office in a political organization? If"Y es," explain in detail
and listthe am ounts spentor to be spentin each case."
a. Forthe follow ing organizations please forw ard copies ofthe responses to
Q uestion #15:
1) C rossroads G rassroots P olicy Strategies
2) P riorities U .S.A
3) A m ericans for P rosperity
4) P atriotM ajority U SA
b. Please provide w ith each answ erthe explanatory "detail" and the lists ofthe
"am ounts spentor to be spentin each case" referred to in Q uestion #15.
As discussed in our previous responses dated June 4,2012, and August24,2012, the IR S
cannotlegally disclose w hether the organizations on your list have applied for tax
exem ption unless and untilsuch application is approved. Section 6104(a) ofthe Internal
R evenue C ode perm its public disclosure ofan application for recognition oftax exem pt
status only after the organization has been recognized as exem pt.
JW1559-000898
Enclosed are the publicly available portions ofthe application file for Patriot M ajority U SA
[EIN 45-0710294].
O ur records indicate a favorable determ ination letterwas also issued to Am ericans for
Prosperity [EIN 75-3148958] in O ctober2004. However, due to issues related to an
electronic conversion process undertaken a num berofyears ago,we have notyet been
able to locate our copy ofthe application file.'
Q uestion 2. In the IRS response ofAugust24,2012,M r.M illerstated thatan address

w ould be needed in orderfor the IRS to tellus w hetheror notan organization has been
recognized by the IRS as tax-exem pt, Ihave provided address inform ation on several
organizations below ,as w ellas verbatim statem ents from these organizations'w ebsites
regarding their501(c)(4) status.
Foreach organization, please letm e know ifthe IRS has recognized itas tax-exem pt,
Organization W ebsiteAddress: Organization's
statem enton 501(c)(4)
status:
http://www.crossroadsgps.orgI
I Cr
"CrossroadsGPS is
ossroads Grassroots P.O.Box34413
PolicyStrategies
otganized asIInonprofit
W ashiti8tOD,DC
organization undersection
20043
501(0)(4)oftheInternal
RevenueCode."
Priorities U.S.A.
"PrioritiesUSA isa
171SM StreetNW
http://www.prioritiesusa.org!
50)(c)(4)organization
#264
dedicated to m obilizing
W ashington,OC
Americansto preserve,
20036-4504
protectand promote the
m iddleclass,and to
ensureopportunity and
freedom forthenext
Sl:eneration."
Americans for
2111
W ilsonBlvd. http://am ericansforprosperity.org! "AtneticansforProsperity
isa 501 (c)(4)entity
Prosperity
Suite350
undertheIRS code.
Arlington,VA 22202
Contributions orgiftsto
Am ericans forProsperity
ate nottax deductible."
"PatriotM ajority USA is
PatriotM ajority USA 1717RhodeIsland http://patriotm ajority.org!
a.501(c)(4)withthe
Avenue,NW
prim arypurpose of
W ashington,OC
encouraging adiscussion
20036
ofeconomic issuesin the
UnitedStates."
Organization Nam e: Organization
Address:
As stated in our previous response to you dated August24,2012, our records show that
Am ericans for Prosperity and Patriot M ajority USA have been recognized by the IRS as tax
exem ptundersection 501(c)(4). W ith respectto Crossroads G rassroots Policy Strategies
and Priorities U.S.A.,we have no record ofan approved application for these organizations.
1 In addition to public availability from the IRS,section 6104(d) ofthe Internal R evenue Code requires that
the organization m ake its application for tax exem ption available for public inspection.
JW1559-000899
Ihope this inform ation is helpful. Ifyou have questions, please contactm e or have yourstaff
contactC atherine Barre at(202) 622-3720.
Sincerely,
Steven T.M iller

JW1559-000900
Septem ber 27,2012

V IA U .S.M A IL & EM A IL (Catherine.M .Barre(ll{irs.gov)
The H onorable D ouglas H. Shulm an
Com m issioner
1111 Constitution A venue,N .W .
RECEIVED
B y Executive Secretariat at12:36 pm , Sep 28,2012

Iappreciate the Septem ber 14,2012 response by Steven T.M iller, D eputy Com m issioner for
Services and Enforcem ent,to m y letter ofA ugust31,2012.
A s a follow -up to that Jetter,please provide m e w ith the follow ing:
1. Q uestion # 15 on the IRS A pplication for Recognition ofExem ption U nder Section SOl(a)
states:
"H as the organization spentordoes itplan to spend tm y m oney attem pting to int1uence the
selection,nom ination, election or appointm entofany person to any Federal, state,or local
public oU ice to an office in a political organization? ]f "Y es," explain in detailand list the
am ounts spentorto be spentin each case."
a. Forthe follow ing organizations please forw ard copies ofthe responses to Q uestion #15:
1)
2)
3)
4)

Priorities U .S.A .
A m ericans for Prosperity
Patriot M ajority U SA
b. Please provide w ith each ans\ver the explanatory "detail" and the lists ofthe "am ounts
spentorto be spentin each case" referred to in Q uestion #15.
2. In the IRS response ofA ugust24,2012,M r. M iller stated thatan address w ould be needed in
orderforthe IRS to tellus w hether or notan organization has been recognized by the IRS as
tax-exem pt. Ihave provided address inform ation on severalorganizations below ,as w ellas
verbatim statem ents from these organizations' \vebsites regarding their 501 (c)(4) status.
JW1559-000901
Foreach organization,please letm e know ifthe IRS has recognized itas tax-exem pt.
Organi:r,ation Nam e:
Crossroads G rassroots
Policy Strategies
f-----....---.........---..........--....- ..-
cc: Dr.Tom Cobum

Ranking M em ber
Perm anentSubcolllm ittee on Investigations
M r.Steven T. M iller
Deputy Com m issionerfor Services and Enforcem ent

JW1559-000903
86428
CONGRESSIONAL Rl'\CO RD -SEN A TE
W hlle T l;U l'l'0n, Lho m otive hnhlJl(\ this Ie\[
lslation and tll'lieve ensuring the
sta.te and
lO G a} ...
or
i.s a noble goal\ 1
believe the responsibility to addrolill thia

issue
hes w ith lIlt' stine anll local govern
m <Hlts. I do not IJeHIJve the fN lem l govern
m ent lw.s the autllorlty under the C onslllu
Lion to provide trallllng for 10t:,,1 and stili"
law enforcem ent or lo provide st.'curllY
equipm ent to sLatt'an'\ luesl courthouses at
the federal goverum ent':! lxpense. Further, I
l,elieve the training program this bilJ au
thorizes duplicates exislillir federal training
prO gl'am s,
First, S. 2076 authorizes the D lreelO r of the
State Justice Institute (SJll to carry out "a
Im illing and technical assistance pro\rram
designed to teach em ployees of Stat", lo(:a!.
and tribal law enforcem ent agencil's bow t.o
rU H lc!pale and respond to violent l'ncounters
during the course of tholl' duties, incluu.ing'
duties rel"ti1);, to security at State, county,
am i trial courthouses." Tile purposc of SJI b
to further thtl <lllvtllopm enL and a<loption o f
im provell ju()lcial adm inIstration in 8U tte
courts In the U nited SLat.es, w hioh il; lJot a
fedem l rosponsitJility under r.he C onstitu
tion. State;
nH 1poU BilJiu for the
tration of their
A ddinr, an additional
allow able purpose to S.JI m erely broadens
the unconstltuU onal reaeh of thiS agency.
Further, even though S,2076 does no!, provide
any additional fun(lillg fol' SJI the agency
could use the authorization of additional re
spouailJilities
CJ.:i a basis for rc(}uesting future
appropriations from C ongn,ss.
Second, the 5,JI training progm m au thOl'
[zed in this Ilil! potentially duplicates exist
Ing federal training progl'lunl! available to

state and local law enfol'cem ent. The fol
low jng pr()gram 6 already exist,,:
I. U .S. M al'shal Ser\'icc's N a,ionl\! Cente!'

fOI',Judiclal Secul'I')', Office,of Protective In
t.elligence; Shares threat Inform ation w ith

state and local law enforcem ent af(tm Gles and
provl,les tm inlng to state and IOGal law en
forcem ent officers II'ho provide courthouse
security. A lao. provide8 guidance and
port to dl1>trict oftkes lind ,Iudicial Security

Inspectors (.1SJS) conducting high threat pro
ceedings and protective res\X )Ilses.
2. U ,S. M arshal SerV ice's N ational C em er
for Judicial Security Fellow .hill program ;
Provides a rhree-m ollth trallling program I'O J'
state. local, and Illtenlatlollal "(:om t S"etl'
I'il"
3', FB I's'U niform C rim e R eporting m C R )

division and Law Enforcem ent O fficers
K illed and A ssaulted iLEO K A ) program s;
U CR and LEO K ....collectdata on law enforce
m ent olIieers w ho have b<'cn klllcd 01' as

sault"d ill the line of duty. 'rhe FlU then
conducts LF;O K A tra1111.ug j)l'ogrtlrn.s for statp
'Inri
local law enforcem ent. pel"Sonuol based
on ihis data.
'1. FB I's Law Enforcem ent T""illlllg for
Safety and Survival (L gT S8 ) Ill'ogrM lI;
Trains FB I. police officers, and inte'l'llat1<m al
law enforcem ent personnel In survival tech,
niques.
5, FB I Field PfJlk" T m iulng proo;rM 11; In
cludes firearm training for state aOlI local
f), FB I's Law Enforcem ent ExeC\lliv('D e""I
0P1Ywut ....sso<;latlon program ;
heads
of state an(1 local law eniol'cem ent ageneles
fl"rsoH uel.
w ith betw een 50 and
7. A dvancou La.w Enl'O I'C l1rnD nt
R e
Septem ber 19, 2012
9. D epartm ent of HOIlH'IiW ll Sec\ll'iI.y's )'ed based 011 the prem ise th at ciU Z C IlS w ho
cral
gnf()1'(;'cJneul fPrainim .t C entet' vole ill our elect-ious are Inforrriou
IF'l..ETC) pl'O grum s; ,'lid 'Ph" 8m '\'Iv"l Shoot about w ho Is s(,oking t,o influence elec
ing 'l'ralnlnr-;
iSSTP) untl,)!' V LETC tions, Sal1ly, w e conU nuc to see th at
i ~ iU ! eight and a half day training prugram
that t"adJes law nnforc"nw nt officcl's (LEO s) lnform M ion obscured by organizations
"how to em l,loy sevel'al types of w eapon sys w ho are m isusing our tax C O \l(l for po
leU lH fQ und, in m O B\' police
\iU cal gain,
(tlw
ice handgun, shotgun, subm adline gun and

A s we have dJscusaod on t,his floor
rillc), T he I.EO B w ill develop m arksm allship m a n y tim os, th e S uprem e C ourt opened
skills ,tS w elJ as all pertinent gun IHU1lUing O U l' cam paign finanC e systcm to a tor
5kills (draw iug from tlw holH el', reIO Rd", im ren t of unllnlltcd and secret speeial-in
l\ctio n . nlO \,C Inent and nlO t'lH a t it

m pitl yet eontl'ollcd pace. U lU rnalely, the teresI, m orw y in C itizens U nited. B ut
SST P II1'<'[",,'e5 the LgO s to survl"" 1\ <Ie:Vdly even the Suprem e C O urt acknow !flC!!H H I
force confront't(,lon through com petont d"d ill C it17.ens U nited tha t lllsdosure is
sion m ,vking nnd c(m U donL gun hi>lHlUng im port,lnt:
sldllll," 'I'h" R el,etive ShooU nK Inst,rucl.O r
"[PJr<lfupt disclo:m l'll of expenf!ltun's cau
'l'rainillfr Program (RS1'1'1') Im del' FLETC provide sharellohlers and eiU "ens W ith the
trains law cllJ'oreeruellt
in han IlIftu'm o.t1on needed to hold ,;:orporatioI1t- ,:u1(1
dU ug their fil'Oal'IllS to survive higll'btress el,'ctetl o(ficials l\ceollntabk 1'01' tn<'ir pod
situations,
and H upporlel's, Shnl'eholderM . <:a.n (it),

lO, Bul't.lau of A lcohol. 'I'ubacl...:o.
Let'm ine w hether t.heir CO r/)(}r"lIou's political
nrlH s' N alionn.l Fir(,!arn1s li;;"am incr
spc,\ch i:H lvances \.11e eO l'jlO raU U ll's intl'n'st in
pl'ograrns, 'rhe training progratn
nla.king prof1t.s. a.nd
can
w hother
training thllt enabh's st<lte lIl1(1 local Ii\w ell o1<")\.NI officIals am ill the pot'l':ut o f "".
[oreorrw nt o!l'1cors \.0 ident.ify arm ed gU l1nW Il -called
interests," C itiztlns
v,
H nd l11crec;i.se thoir "m argln of E llfn"y.'.
F E e. lJO S. C t.876. 916 (20101,
Finally, this lull gIves SUit.e llnd local
Y et. R ecording to lilt' Ccnti\I' for R e
courthoustH s p rIO rlty in obtaining

fed
eral security eqU ipm ent for In'e from th" sponsive l'oliU es, as of Septem ber 13,
G uvernm ent
A dm inistration after It spending on po1iU ca1 a d v e r t i ~ i n g by
gl'oups that oith(11' do n o t digc!os(', or
short reqlliJs(, pm 'io(l b giver, teO feclt'rU l
des, T he courthouse w ould only pay the only pal-tiallY disclose their donors,
cos(.s Qf
the ,J(luil>lI1ent. r.A lujp h:\3 InCI'O R$od lourfold, from $:32 m il
m ent purchased by tlw

f,!dent! g-ovN nm ent lion in the 2008 elect.ion to m O fe than
and then,hy the ,\m t!rICal1 taxpayel',..shollid $135 m illion at. the sarno point ill the
be utlllz<,d by the federal govH nnlllnt if at
all pOBslblo. U not. fedem l <ll;end(llJ m ay G urront eiecU on.
'I'hese groups are oxploiting our ta;.,:
have to purchase equipm ent they other,,!,,'
could have obtuilw d for free IJUt for the stM ,' G ode lJy organizing 1\8 tax-exem pt "SO
and local goV el'lllll'lU Ls t.aklng it A lso, giving cial w elfare" groups and then s p ( ' n d i n l ~
and localH .ioB tIlt) ahility to obtain \.(m s of m illions o f undisdQ sed dollars
tillS equlpm em for ftel) m ay lead La situa on political cam paigns.
tlons w hom (,h"y lIcquiro tho e'llllplllont sim
T he Internal H .evel1ue Servjce (IRS),,
ply l,oeause it IS iree, not bllcause they tl'uly the organization that gran t8 t.hese
nC-lHl It..
A rticle 1. Section a of the C onsU lution groups theil' t.a:'-I)xem pl statu s in !'he
enum em tes the lim lted pow ers of C ongress, first placew..shotlld bo protecting the
and now hel'e I\l'O we tasked W ith funding V I' voting pu bH e from t.he;,,, groups tha t
beCOnllnll'Involved w ith state ilild local '::011 ft pr()tend to be acL ing in the SO CIal w el
security, I firm ly bdleve tillS ISBue 1.8 tho re.. fare but are instead engaging in par
sponsl!Jllity of thO l1tatv:l and not tht fe,hlm l tisan

politics,
govcl'Ilm ot'L H ow evel', IfCOlllfrllSS does ,w t In
T he law in thi!, area is cleal', 26
current PH )
this ,U 'tH l, "Nt!: H hould
gram s, lJt,tennlne ill1'y needs tllat m ay exist. U ,S,C . 50H c)('I) stales th at "Ci..-!c
and pl'loriU "e thosll needs for fundIng by G ut leagues 01' organizaL iolli; not organil.ed
ting from the fodum l budget pro!n'l\fI1s for profit b u t opem ted exclusively for
franght w ith w aste, fraud. abuse, Ilnd dupli the pJ'orllotion of social w eliare, or
G,lUOn,
local associations of tnnployees, tho
m ust sLart m akiug t.ough ,h,d m em bership of w bich Is lim ited to the
slous rathel' than eontinuing ttl kick tile can om pioyues of a designated person or
doW n the road, lea\'ing our childnm and
grnndchildren tfJ '.'1eau up tho ruess, It is ir persons in ,\ p:u'ticular m unicipalit.y.
responsible for C ongress to jeopardIze the fu :lnd the n et earninK s of w hich ,l1'C de
ture standard or IIvlIlg of our children by \,010(1 exclusively to charitalJle, edu
bO !'row lng frolll future gl11l0ralj,;m s, T he U .S, cational, or reel'cational PU I'poses" are
IlRtlonal debt is llO W 0"(>1' SHi trllH ()Il, '111l\t e.xom pt from taxation . T lle \V ord "ex
over $50,000 in debt foj' each m an, dusively" is in the tax code for a rea,
w O lllan
I\nd child in the U nited States, A
YCi>r ago, the nationlll (I\,ht w as SILl trllllO lL SO IL C ongress dilln'llm y "p,lJ't1aJly," or
D espite plt,dgt,s t.o control sl>ending, W ash "prim M 'ily," W e said th at these groups
H Igton
billion;; to Uw national deht had 10 be openll.l,d "exclusively" ['or
tw ery single day, In J(l.!;(. one year, our na" the prom otion of social w eJfanl, TIl('
tlon,.! dl1ht hl\s grow n hy $1.'i trilllou 01' IR S , In w riting' the im plem entIng rlJgu
U ,B% , W e Ciw nor continU O to support federal [,Ll,ions to the statu te, said that., "A n
funding fol'progrllm s an,l InitiaU v"s thn L art) organi:'.ation is operated exclusively for
not f"dD ral \'t'sponsibiJitie. aB dictated b ~ '
the \lI'O IIlO tloll ()f soci<d w elfare If it is
our C onstitut!olL O therw Ise, we w lll never prim
arily eng'l.Ifed in pl'om ot.ing III
v,et OUl'flscnl house
In ordcr.
som e w ay the com m on good and gen
,
U!.'l\1 w cH are." [em phasis adductl B ~ ' sub
'rO M A , CO IlU IlN , M ,D "

stItu tin g t.he w ord "prim arily" in the
U .S. S enator,
N
spouse T raining (A LER R T) pl'O gram : T rains

offieers \n
w ith violent sltu'\t1ons,
111clu,Ung those tlley faco out:!lde of build
m gs and in 1l1'1>lln settings, TucllHles core
classes snch a3 "B asic A cU ve Shootol' Le"el
I and II." "T errorism R esponse T acticsA d
vanced Pisto1." "C om bat R ifle." "C om bat. IN T E R N A L IU 1V gN tJ1oJ SljRV ICEl A N D
Pisto!.' "A dvanced R ille
501(c)(4) O R G A N IZ A T IO N S
Course,"
iUI(J "D O D
1'.11', L g V IN , M l'. P resident, our rep
8. C o:nm unit.y
Policilig S(;lvlces
program s (CO PS);
resentative form of gO V O l'llIneut is
regulation w ith the w ord "exeluslvely"
In the sl;atute, the IH S essoutially re
dofined w hat C ongrells tllljuirCli a Ilod<ll

w elfan, or"anl?,aU on to bo.
M r, 1'I'osi\l(m t, I :lsl.ed tho IR S lor an
explanation a!; to w hy they have not
JW1559-000904
Septem ber 19,2012
CONGRESSIONAL R EC O R D -SEN A TE
responded to the Increasing grow th of

groups that parade as soolal w elfare
groups but are obviously organized for
polltlca.U y partisan purposes. In m y
letters, I asked the IRS how they Inter
86429
86430
ED tlU es that file under section 501(c)(4) Of lntervenU on In pollt.1calcam paigns on behalf
the ID tem al Revenue Code and take advan of or In oPpo81t.1on to any can4ldate for pub
tage of Ita tax exem ption benente Bbould Uc ornce. H ow ever. a 8ect.lon 501(c)(4) social
have to m ake a choice: either loee their ex w elfare orgaD lzaU on m ay engare In ,om e po
em ptetatll8 (and pa.y taxee) or el1m 1nate the litical
acU vltles, so 10D/l' as U1at. Is not. lte
prim ary acU vlty. H ow ever, any expenditure
part.1aan pollU calacU vlty.
The m s needs to Im m ed.lately review the It m akes for political acU vitles m ay be 8Ub
actlvlU es of 501(c)(4) enU tles engaging In ject.to tax under 8ecU on 62'1(01" [Em phasle
l"IUID1Dg partlaa.D pollU cal ada or giV ing added]
f1m ds to Section 62'1 organlzatloD B that run
a. W hat 18 the statutory basl8 of the lan
such ada. The IR S need.s to advise 501(c)(4) guare that allow e 501(c)(4) organlzat.lons to
entlU es of the law In thle arsa and the fac engage In ,om e pollU calacU vlt.lee?
ton It w illlook at In review ing 501(c)(4) eta
b. How does the m s keep traok of these
tllS and tax exem ption luues.
political activities and ensure that.the orga
Please provide m e w ith the follow ing Infor nization payS the tax under section 62'1(01
m ation no later than AUgll8t10,2012:
7. In her July 13 letter. M s. Lerner states
1. How can the m s Interpret the expllclt that the IR S also addreeaes the l88ue of po
laDflllllfe In 26 U .S.C, 501(c)(4), w hich pro litical actlvlt.les In U1e Form s 990 and 990
videe that ??610??(c)(4) entities m llSt operate EZ.
"exclllSlvely" for the prom otion of social Are Form s 990 and Il9O-EZ m ade publlc? U
w elfare, to allow any tax exem pt parUBaII BO,w here can they be acceased?
pollU calacU vlty by 501(c)(4) orgaD1za.tloDB?
8.InternalRevenue Service PubU catlon 667
2.Since partlBaD political acU vlty does not 8tate8
U1at, If a 501(0)(4) entity can "subm it
m eetthe m e dennltlon of "prom oting eoclal proOf that [U1e) organization Is organized ex
w elfare," how can an organization that par clllSlvely to prom ot.e BOclal w elfare. It can
U clpatea In any partl8an polltlcal activity obtain an exem pt.lon even If It. part.lclpatee
be"orgaD ized exclllSlvely to prom ote eoclal legally In som e political activity on behalfof
w elfare?"
or In oppoBltlon to candldate8 for public of
3. The Exem pt O rganlzatlone 2011 A nnual O ce.'l
R eportand 2012 W ork Plan etates: "A e In any
H ave the follow ing 501(c)(4) organlzat.loDB
election year, EO w ill continue Ita w ork to a) applled for: and If BO.b) received t.he de
enforce the rules relating to polltical cam 8crlbed exem ption for pollU cal act.lvlt.y from
palgDB and cam paign expendlturee. In FY them S?
2012, EO w ill com bine w hat It has learned. a. Cro8sroad8 G rassroots Policy Strategle8
from past projecta on polltical actlvlU ee
b.Priorities U.S.A .
wlUl new inform ation gleaned from the rede
c.AmerlC&DB Elect
elgned Form 990 to fOCllS lte exam inat.lon re
d.A m erican Act.lon N et.w ork
BOW 'Ces on eeriollS allegatioD B of lJnperm le
e.AmerlC&DB forPf08perlty
elble pollt.lcallntervenU on."
f.A m erican Future Fund
a.TypicallY , how long after a com plaint to
g.AmerlC&DB forTu:Reform
the m s does a com pllance review begin?
h.60 Plue A 8Boclation
b. W hat approxim ate tim e does It take to
1.PatriotM ajority USA
review the com plaint?
j.Club forGrowUl
c, How m any pereoDB are Involved In the
k.Clt.lzens fora W ork1ag A m erica IDc.
enforcem entofthe 501(c)(4) rules?
1.Susan B.AnUloDY Ll8t
4, The Exem pt O rganizations 2011 A nnual 9. Rave you rem inded 501(c)(4)& w hich pub
Report. and 2012 W ork Plan 8tate8 that 501 licly 8eem to be operat.1ng In U1e partlBall po
(c)(4) OrganlzaUODB "can declare them selves lltlcal arena as to the factors you w ill con
tax-exem pt w ithout8eeklng a determ ination 81derIn determ ining w heU ler U1ey are eD/l'ag
from the m s. EO w ill review organlzat.lons lD g In partlBaD pollt.lcal actlVlt.y? Ifnot..w hy
to eDBure U1at. t.hel have claBBtned. them not?
8elves correct.ly and t.hat.t.hey are com plying
I have encl088d a copy of M s. Lerner'8 let.
w ith appllcable rule8."
ter. U yOIl have any qUest.IODB. plsase con
a. W hy does the IR S allow 501(c)(4) organl tact
m e. or have your 8tarr contact K aye
zatlODB to 8elf-declare?
my
8tarr
at
b. W hen an organization "self declares" as M eier eler@ of
levln.8enate.gO v or 2021224-9110.
a 501(c)(4) organlzaU on,how does the m s get kaye_m
A
gai
n.
It
l
8
urgent
that
I receive your an
noU ce and how long does It take the m s t.o
AugllSt.10.2012.
conduct the review to eneure that.that orga
8w ersby
Sincerely,
D lzatlon has classtrled lteelfcorrectly?
CARL LIilVltl.
6. The m e Com pllanoe G ulde (or T u-E x
Chairm an, Perm anm tSubcom m ittee

em ptO rranlzatloD B 8tates:
on InllCf,tlgatioru.
"W hen a 501(c)(4), (6) or (6) organlzat.lon'8
com m unication explicitly advocate8 the
DBPARTM ENT OF THE TREASURY,
elect.lon or defeat.of an Individual t.o publlc
INTEllHAL R BVEN U B SBR VIC B .
ornce, the com m unlcat.lon 18 con81dered po
W ashlnglon, DC., A uglllt 24,2012.

llU cal cam paIgn acU vlty. A taJt-exem pt. or
ganlzaU on that m akes expenditures for po H on.CARL LEVIN,
U tlcal cam paign actlvlU es 8hall be 8ubject. C hairm an
. Perm onm t Sllbcom m ltUe on Inve,
tlgatlom , U.S.Sm ale. W ashington, DC.
to taJt In an am ount. equal to Ita net Invest.
DEAR SSNATOR LBVItl: I am responding to

m ent. Incom e for U1e year or the aggreate
your
let.ter to Com m l8Bloner Shulm an dated
am ount expended on poU tlcal cam paign ac
tlvU les during the year, w hichever 18 1_." July 2'1, 2012, requesting additional Inform a
a.How does the m e keep track ofthese ex U on about sectlon 601(0)(4) organlzatlon8
.
pllclt com m U D lcaU ons and en8ure that the Th18 response 8upplem ents U1e prevloue re
8poDBe8 dated June 4, 2012 and July 13, 2012,
organization pays thl8 tax?
b. W hat l8 the reason for the requirem ent and addres8e8 the addlU onal questions ral8Bd
that the tax wUl be based. on "w hichever 18 In yourrecentletter.
lese" betw een lte net Investm ent Incom e for Q uestion 1.How can U1e IR S Interpret U1e
the year or the am rregate am ount expended expllclt laD guage In 28 U .S.C. 1501(c)(4).
w hich provides that 610(0)(4) entitles m uet.
on political cam paign actiV ities?
c.W hat tax w ould an organization have to operate "exclU81vely" for U1e prom otion of
pay IfIt.8pends all of Ita Incom e on political 80clal w elfare. to allow any tax exem pt par
advertl8lng (therefore It. has NO net Inve8t. tla
a.D political activity by 501(c)(4) organlza
m ent.Incom e)?
tIODB?
6. M I. Lem er'8 letter quotes the m s
W e note that the current regulation bae
w ebpage on Social W elfare OrganlzaUoDB:
been In place for over50 years.M oreover.un
''The prom oU on of eoclal w elfare does not like Internal Revenue COde 8ecU on 501(c)(3).
Include direct or Indirect participation or w hich 8peclnCally provld8B that organiza
Septem ber 19,2012
tlons m ay "not. part.lclpate In, or Int.ervene

In . , , any pollt.lcal cam paign on behalf of
(or In opposlt.lon to) any candidate fOrpublic
ornce."), section 501(c)(4) doe8 not oontaln a
speclnc rule or U m ltaU on on political cam
paign intervention by social w elfare organi
zatlone.
QUBsUon 3. Since part.1aa.D pollU cal activ
Ity doe8 not m eet the m s deflnltlon of"pro
m ottng eoclal w elfare." how C aD an organlza
t.lon that part.lclpat.e8 In any partisan polit.
Ical act.lvlt.y be "organized excllllllvely to

prom ote social w elfare?"
Ae et.at.ed above. lonptandlng Treasury
Regulatlon8 have Interpreted "excluelvely"
as ueed In section 601(<:)(4) to m ean pri
m arily. Treasury R egulation l.llOI(c)(4}
l(a)(2)(I), prom ulgated In 1969, provides: "A n

organization 18 operated exclllSlvelY for the
prom ot.lon ofBOclal w elfare 1rIt.18 III'lm arily
engaged In prom ot.1ng U1e com m on rood and
general w elfare of the people of the com m u
nlty." A pplying U118 Treasury R erulatlon,

R evsnue R uling 81-96, 1981-1 C.B. 332. con
oluded that "an organization m ay carry on

law ful pollt.lcalact.lvlt.le8 and rem a1Jlexem pt
under eeet.lon 501(c)(4) as long as It. Is prl
m arlly engared in actlvltle8 that prom ote

BOclalw elfare."
Q ue8tlon 3.The Exem pt.O rganlzat.lons 2011
A nnual Report. and 2012 W ork P lu 8tates:
"A 8 In any eleetlon year, EO w ill continue
Ita w ork t.o enforce the rules relatiD S to po
U tlcal cam palgn8 and cam pa1gn expendi
tures. ID FY 2012. EO w ill com bine w hat It

has learned from past projects on political
acU vlt.le8 wlUl new lD lorm at.lon gleaned
from U1e redesigned.Form 990 to focla Its ex
am ination resoW 'Ces on 8eriollS aller-tlon8 of

Im perm laalble political intervention."
a.Typically, how long aCtor a com Jllalnt to
U1e IR S does a com pU ance review bel1D?
b. W hat.approxim ate tim e doss It take to
The IR S rouU nely recelve8 eXlUlllnatlOD
referrals from a varlet.y of soW 'Ces 1Jlcludlns
U1e public. m edia, M em bers of Conrreae Dr
U1elr starr. fond has a 10nptandlD g prcCB8B
for handling referral8 BO that U1ey receive an
lJnpartlal. Independent. review from career
em ployee8. W hen U1e m s receives a referral
about a particular orp.njzat.lon. It 18
prom ptly forw arded to the ClasalftcatloD
unit of U1e Exem pt O rganizations (1l0) Ex
am lnaU on ornce In D allas, Texas. Pursl1lU1t

t.o IRM 4.76.6.4(1), w ithin 30 daY8 ofreceiving
t.he referral, U1e Cla88tncat.lon starr begins
evaluating w heU ler the referral has exam ina
tion potential, 8hould be cODBldered In a fu
ture year, need8 additional Inform atlon to

m ake a decl8lon, or CaUs W ithin the cat.
egories of m atters that. are referred for EO

R eferral C om m ittee review . A lt.houah m M
4.76.6.4(1) sets a goal of 90 days to com plete
review s of referrals, U1e tim e It takes to
fully review a particular referral varies, de
in
pending on 8uch factors as U1e

volved
and the avallabll1ty ofrelevant Infor
m at.1on (I.e. orgaD lzatlon's Form s 990, exter
nal sources such as m edia reports. IIlternet

searche8,eto.).
ID thoee caeea In w hich the m s needs addi
tional inform ation about U1e 8ubjectofa re
ferral that 18 not readily available. 8llch as

Ita Form 990 that has not been nled Fet for
the tax year at l88ue,Class.lncaU on m ay SllS
pend cla88U'y1ng U1e referral and places It In

the follow -up category until the addlU onal
Inform ation Is avaU able.O nce U1e additional
inform ation Is received. review ed. aDd sup
ports the referral being clasalned as having

sxam lnatlon potent.lal,U1e referrall8 lent.to
unassigned Inventory. unU l a revenue &8'8nt
w ith U1e appropriate level of experience for
the luue8 Involved In the m atter 18 available
to conductan exam ination.
O nce In Inventory, U1ere are num eroue fac
tors that. can affect how long It takes to
1__
JW1559-000906
Septem ber 19,2012
S6431
CONGRESSIONAL RECO RD -SEN A TE
com plete the exam ination proce88. W hIle It ROO looks e.t an organlzatlon's Form 990. U nder tbe statute cited e.bove,an organlza
Is dlm cult to predicthow long any 81ngle ex w ebsite, and other publicly avallable lDfor tlon the.t othBrw lsB m eets thB requ1rem ents
am ination wlU take, for cas88 clOBed 10 FY m atlon to see whe.tItls doing e.nd w hetherIt of Bectlon 601(c)(4) social w elfare tax-exem pt
2011,the average tim e It took to cl08e a case continues
to be organlZOd and operated for statue, w hich spencle all Its Incom e on polit
tax-exem pt purpoBS8. U It e.ppee.ra Crom a Ical advertising and hae no net laveetm ent
w as 210 days.
c. How mlU\Y persons are 1ovolved In the ROO review thate.n orge.nlzatlon m ay not be Incom e w ould not OWB any tax uncler Bectlon
com plle.nt. ths organization Is referred for 627(0. It m e.y how ever, through Bucb 8pend
enforcem entofthe 1I01(c)(4)rules?

The Exem ptO rganizations (EO) Cunctlon Is exam 1oe.tlon.
Ing (lI.Dd depending on tbe otherw lSB appllc....
Com pllance cbecks:In a com pliance cbeck. ble facts of the caee).no longer qua1lfY ae an
responsible for the enforcem ent of section
1I01(c)(4) etatutory rules and regulations ae IRS contacts taxpayers by letter w hen we organization that Is tax-exem pt UIlder sec
well as those applicable to all other types of discover an apparent error on a taxpayer's tion 601(c)(4).
return or willb to obtaln rurther Inform ation
w -exem pt orraD 1zatlons.
Q uestion 8. M s. L em er's letter quot8B the
For FY 2011. the total num ber of EO etaff orclarlncation.A com pllance check ls an ef IR S w ebpa,ge on Social W elfare O rganiza
i
ve
w
ay
t
o
m
ai
nt
ai
n
a
com
fi
ol
ent
e.
nd
eCCect
was 889. O ther than the 14 em ployees 10 the
tions:
Pirector'8 office. tbe three EO oalces are pllance presence w ithout an exam ination. "T he prom otion of social w elfe.re does not
W e aleo use com plle.nce cheok que8tlonne.lres inclU de direct or Indirect p a r t l c l J & ~ l o n or
starfed ae follows:
RullJIBB and A 8J'sem ente (R & A ). w hich In to study specific pe.rtB of the tax-exem pt Intsrventlon In political cam paigns on behalC
cludes EO Peterm lnatlons and EO Technical. com m Ull1ty or8peclfic cf088-8ector practices. ofor In O ppoSition to e.ny candidate for pub
ensures organizations m eet legal require

Exam lnations: Exam lD atlons, also know n lic ornce. H ow ever, e.8ectlon &01(c)(4) social
m ents durtD g the application or private let ae audits. are authorized under Section 7602 w elfare organization m ay BngagB In som e po
ter rul1ng proc888, and througb guldance. In of tile COd8. For eXBm pt organizations, e.n litical e.ctlvltles. BO long ae that 18 not Its
exam lD atlon detsrm lneB e.n organization'S prlm e.ry
FY 2011.R& A had 332 em ployeee.
H ow ever, e.ny eX )endlture
EO Exam lnatlons (Exam ) IS com prlsed of continued qualification for tax-exem pt sta It m akBs for polltlce.1 activities m ..,. be 8ub
various UII1ta. Including the Cl& 88lflcatlon ~ U B . W e conduct ~ w o different tYPeB of ex Jeot to tax undBr section 627(0. [Sm pbulB
unit. the EO Com pllance U nit. and the Re am inations:
corrBspondence and field.
added.]
view ofO perations unit.Exam develope proc
Beoause the IR S cannotreview every BnBt
e.. W he.t Is the statutory bael8 of tIlB lan
888es to Identlf:y areae ofnonoom pllance, de

Inl orge.nlzatlon In every tax yee.r. we UB8 gue.gs that allow s 601(c)(4) organizations to
review techniques descrlbBd e.bove to
ge In som 8 political e.ctlvltles?
velope oorrectlve strategies.and coordinates mthe
e.xlm lze our covere.ga of the tax exem pt enge.
w ith other EO Cunctlons to ensure com pli
sector
PIB ue see responseB to queBtlons 1 and 2.
In
both
our
gBneral
program
w
ork
and
ance. so that organlzatlons m alnta10 their
project w ork. The project w ork. w hich e.bove.
exem ptstatus.In F Y 2011.Exam had 631 em
our
b. How dOBB tbe IR S keep traok of these
results trom our BtratBllo planning proCB88, political
activities and eD 8ure that tbe org....
ployees.
IB d8Blgned to Cocus on speclflc e.r8&8 e.rrBCt nlzatlon pays
EO Custom er Education and O utreacb 109
the tax under8ectlon Sll'I(O ?
the
EO
8ect
or
e.
nd
to
dl
rBct
m
ore
Bf
f
ec
lon &01(c)(4) orgaD lzatlons fil1D g Fonna
(O E& O ) coordlnates.& 88lsts and 8upports the
tlve U8e of our reaourceB In the efCort to 990SBct
or
l
l
9OEZ
are
red to report political
developm ent of educational m aterlale and strengtben
com pliance and Im prove tax ad activities. O rganirequi
outreach eaorts for organizations to under
m inistration.
zations t b a ~ engap 10 di
DeBCr
l
bed
In
the
EO
2012
W
ork
stand their responslblllties under the tax Plan. thB BectlonB &Ol(c)(4), (I) and (8) Self rect or lD direct political cam paign IIIltlvltles
law . In FY 2011, CE&O had a staa of 12 em
D Bclarere Is one 8uch project. Tbls proJeot are alBo requlred to com plete Schedule C oC
990 or llOO-EZ.O rganlzatlonB 8ubJect to
ploye8s.
fooUSB8 on organizations t h a ~ hold them Form

The em ployees 10 these Cunctlons are re
eel
tax under section 627(0 are required to com
ves out u being tax-exem pt rather the.n pl

sponsible for the regulation of all types of seeking
y
w
th the 8tatU tory reporting and pay
IR S recognition of their e x e m p ~ sta

m ent irul
tall-exem pt organizations, Includlng section
e8. ThB IR S e.lso recelveB referralB
t
us.
1I01(c)(4)organizations,
regarding such actlvttlB8 from e. variety or
Q uestion 6.The IR S C om pliance GUide for Bour
Q uestion 4.The Exem pt O rganizations 2011 Te.
that
are handled through loa im par
ceB
x-Exem ptO rganizations stat8B:
A nnual Report and 2012 W ork Plan BtateB

"W hBn a 601(C)(4), (6) or (8) O rge.nlzatlon'8 tial, Independent reviBW . SeB the resJlOnSB to
that 601(c)(4) organizations "can declare com m W 1lcatlon explicitly e.dvooe.tes the question 3 for the descrlptlou on the IR S re
them selveB tax-exem pt w ithoutseeking a de election or deCeat of an Individual to publiC ferrlll procees.
term 1nation trom tile IRS.EO w illreview or office, the com m unication IB consldBred po
Q ue8tlon 7. In her July 13 IBttar. M B.
ganlzatlons to enBure that they have cl&88l litical cam paign activity. A tax-exem pt or Lerner statss that the IR S also addr_es the
fied
them selveB correctly and tbat they are ganizatiO n that m akeB expenditures for po 188ue of political activities 10 the Form s 990
com plying w ith applicable rules:'
litical cam paign activities shall be BubJect and llOO-EZ.
a. W hy doea the IRS allow 601(c)(4) organl to
tax In e.n am ount equal to Its net Invest
A re Form s 990 and ll9O-EZ m ade public? U
zatlonB to Belf-declare?
m ent Incom e Cor the year or the e.ggregate so, w here ce.n thBy be e.cee88ed?
The Intem al Revenue COde expre88ly pro am ount expended on political cam paign ac
Y es,Form B 990 e.nd llOO-EZ arB m ade public.
vldBB that certain tax-exem pt organizations tivities
during the year, w hichever ls 1888:' Te.x-exem pt organizations are reqlllred to
m ustgive notice to the IRS. by fiUng an ap
a.How does the IR S keep track ofthese ex m ake their returns W idely avallable for pub
plication for exem ption, In order to claim pU olt com m unications and ensure the.t the lic Inspection. O rganlll& tlons are required to
tax-exem pt status. The Internal Revenue organlzatlon pays this tax?
allow tbe public to lD spect tbe Form s 990.
Code does notreqU ire an organization to pro
Te.x-exem pt orsaD lzations ruing Form 8 990 llOO-EZ, ll9O-N. and ll9O-PF thsY h an rued
vide notice to the IR S to be treated as de or 99O-EZ arB required to report polltlce.l e.c w ith the IR S for tbelr tbrBe m ostr e Q 8 n ~ tax
scribed 10 Beotlon 601(c)(4). By contrast, for tlvltleB . O rge.n1zations the.t engagB In direct years. Exem pt organizations also are re
exam ple. Section 608 generally requireB an or Indirect pol1tlcal cam paign activities are quired to provide copies ofthBse Inform e.tion
organization to provide notice to the IR S be also requ1red to com plete Schedule C of returne w hen requeBted, or m ake them e.ve.U
fore It w11l be treated ae deeorlbed In section Form

990 or 990-EZ. O rganlzatlonB subJBct to able on the Intem B t.Tbe annual1ofonnatlcn
601(c)(3).
tall under seetlon 627<0 are required to com return8 al80 are available cram the IRS, as
b. W hen an organization "selC declaree" as ply w ith tbe 8tatU tory reporting e.nd pay. w ell ae trom third-party sources the.t post
a 501(c)(4) organization, how does the IR S get m ent rules. TbB IR S alBo receiV es refBrralB them on their w ebsltss.
notloe and how long d088 It take the IR S to regardlng suob a c ~ l v l t l B 8 trom a variety of Q uestion 8.Internal RevenuB SBrvioea Pub
conduct
the reView to ensure that the orga aources t h a ~ are handled through e.n Im par llce.tion
statB e the.... If a & 01(e)(4) entity
nization has ol& 88tned Itselfcorrectly?
tle.l. Independent review . S8e the response to can "subm it proof that [the] organization Is
As w ltil other tax exem pt organizations, question 3 for thB deBcrlptlon on thB IR S re organlzsd excluslvBly to prom ote 800lal w el
organizations olalm lng to be tax-exem pt Cerralprocese.
fe.re. I ~ ce.n obtain an eX Bm ptlon ev a If It

under
section 601(c)(4) generally are required
b. W hat IB tIlB r8& 8on for thB rBqu1rem ent partlC lpat88 IBgally In som e political actiV
the.t tbe tax w lll be bued on "w blchever Is Ity on behalf of or In O pposition to can
to file a Form 990 on an annualbaals.

The Exem pt O rganizatiO ns ornce of the le88" betw een Its net Investm ent lD com e for dlde.teB for public office."
IRS ls responsible for the com pliance ofover the year or the aggregate am ount expended
HaVB the follow ing 601(c)(4) organlaatioD B
one m llU on organizations w ltil diverse goals on
political cam paign actlvltles?
e.) applied for: and If so, b) received tbe de
and purpoeee. In order to ensure the highest

The statute under section 627<0 explicitly scribed exem ption Cor polltlce.1 activity from
degree oC com pliance w ith tax law w hile statee the.ta 601(c) organlzatlon Is 8ubjBCt to thB IR S?
work1o1 w itb lim ited resources, EO m ain Its tax bued on "an & m ount eque.l to tbe
a. CrOBBroadB G raearoots Pollcy Strategies
ts.Ins a robust and m ulti-faceted post-filing leseBr oC-{A ) the net InVeBtm Bnt lD com s of b.Priorities U .S.A .
com pliance program that conducts review s such organization for the taxable year, or (B) c.A m ericans Elect
of exem pt organizations 10 varioW l W ay8, t.he aggrege.te a m o u n ~ Bxpended during thB
d.A m erican A c ~ l o D N etw ork
B.A m ericana CorPro8perlty
taxable yBar for sucb e.n exem pt Cunctlon."
such ae:
Review of O perations (ROO) revleW 8: Be
c. W hat tax w ould an orge.n1zatlon be.ve to
cause e.ROO review IS notan e.udlt. ths ROO pay If It 8pends all Its Incom e on political g
.A m ericana for Te.x ReConn
carries out Its post-filing com pliance w ork advertising (tbereCore It has NO net InVSBt
b.80 Plus A seoclatlon
w ithout contacting taxpayers. 1Detee.d, tbe m Bnt1ocom B)?
1.Patriot M ajority U SA
55'
JW1559-000907
86432
CO N G RESSIO N A L RECORD - SEN A TE
j.Club rorG row th
k.Citizens rora W orklng A m erica !Dc.

I. SU8&llB.A nthony List
In1tlally, to clarify, eectlon 501(c)(4) orga
nizations do not receive "exem ption ror po
Septem ber 19,2012
Septem ber 19,2012
86433
Queet.lon 2. How m any 501(c)(4) ol1l'anlza in that position he has exem plified the Pentagon announced the deatha of1,020
t.1ons which appear to be prim arily eugaged integrity and high standards offairness troops in Iraq and in O peratioD Endur
lD politiCal activity have been notlned by and im partiality w hich w e strive Cor In Ing Freedom , w hich Includes ACghani
the IRS wlt.h1D the last8 m onthe that they our Federal Judiciary,
stan. They w1l1 not be forgotten, and
m ay be In violation oC the law?
W hen the IRS exam ines a section 601(o){4) Throughout his years as a Federal today I ask unanim ous consent that
organlzat.lon,the objective oC the audit 18 to judge he has never lost sight of the their nam es be printed in the RECORD.
determ ine w hether that orgaDlzatlon Quail. real-U fe effects of the court's decisions T here being no ob)ectlon, the m ate
nes
Cortaxexem pt.-status as a social welfare on the U ves of those w ho com e before rial w as ordered to be printed in the
organization.A s dlscuaaed In our June 4,2012 the court.
RBCORD,aa follow s:
response to your M arch 30, 2012 letter, that B ruce and his w ife M ary have excit
CW 2 Jose L. M ontenegro Jr., oC Houst.on,
determ 1nat.1on lookS to w hether the organl Ing plans for the next chapter of their TX : CW 2 Thalia S.Ram irez, oC San Antonio,
zatlon Is prlm arUy eugaged In activities that lives. They are close friends to m y w ife TX: PFC Shane W . Cantu, oC CorlU1lla, M I:
prom ote 800lal welfare.not organized or op
nne, and m e. W e w ish them the very LCpl Alec R. Terw iske, oC Dubois, IN : SSG
erated Cor profit, and the net earnlll8'8 oC Abest
Jerem le S. Border, oC M esquite. TX: SSG
in future years.
which do notInure to the benent oC any pri
Jonathan P. Schm idt. oC Petereburg. VA;

vate shareholder orIndiVidual.The exam ina
SPC Kyle R. Rookey, oC Oswago, NY: SSG

tion looke atthe actiVities engaged lD during
JeSSica M . W lDg, oC Alexandria. VA: SO T
TR IB U TE TO JoN A O LSSO N
the com plete taxable yearatluue.A lthough
opherJ.Birdwell.oC W indsor.CO:SPC
the prom otion oC social welfare does not In
M r, BIN G A M A N . M r. President. Chrl8t
y J.Anders,oC BakerCity,OR;PFC Pa
clude direct. or indirect. participation or today I wiBh to recognize Jona O lsson, tMriabr
cia L. H om e. oC Greenwood, illS: SGT
lDterventlon lD politicalcam paigns on behalC fire chieC oC the L atlr V olunteer Fire Loui
s R. Torres. oC OberllD, OH: S(JT David
oC or lD oppoaltlon to any candidate Cor pub D epartm ent located near Q uesta, N M . V. W illlam s, oC Frederick, M D : src Coater
lic oroce,a section 501(c)(4)socialwelfare or O lsson w as recently honored as the 2012 B. Debo88, oC State Line. M S: SGT Richard
ganizat.1on can engage lD polltical actiV ities V olunteer Fire C hief of the Y ear by A. E888X, oC Kelseyvllle, CA: SGT Luts A.
as 10118'as Itis prim arily eugaged lD actiVi
OUver G albreath, oC San Juan, PR: S02

Fire C hief for her tirele88 w ork at the Davi
ties thatprom ote 8001&1 weiCare.
d J. W areen.oC Kent.wood,M I: SOl Pat.
It the IR S believes that an organizat.1on L atir

V olunteer Fire D epartm ent and rick D. Feeke, or Edgew ater, M D ; POI Sean
does not m eet the reQuIr8m ents under 880 her efforts to increase diversity in the P.Carson,oC Des M Oines,W A:CW 2 Suresh N.
tlon 601(c}(4}.the IRS not.1nea the organiza. local fire service. She w as honored on A.Krause,oC CathedralCity,CA.
tion oC Its lDtentlon to revoke the organiza A ugust 3. 2012. during the opening ses
CW 3 Brian D. Hornsby. oC M elbourne, FL:
t.1on's exem pt.stat.us,expla1D1Dg the law and on of the International A ssociation of POI D arrelL.Enos.oC Colorado Springe,CO:
reasons for the proposed revocation.The or si
Fire Chiefs' Fire-R escue International SSgt Gregory T. Copes, oC Lynch Station,
ganization hae 30 days from the date oC that ConCer
VA: SPC Jam es A. Justice. oC Grover, NC:
ence and Exhibition in D enver, PFC
letter to protestorappeal the determ lD atlon
M ichael R. Dem areico U , oC Nort.h
beCore a final revocation letter Is luued to CO.
Adam
M A : SSG ErIc S. Holm an, oC Evans
A fter m oving to New M exico In 1999. Clt.y.e,
the organlzat.1on.
PA: PFC Andrew J. Keller, oC T 1prd,

During the pastsix m onths, no notices oC O lsson w as recruited to join the L atir OR: SSgt. Scot.t E. Dickinson, oC San Diego,
proposed or flnal revocation were 188ued to V olunteer Fire D epartm ent, She quick CA: Cpl Richard A. RIvera Jr., oC V entura.
sect.1on 601(0)(4) organizations.Note that the ly becam e integrated in the fire depart CA; LCpl Gregory T. Buckley, oC OCeanside,
IRS currently hae m ore than 70 ongolug ex m ent,rising through the ranks.serving NY; SSgt. Sky R. M ote, oC El Dorado, CA:
am lDations oC 88ct.1on 501(c)(4) organizations as a training orncer, deputy chief. and GySgt. Ryan Jeechke. oC Herndon, VA: Capt.
(th18 lDoludes exam lDations Cora variety oC
M atthew P. M anoukian, oC Loa Altos Hille.
iUues,som e oC whloh Inolude whet.her the or
eventually fire and EM S chieC Cor the CA: M Sgt.Gregory R. Trent., oC N orw n, M A ;
depart
m
ent
i
n
2006.
O
l
sson
has
f
ac1l
1
gaulzatlon is prlm arlly eugaged lD activities
M AJThom as E. Kennedy,oC W estPOint.NY:
that. prom ots social weUare). It Is also im
tated training to individual depart CSM KevlD J. G rlm n, orLaram ie, W Y: SPC
portant to note that the Service also m ain m ents and fire conCerences across Ethan J.M art.lD.oC LeW iston.ID :M ~ W alter
tains a determ ination proceu to review t.he N orth A m erica, as w ell as the U nited D. G ray, or Conyere. GA: P03 Clayton R.
operations oC an organization to determ ine K ingdom .
Beaucham p, oC W eatherCord, TX : Cp\ D aniel
w hether It shOUld be recoplzed as tax ex D uring tough econom ic tim es, O lsson L.LiD nabary U , oC H ubert,NC.
sm pt. In tb1s area, we also review com pll and other volunteers have continued to ISG Ruaaell R. Bell, oC Tyler, TX : SSG
U C 8 W ith the legal requirem ents, lDoluding
thew S, Sit.ton, oC Largo, FL: 1LT Todd
the fire departm ent, increasing MW .at.Lam
w hether an organization Is prim ary engaged expand
bka, oC Fraser, M I: PFC Jesus J.
hours
and
the
num
ber
of
training
lD act.1vlt.les that prom ote social welfare.
Lopez, oC San BernardlD o, CA: SPC Kyle B.
There are current.ly m ore t.han 1,800 organi
qualified volunteers. A ll 18 of L atir's M cClain, oC Rochester lU lls,M I: LOplCurtis
zations lD the determ lDat.lon proceu 88eking volunteer firefighters are structure J.D uarte.oC CovlDa,CA:GySgt.Jonathan W .
recognlt.lon as a sect.lon 501(c)(4} organiza trained. 13 are quaU f1ed w ith w ildland GlCCord. oC Palm Bay, FL: G ySgt D aniel J.
t.lon. The level oC poUt.1cal activity Is an R ed Cards.and nine have EM S U censes. Price.oC H olland, M !; lLT Sean R.Jacobe,oC
188ue In a num ber oC these determ lnat.lon The L atir V olunteer Fire D epartm ent Redding, CA:SGT John E. Han8en.orA ustin,
cases.
an active junior firefighter TX: SPC Benjam lD C. Pleitez. oC Turlock.
I hope th18 lnCorm atlon is helpful. If you also has. In
CA; BFC Bobby L. Estle, oC Lsbanon, OH:
addition, the fire depart
PFC
have Quest.lons, please contact m e or have program
Jose O scar Belm ontes.oC La Verne, CA;
m ent recently built a new addition to PFC
yoursW C contact.Catherine Barre.
Theodore M . Glende, oC Rochester, N Y;
the fire station and purchased another Srt.Just
SlDcerely,
.lD M . H anaen, oC Traverse aty, M I;
fire
engine.
STIM ilN T. M ILLER,
SPC Just.ln L. H orsley, oC Palm Bay, FL:
for Serl1lca and
D eputll
I ask that m y colleagues Join m e in PFC Brenden N. Salazar, oC Chuluota, FL:
Enforcem ent.
honoring Jona 01880n and the excellent PFO Adam C. R ou, oC Lym an, SC; SO T Eric
w ork of the L atir V olunteer Fire D e E. W illiam s, oC M urrieta. CA: PFC JRllan L.
partm ent. The dedication of0l88On and ColvlD.oC B1rm 1ugham .AL.
TR IB U TE TO JU D G E BRU CE D.
the
com m unity volunteers helps ensure SSG Richard L. B erry, oC Scot.tedale. AZ:
BLA CK
P02 M ichael J. Brodsky. oC Tam arac, FL:
the delivery of vital servioes to N ew SSG
Brandon R. Pepper, oC Y ork, PA; SPC
M r. BIN G A M A N . M r. President, I M exico residents.
D arrlon T. H lca, oC Raleigh, NC: nc JeC
w ant to recognize the distinguished
L.
Rlcs, oC Troy, OH; P02 Joaeph P.
f
r
ey
service of m y friend B ruce B lack, the
Flt.zm orrla, oC Ruston, LA : CPO Sean P. Sul
ChieC Judge for the U .S. D istrict C ourt H O N O RIN G O U R A RM ED FO RCES

livan, oC St. Lou18, M O; SPO K ryltal M .
for the D istrict ofN ew M eXiCO.
M r. LA U TEN BERG . M r. President. Fitts.oC H ouston, TX; CplJoshua R. Ashley.
B ruce has chosen to leave the Fed over 2 years have passed since I last in of Rancho Cucam onga, CA; SGT DaDlel A.
eral bench at the end of this m onth. cluded the nam es of our troops w ho Rodriguez. oC Balt.im ore. M D: SGT Jose J.
H is decision to retire IS a 1088 for our have lost their U ves serving In support Reyes. or Ban Lorenzo, PR: SPC Seqlo E.
Perez Jr.. oC Crown Poln& .IN ; spe N icholas
State and for the N ation. B ut he has oC operations in Iraq and A Cghanistan, A.
Taylor.oC Berne.IN : SGT Erik N.M ay,oC
served our N ation w ith great distinc I w ish to honor their service and sac Independence,
SSG Carl E. H am m ar, oC
tion and ab1l1ty.
r1f1ce by including their nam es in the Lake H avasu KS;
Clt.y, AZ: SGT M ichael E.
B ruce w as appointed to be a district CONGRESSIONAL RECORD,
Ristau. oC RockCord. IL; SPC Sterling W .
court judge by President C U nton in
Since I last included the nam es of W yat.t, oC O olum bla, M O: PFC O am lron J.
1995. D uring the 17 years of hiS service our fa.llen troops on July 13, 2010, the Stam baugh, oC Spring G rove, PA; PFC
JW1559-000909
Septem ber 27,2012

V IA U .S.M A IL & EM A IL (Catherine.M .Barre(ll{irs.gov)
The H onorable D ouglas H. Shulm an
Com m issioner
RECEIVED
B y Executive Secretariat at12:36 pm , Sep 28,2012

Iappreciate the Septem ber 14,2012 response by Steven T.M iller, D eputy Com m issioner for
Services and Enforcem ent,to m y letter ofA ugust31,2012.
A s a follow -up to that Jetter,please provide m e w ith the follow ing:
1. Q uestion # 15 on the IRS A pplication for Recognition ofExem ption U nder Section SOl(a)
states:
"H as the organization spentordoes itplan to spend tm y m oney attem pting to int1uence the
selection,nom ination, election or appointm entofany person to any Federal, state,or local
public oU ice to an office in a political organization? ]f "Y es," explain in detailand list the
am ounts spentorto be spentin each case."
a. Forthe follow ing organizations please forw ard copies ofthe responses to Q uestion #15:
1)
2)
3)
4)

Priorities U .S.A .
A m ericans for Prosperity
Patriot M ajority U SA
b. Please provide w ith each ans\ver the explanatory "detail" and the lists ofthe "am ounts
spentorto be spentin each case" referred to in Q uestion #15.
2. In the IRS response ofA ugust24,2012,M r. M iller stated thatan address w ould be needed in
orderforthe IRS to tellus w hether or notan organization has been recognized by the IRS as
tax-exem pt. Ihave provided address inform ation on severalorganizations below ,as w ellas
verbatim statem ents from these organizations' \vebsites regarding their 501 (c)(4) status.
JW1559-000910
Foreach organization,please letm e know ifthe IRS has recognized itas tax-exem pt.
Organi:r,ation Nam e:
Crossroads G rassroots
Policy Strategies
f-----....---.........---..........--....- ..-
cc: Dr.Tom Cobum

Ranking M em ber
Perm anentSubcolllm ittee on Investigations
M r.Steven T. M iller
Deputy Com m issionerfor Services and Enforcem ent

JW1559-000912
86428
CONGRESSIONAL Rl'\CO RD -SEN A TE
W hlle T l;U l'l'0n, Lho m otive hnhlJl(\ this Ie\[
lslation and tll'lieve ensuring the
sta.te and
lO G a} ...
or
i.s a noble goal\ 1
believe the responsibility to addrolill thia

issue
hes w ith lIlt' stine anll local govern
m <Hlts. I do not IJeHIJve the fN lem l govern
m ent lw.s the autllorlty under the C onslllu
Lion to provide trallllng for 10t:,,1 and stili"
law enforcem ent or lo provide st.'curllY
equipm ent to sLatt'an'\ luesl courthouses at
the federal goverum ent':! lxpense. Further, I
l,elieve the training program this bilJ au
thorizes duplicates exislillir federal training
prO gl'am s,
First, S. 2076 authorizes the D lreelO r of the
State Justice Institute (SJll to carry out "a
Im illing and technical assistance pro\rram
designed to teach em ployees of Stat", lo(:a!.
and tribal law enforcem ent agencil's bow t.o
rU H lc!pale and respond to violent l'ncounters
during the course of tholl' duties, incluu.ing'
duties rel"ti1);, to security at State, county,
am i trial courthouses." Tile purposc of SJI b
to further thtl <lllvtllopm enL and a<loption o f
im provell ju()lcial adm inIstration in 8U tte
courts In the U nited SLat.es, w hioh il; lJot a
fedem l rosponsitJility under r.he C onstitu
tion. State;
nH 1poU BilJiu for the
tration of their
A ddinr, an additional
allow able purpose to S.JI m erely broadens
the unconstltuU onal reaeh of thiS agency.
Further, even though S,2076 does no!, provide
any additional fun(lillg fol' SJI the agency
could use the authorization of additional re
spouailJilities
CJ.:i a basis for rc(}uesting future
appropriations from C ongn,ss.
Second, the 5,JI training progm m au thOl'
[zed in this Ilil! potentially duplicates exist
Ing federal training progl'lunl! available to

state and local law enfol'cem ent. The fol
low jng pr()gram 6 already exist,,:
I. U .S. M al'shal Ser\'icc's N a,ionl\! Cente!'

fOI',Judiclal Secul'I')', Office,of Protective In
t.elligence; Shares threat Inform ation w ith

state and local law enforcem ent af(tm Gles and
provl,les tm inlng to state and IOGal law en
forcem ent officers II'ho provide courthouse
security. A lao. provide8 guidance and
port to dl1>trict oftkes lind ,Iudicial Security

Inspectors (.1SJS) conducting high threat pro
ceedings and protective res\X )Ilses.
2. U ,S. M arshal SerV ice's N ational C em er
for Judicial Security Fellow .hill program ;
Provides a rhree-m ollth trallling program I'O J'
state. local, and Illtenlatlollal "(:om t S"etl'
I'il"
3', FB I's'U niform C rim e R eporting m C R )

division and Law Enforcem ent O fficers
K illed and A ssaulted iLEO K A ) program s;
U CR and LEO K ....collectdata on law enforce
m ent olIieers w ho have b<'cn klllcd 01' as

sault"d ill the line of duty. 'rhe FlU then
conducts LF;O K A tra1111.ug j)l'ogrtlrn.s for statp
'Inri
local law enforcem ent. pel"Sonuol based
on ihis data.
'1. FB I's Law Enforcem ent T""illlllg for
Safety and Survival (L gT S8 ) Ill'ogrM lI;
Trains FB I. police officers, and inte'l'llat1<m al
law enforcem ent personnel In survival tech,
niques.
5, FB I Field PfJlk" T m iulng proo;rM 11; In
cludes firearm training for state aOlI local
f), FB I's Law Enforcem ent ExeC\lliv('D e""I
0P1Ywut ....sso<;latlon program ;
heads
of state an(1 local law eniol'cem ent ageneles
fl"rsoH uel.
w ith betw een 50 and
7. A dvancou La.w Enl'O I'C l1rnD nt
R e
Septem ber 19, 2012
9. D epartm ent of HOIlH'IiW ll Sec\ll'iI.y's )'ed based 011 the prem ise th at ciU Z C IlS w ho
cral
gnf()1'(;'cJneul fPrainim .t C entet' vole ill our elect-ious are Inforrriou
IF'l..ETC) pl'O grum s; ,'lid 'Ph" 8m '\'Iv"l Shoot about w ho Is s(,oking t,o influence elec
ing 'l'ralnlnr-;
iSSTP) untl,)!' V LETC tions, Sal1ly, w e conU nuc to see th at
i ~ iU ! eight and a half day training prugram
that t"adJes law nnforc"nw nt officcl's (LEO s) lnform M ion obscured by organizations
"how to em l,loy sevel'al types of w eapon sys w ho are m isusing our tax C O \l(l for po
leU lH fQ und, in m O B\' police
\iU cal gain,
(tlw
ice handgun, shotgun, subm adline gun and

A s we have dJscusaod on t,his floor
rillc), T he I.EO B w ill develop m arksm allship m a n y tim os, th e S uprem e C ourt opened
skills ,tS w elJ as all pertinent gun IHU1lUing O U l' cam paign finanC e systcm to a tor
5kills (draw iug from tlw holH el', reIO Rd", im ren t of unllnlltcd and secret speeial-in
l\ctio n . nlO \,C Inent and nlO t'lH a t it

m pitl yet eontl'ollcd pace. U lU rnalely, the teresI, m orw y in C itizens U nited. B ut
SST P II1'<'[",,'e5 the LgO s to survl"" 1\ <Ie:Vdly even the Suprem e C O urt acknow !flC!!H H I
force confront't(,lon through com petont d"d ill C it17.ens U nited tha t lllsdosure is
sion m ,vking nnd c(m U donL gun hi>lHlUng im port,lnt:
sldllll," 'I'h" R el,etive ShooU nK Inst,rucl.O r
"[PJr<lfupt disclo:m l'll of expenf!ltun's cau
'l'rainillfr Program (RS1'1'1') Im del' FLETC provide sharellohlers and eiU "ens W ith the
trains law cllJ'oreeruellt
in han IlIftu'm o.t1on needed to hold ,;:orporatioI1t- ,:u1(1
dU ug their fil'Oal'IllS to survive higll'btress el,'ctetl o(ficials l\ceollntabk 1'01' tn<'ir pod
situations,
and H upporlel's, Shnl'eholderM . <:a.n (it),

lO, Bul't.lau of A lcohol. 'I'ubacl...:o.
Let'm ine w hether t.heir CO r/)(}r"lIou's political
nrlH s' N alionn.l Fir(,!arn1s li;;"am incr
spc,\ch i:H lvances \.11e eO l'jlO raU U ll's intl'n'st in
pl'ograrns, 'rhe training progratn
nla.king prof1t.s. a.nd
can
w hother
training thllt enabh's st<lte lIl1(1 local Ii\w ell o1<")\.NI officIals am ill the pot'l':ut o f "".
[oreorrw nt o!l'1cors \.0 ident.ify arm ed gU l1nW Il -called
interests," C itiztlns
v,
H nd l11crec;i.se thoir "m argln of E llfn"y.'.
F E e. lJO S. C t.876. 916 (20101,
Finally, this lull gIves SUit.e llnd local
Y et. R ecording to lilt' Ccnti\I' for R e
courthoustH s p rIO rlty in obtaining

fed
eral security eqU ipm ent for In'e from th" sponsive l'oliU es, as of Septem ber 13,
G uvernm ent
A dm inistration after It spending on po1iU ca1 a d v e r t i ~ i n g by
gl'oups that oith(11' do n o t digc!os(', or
short reqlliJs(, pm 'io(l b giver, teO feclt'rU l
des, T he courthouse w ould only pay the only pal-tiallY disclose their donors,
cos(.s Qf
the ,J(luil>lI1ent. r.A lujp h:\3 InCI'O R$od lourfold, from $:32 m il
m ent purchased by tlw

f,!dent! g-ovN nm ent lion in the 2008 elect.ion to m O fe than
and then,hy the ,\m t!rICal1 taxpayel',..shollid $135 m illion at. the sarno point ill the
be utlllz<,d by the federal govH nnlllnt if at
all pOBslblo. U not. fedem l <ll;end(llJ m ay G urront eiecU on.
'I'hese groups are oxploiting our ta;.,:
have to purchase equipm ent they other,,!,,'
could have obtuilw d for free IJUt for the stM ,' G ode lJy organizing 1\8 tax-exem pt "SO
and local goV el'lllll'lU Ls t.aklng it A lso, giving cial w elfare" groups and then s p ( ' n d i n l ~
and localH .ioB tIlt) ahility to obtain \.(m s of m illions o f undisdQ sed dollars
tillS equlpm em for ftel) m ay lead La situa on political cam paigns.
tlons w hom (,h"y lIcquiro tho e'llllplllont sim
T he Internal H .evel1ue Servjce (IRS),,
ply l,oeause it IS iree, not bllcause they tl'uly the organization that gran t8 t.hese
nC-lHl It..
A rticle 1. Section a of the C onsU lution groups theil' t.a:'-I)xem pl statu s in !'he
enum em tes the lim lted pow ers of C ongress, first placew..shotlld bo protecting the
and now hel'e I\l'O we tasked W ith funding V I' voting pu bH e from t.he;,,, groups tha t
beCOnllnll'Involved w ith state ilild local '::011 ft pr()tend to be acL ing in the SO CIal w el
security, I firm ly bdleve tillS ISBue 1.8 tho re.. fare but are instead engaging in par
sponsl!Jllity of thO l1tatv:l and not tht fe,hlm l tisan

politics,
govcl'Ilm ot'L H ow evel', IfCOlllfrllSS does ,w t In
T he law in thi!, area is cleal', 26
current PH )
this ,U 'tH l, "Nt!: H hould
gram s, lJt,tennlne ill1'y needs tllat m ay exist. U ,S,C . 50H c)('I) stales th at "Ci..-!c
and pl'loriU "e thosll needs for fundIng by G ut leagues 01' organizaL iolli; not organil.ed
ting from the fodum l budget pro!n'l\fI1s for profit b u t opem ted exclusively for
franght w ith w aste, fraud. abuse, Ilnd dupli the pJ'orllotion of social w eliare, or
G,lUOn,
local associations of tnnployees, tho
m ust sLart m akiug t.ough ,h,d m em bership of w bich Is lim ited to the
slous rathel' than eontinuing ttl kick tile can om pioyues of a designated person or
doW n the road, lea\'ing our childnm and
grnndchildren tfJ '.'1eau up tho ruess, It is ir persons in ,\ p:u'ticular m unicipalit.y.
responsible for C ongress to jeopardIze the fu :lnd the n et earninK s of w hich ,l1'C de
ture standard or IIvlIlg of our children by \,010(1 exclusively to charitalJle, edu
bO !'row lng frolll future gl11l0ralj,;m s, T he U .S, cational, or reel'cational PU I'poses" are
IlRtlonal debt is llO W 0"(>1' SHi trllH ()Il, '111l\t e.xom pt from taxation . T lle \V ord "ex
over $50,000 in debt foj' each m an, dusively" is in the tax code for a rea,
w O lllan
I\nd child in the U nited States, A
YCi>r ago, the nationlll (I\,ht w as SILl trllllO lL SO IL C ongress dilln'llm y "p,lJ't1aJly," or
D espite plt,dgt,s t.o control sl>ending, W ash "prim M 'ily," W e said th at these groups
H Igton
billion;; to Uw national deht had 10 be openll.l,d "exclusively" ['or
tw ery single day, In J(l.!;(. one year, our na" the prom otion of social w eJfanl, TIl('
tlon,.! dl1ht hl\s grow n hy $1.'i trilllou 01' IR S , In w riting' the im plem entIng rlJgu
U ,B% , W e Ciw nor continU O to support federal [,Ll,ions to the statu te, said that., "A n
funding fol'progrllm s an,l InitiaU v"s thn L art) organi:'.ation is operated exclusively for
not f"dD ral \'t'sponsibiJitie. aB dictated b ~ '
the \lI'O IIlO tloll ()f soci<d w elfare If it is
our C onstitut!olL O therw Ise, we w lll never prim
arily eng'l.Ifed in pl'om ot.ing III
v,et OUl'flscnl house
In ordcr.
som e w ay the com m on good and gen
,
U!.'l\1 w cH are." [em phasis adductl B ~ ' sub
'rO M A , CO IlU IlN , M ,D "

stItu tin g t.he w ord "prim arily" in the
U .S. S enator,
N
spouse T raining (A LER R T) pl'O gram : T rains

offieers \n
w ith violent sltu'\t1ons,
111clu,Ung those tlley faco out:!lde of build
m gs and in 1l1'1>lln settings, TucllHles core
classes snch a3 "B asic A cU ve Shootol' Le"el
I and II." "T errorism R esponse T acticsA d
vanced Pisto1." "C om bat R ifle." "C om bat. IN T E R N A L IU 1V gN tJ1oJ SljRV ICEl A N D
Pisto!.' "A dvanced R ille
501(c)(4) O R G A N IZ A T IO N S
Course,"
iUI(J "D O D
1'.11', L g V IN , M l'. P resident, our rep
8. C o:nm unit.y
Policilig S(;lvlces
program s (CO PS);
resentative form of gO V O l'llIneut is
regulation w ith the w ord "exeluslvely"
In the sl;atute, the IH S essoutially re
dofined w hat C ongrells tllljuirCli a Ilod<ll

w elfan, or"anl?,aU on to bo.
M r, 1'I'osi\l(m t, I :lsl.ed tho IR S lor an
explanation a!; to w hy they have not
JW1559-000913
Septem ber 19,2012
responded to the Increasing grow th of

groups that parade as soolal w elfare
groups but are obviously organized for
polltlca.U y partisan purposes. In m y
letters, I asked the IRS how they Inter
86429
86430
ED tlU es that file under section 501(c)(4) Of lntervenU on In pollt.1calcam paigns on behalf
the ID tem al Revenue Code and take advan of or In oPpo81t.1on to any can4ldate for pub
tage of Ita tax exem ption benente Bbould Uc ornce. H ow ever. a 8ect.lon 501(c)(4) social
have to m ake a choice: either loee their ex w elfare orgaD lzaU on m ay engare In ,om e po
em ptetatll8 (and pa.y taxee) or el1m 1nate the litical
acU vltles, so 10D/l' as U1at. Is not. lte
prim ary acU vlty. H ow ever, any expenditure
part.1aan pollU calacU vlty.
The m s needs to Im m ed.lately review the It m akes for political acU vitles m ay be 8Ub
actlvlU es of 501(c)(4) enU tles engaging In ject.to tax under 8ecU on 62'1(01" [Em phasle
l"IUID1Dg partlaa.D pollU cal ada or giV ing added]
f1m ds to Section 62'1 organlzatloD B that run
a. W hat 18 the statutory basl8 of the lan
such ada. The IR S need.s to advise 501(c)(4) guare that allow e 501(c)(4) organlzat.lons to
entlU es of the law In thle arsa and the fac engage In ,om e pollU calacU vlt.lee?
ton It w illlook at In review ing 501(c)(4) eta
b. How does the m s keep traok of these
tllS and tax exem ption luues.
political activities and ensure that.the orga
Please provide m e w ith the follow ing Infor nization payS the tax under section 62'1(01
m ation no later than AUgll8t10,2012:
7. In her July 13 letter. M s. Lerner states
1. How can the m s Interpret the expllclt that the IR S also addreeaes the l88ue of po
laDflllllfe In 26 U .S.C, 501(c)(4), w hich pro litical actlvlt.les In U1e Form s 990 and 990
videe that ??610??(c)(4) entities m llSt operate EZ.
"exclllSlvely" for the prom otion of social Are Form s 990 and Il9O-EZ m ade publlc? U
w elfare, to allow any tax exem pt parUBaII BO,w here can they be acceased?
pollU calacU vlty by 501(c)(4) orgaD1za.tloDB?
8.InternalRevenue Service PubU catlon 667
2.Since partlBaD political acU vlty does not 8tate8
U1at, If a 501(0)(4) entity can "subm it
m eetthe m e dennltlon of "prom oting eoclal proOf that [U1e) organization Is organized ex
w elfare," how can an organization that par clllSlvely to prom ot.e BOclal w elfare. It can
U clpatea In any partl8an polltlcal activity obtain an exem pt.lon even If It. part.lclpatee
be"orgaD ized exclllSlvely to prom ote eoclal legally In som e political activity on behalfof
w elfare?"
or In oppoBltlon to candldate8 for public of
3. The Exem pt O rganlzatlone 2011 A nnual O ce.'l
R eportand 2012 W ork Plan etates: "A e In any
H ave the follow ing 501(c)(4) organlzat.loDB
election year, EO w ill continue Ita w ork to a) applled for: and If BO.b) received t.he de
enforce the rules relating to polltical cam 8crlbed exem ption for pollU cal act.lvlt.y from
palgDB and cam paign expendlturee. In FY them S?
2012, EO w ill com bine w hat It has learned. a. Cro8sroad8 G rassroots Policy Strategle8
from past projecta on polltical actlvlU ee
b.Priorities U.S.A .
wlUl new inform ation gleaned from the rede
c.AmerlC&DB Elect
elgned Form 990 to fOCllS lte exam inat.lon re
d.A m erican Act.lon N et.w ork
BOW 'Ces on eeriollS allegatioD B of lJnperm le
e.AmerlC&DB forPf08perlty
elble pollt.lcallntervenU on."
a.TypicallY , how long after a com plaint to
g.AmerlC&DB forTu:Reform
the m s does a com pllance review begin?
h.60 Plue A 8Boclation
b. W hat approxim ate tim e does It take to
1.PatriotM ajority USA
j.Club forGrowUl
c, How m any pereoDB are Involved In the
k.Clt.lzens fora W ork1ag A m erica IDc.
enforcem entofthe 501(c)(4) rules?
1.Susan B.AnUloDY Ll8t
4, The Exem pt O rganizations 2011 A nnual 9. Rave you rem inded 501(c)(4)& w hich pub
Report. and 2012 W ork Plan 8tate8 that 501 licly 8eem to be operat.1ng In U1e partlBall po
(c)(4) OrganlzaUODB "can declare them selves lltlcal arena as to the factors you w ill con
tax-exem pt w ithout8eeklng a determ ination 81derIn determ ining w heU ler U1ey are eD/l'ag
from the m s. EO w ill review organlzat.lons lD g In partlBaD pollt.lcal actlVlt.y? Ifnot..w hy
to eDBure U1at. t.hel have claBBtned. them not?
8elves correct.ly and t.hat.t.hey are com plying
I have encl088d a copy of M s. Lerner'8 let.
w ith appllcable rule8."
ter. U yOIl have any qUest.IODB. plsase con
a. W hy does the IR S allow 501(c)(4) organl tact
m e. or have your 8tarr contact K aye
zatlODB to 8elf-declare?
my
8tarr
at
b. W hen an organization "self declares" as M eier eler@ of
levln.8enate.gO v or 2021224-9110.
a 501(c)(4) organlzaU on,how does the m s get kaye_m
A
gai
n.
It
l
8
urgent
that
I receive your an
noU ce and how long does It take the m s t.o
AugllSt.10.2012.
conduct the review to eneure that.that orga
8w ersby
Sincerely,
D lzatlon has classtrled lteelfcorrectly?
CARL LIilVltl.
6. The m e Com pllanoe G ulde (or T u-E x
Chairm an, Perm anm tSubcom m ittee

em ptO rranlzatloD B 8tates:
on InllCf,tlgatioru.
"W hen a 501(c)(4), (6) or (6) organlzat.lon'8
com m unication explicitly advocate8 the
DBPARTM ENT OF THE TREASURY,
elect.lon or defeat.of an Individual t.o publlc
INTEllHAL R BVEN U B SBR VIC B .
ornce, the com m unlcat.lon 18 con81dered po
W ashlnglon, DC., A uglllt 24,2012.

llU cal cam paIgn acU vlty. A taJt-exem pt. or
ganlzaU on that m akes expenditures for po H on.CARL LEVIN,
U tlcal cam paign actlvlU es 8hall be 8ubject. C hairm an
. Perm onm t Sllbcom m ltUe on Inve,
tlgatlom , U.S.Sm ale. W ashington, DC.
to taJt In an am ount. equal to Ita net Invest.
DEAR SSNATOR LBVItl: I am responding to

m ent. Incom e for U1e year or the aggreate
your
let.ter to Com m l8Bloner Shulm an dated
am ount expended on poU tlcal cam paign ac
tlvU les during the year, w hichever 18 1_." July 2'1, 2012, requesting additional Inform a
a.How does the m e keep track ofthese ex U on about sectlon 601(0)(4) organlzatlon8
.
pllclt com m U D lcaU ons and en8ure that the Th18 response 8upplem ents U1e prevloue re
8poDBe8 dated June 4, 2012 and July 13, 2012,
organization pays thl8 tax?
b. W hat l8 the reason for the requirem ent and addres8e8 the addlU onal questions ral8Bd
that the tax wUl be based. on "w hichever 18 In yourrecentletter.
lese" betw een lte net Investm ent Incom e for Q uestion 1.How can U1e IR S Interpret U1e
the year or the am rregate am ount expended expllclt laD guage In 28 U .S.C. 1501(c)(4).
w hich provides that 610(0)(4) entitles m uet.
on political cam paign actiV ities?
c.W hat tax w ould an organization have to operate "exclU81vely" for U1e prom otion of
pay IfIt.8pends all of Ita Incom e on political 80clal w elfare. to allow any tax exem pt par
advertl8lng (therefore It. has NO net Inve8t. tla
a.D political activity by 501(c)(4) organlza
m ent.Incom e)?
tIODB?
6. M I. Lem er'8 letter quotes the m s
W e note that the current regulation bae
w ebpage on Social W elfare OrganlzaUoDB:
been In place for over50 years.M oreover.un
''The prom oU on of eoclal w elfare does not like Internal Revenue COde 8ecU on 501(c)(3).
Include direct or Indirect participation or w hich 8peclnCally provld8B that organiza
Septem ber 19,2012
tlons m ay "not. part.lclpate In, or Int.ervene

In . , , any pollt.lcal cam paign on behalf of
(or In opposlt.lon to) any candidate fOrpublic
ornce."), section 501(c)(4) doe8 not oontaln a
speclnc rule or U m ltaU on on political cam
paign intervention by social w elfare organi
zatlone.
QUBsUon 3. Since part.1aa.D pollU cal activ
Ity doe8 not m eet the m s deflnltlon of"pro
m ottng eoclal w elfare." how C aD an organlza
t.lon that part.lclpat.e8 In any partisan polit.
Ical act.lvlt.y be "organized excllllllvely to

prom ote social w elfare?"
Ae et.at.ed above. lonptandlng Treasury
Regulatlon8 have Interpreted "excluelvely"
as ueed In section 601(<:)(4) to m ean pri
m arily. Treasury R egulation l.llOI(c)(4}
l(a)(2)(I), prom ulgated In 1969, provides: "A n

organization 18 operated exclllSlvelY for the
prom ot.lon ofBOclal w elfare 1rIt.18 III'lm arily
engaged In prom ot.1ng U1e com m on rood and
general w elfare of the people of the com m u
nlty." A pplying U118 Treasury R erulatlon,

R evsnue R uling 81-96, 1981-1 C.B. 332. con
oluded that "an organization m ay carry on

law ful pollt.lcalact.lvlt.le8 and rem a1Jlexem pt
under eeet.lon 501(c)(4) as long as It. Is prl
m arlly engared in actlvltle8 that prom ote

BOclalw elfare."
Q ue8tlon 3.The Exem pt.O rganlzat.lons 2011
A nnual Report. and 2012 W ork P lu 8tates:
"A 8 In any eleetlon year, EO w ill continue
Ita w ork t.o enforce the rules relatiD S to po
U tlcal cam palgn8 and cam pa1gn expendi
tures. ID FY 2012. EO w ill com bine w hat It

has learned from past projects on political
acU vlt.le8 wlUl new lD lorm at.lon gleaned
from U1e redesigned.Form 990 to focla Its ex
am ination resoW 'Ces on 8eriollS aller-tlon8 of

Im perm laalble political intervention."
a.Typically, how long aCtor a com Jllalnt to
U1e IR S does a com pU ance review bel1D?
b. W hat.approxim ate tim e doss It take to
The IR S rouU nely recelve8 eXlUlllnatlOD
referrals from a varlet.y of soW 'Ces 1Jlcludlns
U1e public. m edia, M em bers of Conrreae Dr
U1elr starr. fond has a 10nptandlD g prcCB8B
for handling referral8 BO that U1ey receive an
lJnpartlal. Independent. review from career
em ployee8. W hen U1e m s receives a referral
about a particular orp.njzat.lon. It 18
prom ptly forw arded to the ClasalftcatloD
unit of U1e Exem pt O rganizations (1l0) Ex
am lnaU on ornce In D allas, Texas. Pursl1lU1t

t.o IRM 4.76.6.4(1), w ithin 30 daY8 ofreceiving
t.he referral, U1e Cla88tncat.lon starr begins
evaluating w heU ler the referral has exam ina
tion potential, 8hould be cODBldered In a fu
ture year, need8 additional Inform atlon to

m ake a decl8lon, or CaUs W ithin the cat.
egories of m atters that. are referred for EO

R eferral C om m ittee review . A lt.houah m M
4.76.6.4(1) sets a goal of 90 days to com plete
review s of referrals, U1e tim e It takes to
fully review a particular referral varies, de
in
pending on 8uch factors as U1e

volved
and the avallabll1ty ofrelevant Infor
m at.1on (I.e. orgaD lzatlon's Form s 990, exter
nal sources such as m edia reports. IIlternet

searche8,eto.).
ID thoee caeea In w hich the m s needs addi
tional inform ation about U1e 8ubjectofa re
ferral that 18 not readily available. 8llch as

Ita Form 990 that has not been nled Fet for
the tax year at l88ue,Class.lncaU on m ay SllS
pend cla88U'y1ng U1e referral and places It In

the follow -up category until the addlU onal
Inform ation Is avaU able.O nce U1e additional
inform ation Is received. review ed. aDd sup
ports the referral being clasalned as having

sxam lnatlon potent.lal,U1e referrall8 lent.to
unassigned Inventory. unU l a revenue &8'8nt
w ith U1e appropriate level of experience for
the luue8 Involved In the m atter 18 available
to conductan exam ination.
O nce In Inventory, U1ere are num eroue fac
tors that. can affect how long It takes to
1__
JW1559-000915
Septem ber 19,2012
S6431
com plete the exam ination proce88. W hIle It ROO looks e.t an organlzatlon's Form 990. U nder tbe statute cited e.bove,an organlza
Is dlm cult to predicthow long any 81ngle ex w ebsite, and other publicly avallable lDfor tlon the.t othBrw lsB m eets thB requ1rem ents
am ination wlU take, for cas88 clOBed 10 FY m atlon to see whe.tItls doing e.nd w hetherIt of Bectlon 601(c)(4) social w elfare tax-exem pt
2011,the average tim e It took to cl08e a case continues
to be organlZOd and operated for statue, w hich spencle all Its Incom e on polit
tax-exem pt purpoBS8. U It e.ppee.ra Crom a Ical advertising and hae no net laveetm ent
w as 210 days.
c. How mlU\Y persons are 1ovolved In the ROO review thate.n orge.nlzatlon m ay not be Incom e w ould not OWB any tax uncler Bectlon
com plle.nt. ths organization Is referred for 627(0. It m e.y how ever, through Bucb 8pend
enforcem entofthe 1I01(c)(4)rules?

The Exem ptO rganizations (EO) Cunctlon Is exam 1oe.tlon.
Ing (lI.Dd depending on tbe otherw lSB appllc....
Com pllance cbecks:In a com pliance cbeck. ble facts of the caee).no longer qua1lfY ae an
responsible for the enforcem ent of section
1I01(c)(4) etatutory rules and regulations ae IRS contacts taxpayers by letter w hen we organization that Is tax-exem pt UIlder sec
well as those applicable to all other types of discover an apparent error on a taxpayer's tion 601(c)(4).
return or willb to obtaln rurther Inform ation
w -exem pt orraD 1zatlons.
Q uestion 8. M s. L em er's letter quot8B the
For FY 2011. the total num ber of EO etaff orclarlncation.A com pllance check ls an ef IR S w ebpa,ge on Social W elfare O rganiza
i
ve
w
ay
t
o
m
ai
nt
ai
n
a
com
fi
ol
ent
e.
nd
eCCect
was 889. O ther than the 14 em ployees 10 the
tions:
Pirector'8 office. tbe three EO oalces are pllance presence w ithout an exam ination. "T he prom otion of social w elfe.re does not
W e aleo use com plle.nce cheok que8tlonne.lres inclU de direct or Indirect p a r t l c l J & ~ l o n or
starfed ae follows:
RullJIBB and A 8J'sem ente (R & A ). w hich In to study specific pe.rtB of the tax-exem pt Intsrventlon In political cam paigns on behalC
cludes EO Peterm lnatlons and EO Technical. com m Ull1ty or8peclfic cf088-8ector practices. ofor In O ppoSition to e.ny candidate for pub
ensures organizations m eet legal require

Exam lnations: Exam lD atlons, also know n lic ornce. H ow ever, e.8ectlon &01(c)(4) social
m ents durtD g the application or private let ae audits. are authorized under Section 7602 w elfare organization m ay BngagB In som e po
ter rul1ng proc888, and througb guldance. In of tile COd8. For eXBm pt organizations, e.n litical e.ctlvltles. BO long ae that 18 not Its
exam lD atlon detsrm lneB e.n organization'S prlm e.ry
FY 2011.R& A had 332 em ployeee.
H ow ever, e.ny eX )endlture
EO Exam lnatlons (Exam ) IS com prlsed of continued qualification for tax-exem pt sta It m akBs for polltlce.1 activities m ..,. be 8ub
various UII1ta. Including the Cl& 88lflcatlon ~ U B . W e conduct ~ w o different tYPeB of ex Jeot to tax undBr section 627(0. [Sm pbulB
unit. the EO Com pllance U nit. and the Re am inations:
corrBspondence and field.
added.]
view ofO perations unit.Exam develope proc
Beoause the IR S cannotreview every BnBt
e.. W he.t Is the statutory bael8 of tIlB lan
888es to Identlf:y areae ofnonoom pllance, de

Inl orge.nlzatlon In every tax yee.r. we UB8 gue.gs that allow s 601(c)(4) organizations to
review techniques descrlbBd e.bove to
ge In som 8 political e.ctlvltles?
velope oorrectlve strategies.and coordinates mthe
e.xlm lze our covere.ga of the tax exem pt enge.
w ith other EO Cunctlons to ensure com pli
sector
PIB ue see responseB to queBtlons 1 and 2.
In
both
our
gBneral
program
w
ork
and
ance. so that organlzatlons m alnta10 their
project w ork. The project w ork. w hich e.bove.
exem ptstatus.In F Y 2011.Exam had 631 em
our
b. How dOBB tbe IR S keep traok of these
results trom our BtratBllo planning proCB88, political
activities and eD 8ure that tbe org....
ployees.
IB d8Blgned to Cocus on speclflc e.r8&8 e.rrBCt nlzatlon pays
EO Custom er Education and O utreacb 109
the tax under8ectlon Sll'I(O ?
the
EO
8ect
or
e.
nd
to
dl
rBct
m
ore
Bf
f
ec
lon &01(c)(4) orgaD lzatlons fil1D g Fonna
(O E& O ) coordlnates.& 88lsts and 8upports the
tlve U8e of our reaourceB In the efCort to 990SBct
or
l
l
9OEZ
are
red to report political
developm ent of educational m aterlale and strengtben
com pliance and Im prove tax ad activities. O rganirequi
outreach eaorts for organizations to under
m inistration.
zations t b a ~ engap 10 di
DeBCr
l
bed
In
the
EO
2012
W
ork
stand their responslblllties under the tax Plan. thB BectlonB &Ol(c)(4), (I) and (8) Self rect or lD direct political cam paign IIIltlvltles
law . In FY 2011, CE&O had a staa of 12 em
D Bclarere Is one 8uch project. Tbls proJeot are alBo requlred to com plete Schedule C oC
990 or llOO-EZ.O rganlzatlonB 8ubJect to
ploye8s.
fooUSB8 on organizations t h a ~ hold them Form

The em ployees 10 these Cunctlons are re
eel
tax under section 627(0 are required to com
ves out u being tax-exem pt rather the.n pl

sponsible for the regulation of all types of seeking
y
w
th the 8tatU tory reporting and pay
IR S recognition of their e x e m p ~ sta

m ent irul
tall-exem pt organizations, Includlng section
e8. ThB IR S e.lso recelveB referralB
t
us.
1I01(c)(4)organizations,
regarding such actlvttlB8 from e. variety or
Q uestion 6.The IR S C om pliance GUide for Bour
Q uestion 4.The Exem pt O rganizations 2011 Te.
that
are handled through loa im par
ceB
x-Exem ptO rganizations stat8B:
A nnual Report and 2012 W ork Plan BtateB

"W hBn a 601(C)(4), (6) or (8) O rge.nlzatlon'8 tial, Independent reviBW . SeB the resJlOnSB to
that 601(c)(4) organizations "can declare com m W 1lcatlon explicitly e.dvooe.tes the question 3 for the descrlptlou on the IR S re
them selveB tax-exem pt w ithoutseeking a de election or deCeat of an Individual to publiC ferrlll procees.
term 1nation trom tile IRS.EO w illreview or office, the com m unication IB consldBred po
Q ue8tlon 7. In her July 13 IBttar. M B.
ganlzatlons to enBure that they have cl&88l litical cam paign activity. A tax-exem pt or Lerner statss that the IR S also addr_es the
fied
them selveB correctly and tbat they are ganizatiO n that m akeB expenditures for po 188ue of political activities 10 the Form s 990
com plying w ith applicable rules:'
litical cam paign activities shall be BubJect and llOO-EZ.
a. W hy doea the IRS allow 601(c)(4) organl to
tax In e.n am ount equal to Its net Invest
A re Form s 990 and ll9O-EZ m ade public? U
zatlonB to Belf-declare?
m ent Incom e Cor the year or the e.ggregate so, w here ce.n thBy be e.cee88ed?
The Intem al Revenue COde expre88ly pro am ount expended on political cam paign ac
Y es,Form B 990 e.nd llOO-EZ arB m ade public.
vldBB that certain tax-exem pt organizations tivities
during the year, w hichever ls 1888:' Te.x-exem pt organizations are reqlllred to
m ustgive notice to the IRS. by fiUng an ap
a.How does the IR S keep track ofthese ex m ake their returns W idely avallable for pub
plication for exem ption, In order to claim pU olt com m unications and ensure the.t the lic Inspection. O rganlll& tlons are required to
tax-exem pt status. The Internal Revenue organlzatlon pays this tax?
allow tbe public to lD spect tbe Form s 990.
Code does notreqU ire an organization to pro
Te.x-exem pt orsaD lzations ruing Form 8 990 llOO-EZ, ll9O-N. and ll9O-PF thsY h an rued
vide notice to the IR S to be treated as de or 99O-EZ arB required to report polltlce.l e.c w ith the IR S for tbelr tbrBe m ostr e Q 8 n ~ tax
scribed 10 Beotlon 601(c)(4). By contrast, for tlvltleB . O rge.n1zations the.t engagB In direct years. Exem pt organizations also are re
exam ple. Section 608 generally requireB an or Indirect pol1tlcal cam paign activities are quired to provide copies ofthBse Inform e.tion
organization to provide notice to the IR S be also requ1red to com plete Schedule C of returne w hen requeBted, or m ake them e.ve.U
fore It w11l be treated ae deeorlbed In section Form

990 or 990-EZ. O rganlzatlonB subJBct to able on the Intem B t.Tbe annual1ofonnatlcn
601(c)(3).
tall under seetlon 627<0 are required to com return8 al80 are available cram the IRS, as
b. W hen an organization "selC declaree" as ply w ith tbe 8tatU tory reporting e.nd pay. w ell ae trom third-party sources the.t post
a 501(c)(4) organization, how does the IR S get m ent rules. TbB IR S alBo receiV es refBrralB them on their w ebsltss.
notloe and how long d088 It take the IR S to regardlng suob a c ~ l v l t l B 8 trom a variety of Q uestion 8.Internal RevenuB SBrvioea Pub
conduct
the reView to ensure that the orga aources t h a ~ are handled through e.n Im par llce.tion
statB e the.... If a & 01(e)(4) entity
nization has ol& 88tned Itselfcorrectly?
tle.l. Independent review . S8e the response to can "subm it proof that [the] organization Is
As w ltil other tax exem pt organizations, question 3 for thB deBcrlptlon on thB IR S re organlzsd excluslvBly to prom ote 800lal w el
organizations olalm lng to be tax-exem pt Cerralprocese.
fe.re. I ~ ce.n obtain an eX Bm ptlon ev a If It

under
section 601(c)(4) generally are required
b. W hat IB tIlB r8& 8on for thB rBqu1rem ent partlC lpat88 IBgally In som e political actiV
the.t tbe tax w lll be bued on "w blchever Is Ity on behalf of or In O pposition to can
to file a Form 990 on an annualbaals.

The Exem pt O rganizatiO ns ornce of the le88" betw een Its net Investm ent lD com e for dlde.teB for public office."
IRS ls responsible for the com pliance ofover the year or the aggregate am ount expended
HaVB the follow ing 601(c)(4) organlaatioD B
one m llU on organizations w ltil diverse goals on
political cam paign actlvltles?
e.) applied for: and If so, b) received tbe de
and purpoeee. In order to ensure the highest

The statute under section 627<0 explicitly scribed exem ption Cor polltlce.1 activity from
degree oC com pliance w ith tax law w hile statee the.ta 601(c) organlzatlon Is 8ubjBCt to thB IR S?
work1o1 w itb lim ited resources, EO m ain Its tax bued on "an & m ount eque.l to tbe
a. CrOBBroadB G raearoots Pollcy Strategies
ts.Ins a robust and m ulti-faceted post-filing leseBr oC-{A ) the net InVeBtm Bnt lD com s of b.Priorities U .S.A .
com pliance program that conducts review s such organization for the taxable year, or (B) c.A m ericans Elect
of exem pt organizations 10 varioW l W ay8, t.he aggrege.te a m o u n ~ Bxpended during thB
d.A m erican A c ~ l o D N etw ork
B.A m ericana CorPro8perlty
taxable yBar for sucb e.n exem pt Cunctlon."
such ae:
Review of O perations (ROO) revleW 8: Be
c. W hat tax w ould an orge.n1zatlon be.ve to
cause e.ROO review IS notan e.udlt. ths ROO pay If It 8pends all Its Incom e on political g
.A m ericana for Te.x ReConn
carries out Its post-filing com pliance w ork advertising (tbereCore It has NO net InVSBt
b.80 Plus A seoclatlon
w ithout contacting taxpayers. 1Detee.d, tbe m Bnt1ocom B)?
1.Patriot M ajority U SA
55'
JW1559-000916
86432
CO N G RESSIO N A L RECORD - SEN A TE
j.Club rorG row th
k.Citizens rora W orklng A m erica !Dc.

I. SU8&llB.A nthony List
In1tlally, to clarify, eectlon 501(c)(4) orga
nizations do not receive "exem ption ror po
Septem ber 19,2012
Septem ber 19,2012
86433
Queet.lon 2. How m any 501(c)(4) ol1l'anlza in that position he has exem plified the Pentagon announced the deatha of1,020
t.1ons which appear to be prim arily eugaged integrity and high standards offairness troops in Iraq and in O peratioD Endur
lD politiCal activity have been notlned by and im partiality w hich w e strive Cor In Ing Freedom , w hich Includes ACghani
the IRS wlt.h1D the last8 m onthe that they our Federal Judiciary,
stan. They w1l1 not be forgotten, and
m ay be In violation oC the law?
W hen the IRS exam ines a section 601(o){4) Throughout his years as a Federal today I ask unanim ous consent that
organlzat.lon,the objective oC the audit 18 to judge he has never lost sight of the their nam es be printed in the RECORD.
determ ine w hether that orgaDlzatlon Quail. real-U fe effects of the court's decisions T here being no ob)ectlon, the m ate
nes
Cortaxexem pt.-status as a social welfare on the U ves of those w ho com e before rial w as ordered to be printed in the
organization.A s dlscuaaed In our June 4,2012 the court.
RBCORD,aa follow s:
response to your M arch 30, 2012 letter, that B ruce and his w ife M ary have excit
CW 2 Jose L. M ontenegro Jr., oC Houst.on,
determ 1nat.1on lookS to w hether the organl Ing plans for the next chapter of their TX : CW 2 Thalia S.Ram irez, oC San Antonio,
zatlon Is prlm arUy eugaged In activities that lives. They are close friends to m y w ife TX: PFC Shane W . Cantu, oC CorlU1lla, M I:
prom ote 800lal welfare.not organized or op
nne, and m e. W e w ish them the very LCpl Alec R. Terw iske, oC Dubois, IN : SSG
erated Cor profit, and the net earnlll8'8 oC Abest
Jerem le S. Border, oC M esquite. TX: SSG
in future years.
which do notInure to the benent oC any pri
Jonathan P. Schm idt. oC Petereburg. VA;

vate shareholder orIndiVidual.The exam ina
SPC Kyle R. Rookey, oC Oswago, NY: SSG

tion looke atthe actiVities engaged lD during
JeSSica M . W lDg, oC Alexandria. VA: SO T
TR IB U TE TO JoN A O LSSO N
the com plete taxable yearatluue.A lthough
opherJ.Birdwell.oC W indsor.CO:SPC
the prom otion oC social welfare does not In
M r, BIN G A M A N . M r. President. Chrl8t
y J.Anders,oC BakerCity,OR;PFC Pa
clude direct. or indirect. participation or today I wiBh to recognize Jona O lsson, tMriabr
cia L. H om e. oC Greenwood, illS: SGT
lDterventlon lD politicalcam paigns on behalC fire chieC oC the L atlr V olunteer Fire Loui
s R. Torres. oC OberllD, OH: S(JT David
oC or lD oppoaltlon to any candidate Cor pub D epartm ent located near Q uesta, N M . V. W illlam s, oC Frederick, M D : src Coater
lic oroce,a section 501(c)(4)socialwelfare or O lsson w as recently honored as the 2012 B. Debo88, oC State Line. M S: SGT Richard
ganizat.1on can engage lD polltical actiV ities V olunteer Fire C hief of the Y ear by A. E888X, oC Kelseyvllle, CA: SGT Luts A.
as 10118'as Itis prim arily eugaged lD actiVi
OUver G albreath, oC San Juan, PR: S02

Fire C hief for her tirele88 w ork at the Davi
ties thatprom ote 8001&1 weiCare.
d J. W areen.oC Kent.wood,M I: SOl Pat.
It the IR S believes that an organizat.1on L atir

V olunteer Fire D epartm ent and rick D. Feeke, or Edgew ater, M D ; POI Sean
does not m eet the reQuIr8m ents under 880 her efforts to increase diversity in the P.Carson,oC Des M Oines,W A:CW 2 Suresh N.
tlon 601(c}(4}.the IRS not.1nea the organiza. local fire service. She w as honored on A.Krause,oC CathedralCity,CA.
tion oC Its lDtentlon to revoke the organiza A ugust 3. 2012. during the opening ses
CW 3 Brian D. Hornsby. oC M elbourne, FL:
t.1on's exem pt.stat.us,expla1D1Dg the law and on of the International A ssociation of POI D arrelL.Enos.oC Colorado Springe,CO:
reasons for the proposed revocation.The or si
Fire Chiefs' Fire-R escue International SSgt Gregory T. Copes, oC Lynch Station,
ganization hae 30 days from the date oC that ConCer
VA: SPC Jam es A. Justice. oC Grover, NC:
ence and Exhibition in D enver, PFC
letter to protestorappeal the determ lD atlon
M ichael R. Dem areico U , oC Nort.h
beCore a final revocation letter Is luued to CO.
Adam
M A : SSG ErIc S. Holm an, oC Evans
A fter m oving to New M exico In 1999. Clt.y.e,
the organlzat.1on.
PA: PFC Andrew J. Keller, oC T 1prd,

During the pastsix m onths, no notices oC O lsson w as recruited to join the L atir OR: SSgt. Scot.t E. Dickinson, oC San Diego,
proposed or flnal revocation were 188ued to V olunteer Fire D epartm ent, She quick CA: Cpl Richard A. RIvera Jr., oC V entura.
sect.1on 601(0)(4) organizations.Note that the ly becam e integrated in the fire depart CA; LCpl Gregory T. Buckley, oC OCeanside,
IRS currently hae m ore than 70 ongolug ex m ent,rising through the ranks.serving NY; SSgt. Sky R. M ote, oC El Dorado, CA:
am lDations oC 88ct.1on 501(c)(4) organizations as a training orncer, deputy chief. and GySgt. Ryan Jeechke. oC Herndon, VA: Capt.
(th18 lDoludes exam lDations Cora variety oC
M atthew P. M anoukian, oC Loa Altos Hille.
iUues,som e oC whloh Inolude whet.her the or
eventually fire and EM S chieC Cor the CA: M Sgt.Gregory R. Trent., oC N orw n, M A ;
depart
m
ent
i
n
2006.
O
l
sson
has
f
ac1l
1
gaulzatlon is prlm arlly eugaged lD activities
M AJThom as E. Kennedy,oC W estPOint.NY:
that. prom ots social weUare). It Is also im
tated training to individual depart CSM KevlD J. G rlm n, orLaram ie, W Y: SPC
portant to note that the Service also m ain m ents and fire conCerences across Ethan J.M art.lD.oC LeW iston.ID :M ~ W alter
tains a determ ination proceu to review t.he N orth A m erica, as w ell as the U nited D. G ray, or Conyere. GA: P03 Clayton R.
operations oC an organization to determ ine K ingdom .
Beaucham p, oC W eatherCord, TX : Cp\ D aniel
w hether It shOUld be recoplzed as tax ex D uring tough econom ic tim es, O lsson L.LiD nabary U , oC H ubert,NC.
sm pt. In tb1s area, we also review com pll and other volunteers have continued to ISG Ruaaell R. Bell, oC Tyler, TX : SSG
U C 8 W ith the legal requirem ents, lDoluding
thew S, Sit.ton, oC Largo, FL: 1LT Todd
the fire departm ent, increasing MW .at.Lam
w hether an organization Is prim ary engaged expand
bka, oC Fraser, M I: PFC Jesus J.
hours
and
the
num
ber
of
training
lD act.1vlt.les that prom ote social welfare.
Lopez, oC San BernardlD o, CA: SPC Kyle B.
There are current.ly m ore t.han 1,800 organi
qualified volunteers. A ll 18 of L atir's M cClain, oC Rochester lU lls,M I: LOplCurtis
zations lD the determ lDat.lon proceu 88eking volunteer firefighters are structure J.D uarte.oC CovlDa,CA:GySgt.Jonathan W .
recognlt.lon as a sect.lon 501(c)(4} organiza trained. 13 are quaU f1ed w ith w ildland GlCCord. oC Palm Bay, FL: G ySgt D aniel J.
t.lon. The level oC poUt.1cal activity Is an R ed Cards.and nine have EM S U censes. Price.oC H olland, M !; lLT Sean R.Jacobe,oC
188ue In a num ber oC these determ lnat.lon The L atir V olunteer Fire D epartm ent Redding, CA:SGT John E. Han8en.orA ustin,
cases.
an active junior firefighter TX: SPC Benjam lD C. Pleitez. oC Turlock.
I hope th18 lnCorm atlon is helpful. If you also has. In
CA; BFC Bobby L. Estle, oC Lsbanon, OH:
addition, the fire depart
PFC
have Quest.lons, please contact m e or have program
Jose O scar Belm ontes.oC La Verne, CA;
m ent recently built a new addition to PFC
yoursW C contact.Catherine Barre.
Theodore M . Glende, oC Rochester, N Y;
the fire station and purchased another Srt.Just
SlDcerely,
.lD M . H anaen, oC Traverse aty, M I;
fire
engine.
STIM ilN T. M ILLER,
SPC Just.ln L. H orsley, oC Palm Bay, FL:
for Serl1lca and
D eputll
I ask that m y colleagues Join m e in PFC Brenden N. Salazar, oC Chuluota, FL:
Enforcem ent.
honoring Jona 01880n and the excellent PFO Adam C. R ou, oC Lym an, SC; SO T Eric
w ork of the L atir V olunteer Fire D e E. W illiam s, oC M urrieta. CA: PFC JRllan L.
partm ent. The dedication of0l88On and ColvlD.oC B1rm 1ugham .AL.
TR IB U TE TO JU D G E BRU CE D.
the
com m unity volunteers helps ensure SSG Richard L. B erry, oC Scot.tedale. AZ:
BLA CK
P02 M ichael J. Brodsky. oC Tam arac, FL:
the delivery of vital servioes to N ew SSG
Brandon R. Pepper, oC Y ork, PA; SPC
M r. BIN G A M A N . M r. President, I M exico residents.
D arrlon T. H lca, oC Raleigh, NC: nc JeC
w ant to recognize the distinguished
L.
Rlcs, oC Troy, OH; P02 Joaeph P.
f
r
ey
service of m y friend B ruce B lack, the
Flt.zm orrla, oC Ruston, LA : CPO Sean P. Sul
ChieC Judge for the U .S. D istrict C ourt H O N O RIN G O U R A RM ED FO RCES

livan, oC St. Lou18, M O; SPO K ryltal M .
for the D istrict ofN ew M eXiCO.
M r. LA U TEN BERG . M r. President. Fitts.oC H ouston, TX; CplJoshua R. Ashley.
B ruce has chosen to leave the Fed over 2 years have passed since I last in of Rancho Cucam onga, CA; SGT DaDlel A.
eral bench at the end of this m onth. cluded the nam es of our troops w ho Rodriguez. oC Balt.im ore. M D: SGT Jose J.
H is decision to retire IS a 1088 for our have lost their U ves serving In support Reyes. or Ban Lorenzo, PR: SPC Seqlo E.
Perez Jr.. oC Crown Poln& .IN ; spe N icholas
State and for the N ation. B ut he has oC operations in Iraq and A Cghanistan, A.
Taylor.oC Berne.IN : SGT Erik N.M ay,oC
served our N ation w ith great distinc I w ish to honor their service and sac Independence,
SSG Carl E. H am m ar, oC
tion and ab1l1ty.
r1f1ce by including their nam es in the Lake H avasu KS;
Clt.y, AZ: SGT M ichael E.
B ruce w as appointed to be a district CONGRESSIONAL RECORD,
Ristau. oC RockCord. IL; SPC Sterling W .
court judge by President C U nton in
Since I last included the nam es of W yat.t, oC O olum bla, M O: PFC O am lron J.
1995. D uring the 17 years of hiS service our fa.llen troops on July 13, 2010, the Stam baugh, oC Spring G rove, PA; PFC
JW1559-000918
From:
Sinno Suzanne
Sent:
To:
Subject:
Levin 501(c)(4) letters - 5 of 6
Attachments:
30794_Enclosure_1.pdf; 30794_Enclosure_2.pdf; 30794_Enclosure_3.pdf; 30794
_Levin_Attachment.pdf
JW1559-000919
EXEM PT O R G A N IZA TIO N D ETER M IN A TIO N S C A SE A SSIG N M EN T G U ID E

C A SE G R A D IN G C R ITER IA
C A SE C O M PLEXITY
FA C TO R S
A nalysis of
A pplication
FactualC om plexity
ofIssues
A pplication of Tax
Law
Interpersonal Skills
Im pactofW ork
G S-11
G R A D E LEVEL D ISTIN C TIO N S

G S-12
Application is com plex and facts

Application is basic; facts
m ust be determ ined through
regarding nature and purpose
analysis and questioning of
are easily discernible. Private
benefit/inurem ent issues unlikely applicant
. Private benefit/inurem ent
issues possible.
butpossible.
Issues are ofaverage com plexity Issues m ay be sensitive or involve
and sensitivity. Established
controversy. C ase developm ent
case developm ent m ethods and m ethods and procedures m ustbe
adapted to case.
procedures are usually
adequate.
Tax
laws are in m ostcases
Tax law s are notalw ays directly
applicable butoccasionally
applicable. R esearch and analysis
involve unusual interpretation
are required to establish proper
and application.
interpretation and use of
precedents.
C ontacts are w ith
C ontacts are with a variety ofEO
representatives ofapplicants,
representatives and officers of
considerable prom inence in the
organization m em bers and
com m unity including accountants
contributors. Tactand
and legalrepresentatives.
diplom acy are required to
resolve and elicitinform ation and C onsiderable tact and skillful
resolve questions and problem s. negotiations are necessary since
issues discussed are som etim es
controversial and sensitive.
D eterm ination decision m ay
D eterm ination decision m ay affect
im pactother organizations;
larger organizations ofregionalor
applicant's sole source of
nationalstature; applicant's incom e
incom e m ay be from donations; is from a variety ofsources; and
and, the likelihood ofm edia
m edia attention is likely.
attention is lim ited.
G S-13
Application is extrem ely com plex (e.g.,

involves inurem ent, private benefit, related
entities) and significant additional
docum entation is required ofapplicant.
C ase developm ent m ethods and procedures
m ust be adapted to unique situations. Issues
are noveland unusualand involve the largest
and m ostcom plex EO 's.
Tax law s orother legal issues involve points
oflaw w ithout precedent orw ith conflicting
precedents. R esearch and analysis are
necessary to establish significant sim ilarities
w ith related issues.
C ontacts are w ith officials ofvery large or
prom inent organizations and persons w ith
nationalreputations in business, legaland
accounting circles and others ofoutstanding
political, social or econom ic influence.
C onsiderable tactand discretion are required
for resolution ofissues.
D eterm ination decision m ay im pactother
organizations nationw ide; applicant has
significant resources and determ ination
decision m ay have significant social and
econom ic im plications w ith recurring effects in
prior or subsequent tax years; and,
w idespread m edia attention is probable.
R evised N ovem ber 25, 2002
JW1559-000920
InternalR evenue Service

P.O. Box 2508
C incinnati, OH 45201
Date:
*
*
*
*
D epartm ent ofthe Treasury
Em ployer Identification N um ber:

XX-XXXXXXX
Person to C ontact- G roup #:
Specialist N am e -XXXX
ID #X X X X X X X
C ontactTelephone N um bers:
C ases)
D ear Sir or M adam :
XXX-XXX-XXXX P hone
XXX-XXX-XXXX Fax (859-669-3783 for TE D S )
R esponse Due Date:

*
W e need m ore inform ation before w e can com plete our consideration ofyour application for
exem ption. Please provide the inform ation requested on the enclosed Inform ation R equest by
the response due date show n above. Your response m ust be signed by an authorized person or
an officer w hose nam e is listed on your application. Also, the inform ation you subm it should be
accom panied by the follow ing declaration:
U nder penalties ofperjury, Ideclare thatIhave exam ined this inform ation, including
accom panying docum ents, and, to the besto fm y know/edge and belief,the
inform ation containsallthe relevantfacts relating to the requestfor the inform ation,
and suchfacts are true, correct, and com plete.
Ifw e approve your application for exem ption, w e w illbe required by law to m ake the application
and the inform ation thatyou subm itin response to this letter available for public inspection.
Please ensure that your response doesn't include unnecessary personalidentifying inform ation,
such as bank account num bers or SocialSecurity num bers, that could result in identity theft or
other adverse consequences ifpublicly disclosed. Ifyou have any questions about the public
inspection ofyour application or other docum ents, please callthe person w hose nam e and
telephone num ber are show n above.
To facilitate processing ofyour application, please attach a copy ofthis letter and the enclosed
Application Identification Sheet to your response and allcorrespondence related to your
application. This w illenable us to quickly and accurately associate the additionaldocum ents
w ith your case file. Also, please note the follow ing im portant response subm ission inform ation:
Please don't fax and m ail your response. Faxing and m ailing your response w ill result in
unnecessary delays in processing your application. Each piece of correspondence
subm itted (w hether fax or m ail) m ust be processed, assigned, and review ed by an E O
D eterm inations specialist.
Please don't fax your response m ultiple tim es. Faxing your response m ultiple tim es w ill
delay the processing ofyour application for the reasons noted above.
JW1559-000921
N am e
EIN
Please don't call to verify receipt of your response without allowing for adequate
processing tim e. It takes a m inim um ofthree workdays to process your faxed or m ailed
response from the day itis received.
Ifwe don'thearfrom you by the response due date shown above, we willassum e you no longer
w antus to consider your application forexem ption and willclose your case. As a result, the
InternalR evenue Service willtreatyou as a taxable entity. Ifwe receive the inform ation after
the response due date, we m ay ask you to send us a new application.
..**..**..
D ELETE IF NO T A 501 (c)(3)APPLIC ATIO N .....
In addition, ifyou don'trespond to the inform ation requestby the due date, we willconclude that
you have nottaken allreasonable steps to com plete your application forexem ption. Under
InternalRevenue C ode section 7428(b)(2), you m ustshow thatyou have taken allthe
reasonable steps to obtain yourexem ption letterunderIRS procedures in a tim ely m anner and
exhausted your adm inistrative rem edies before you can pursue a declaratory judgm ent.
Accordingly, ifyou failto tim ely prOVide the inform ation we need to enable us to acton your
application, you m ay lose your rights to a declaratory judgm ent under Code section 7428.
**O E LE T E IF NO PO W ER O F AT IO R N E Y *
W e have senta copy ofthis letterto yourrepresentative as indicated in Form 2848, Pow erof
Attorney and Declaration ofRepresentative.
.........*
****** ******
Ifyou have any questions, please contactthe person whose nam e and telephone num ber are
show n in the heading ofthis letter.
Sincerely yours,
Specialist Nam e
Exem pt O rganizations Specialist
Enclosure: Infonnation Request
Application Identification Sheet
Letter 1312 (Rev.05-2011)
AdditionalInform ation Requested:
JW1559-000922
N am e
EIN
PLEASE D IR EC T ALL C O R R ESPO N D EN C E R EG AR D IN G YO U R C ASE TO :

Selective:
(EDS C ases)
U S M ail:
StreetAddress for D elivery Service:
Intem alR evenue Service

Exem ptO rganizations
P. O . Box 2508
C incinnati. O H 45201
A IT: SpecialistN am e
Room XXXX
G roupXXXX

550 M ain St, FederalBldg.
Cincinnati, O H 45202
A IT:Specialist N am e
R oom XXXX
G roupX X X X
(TEDS C ases)
U S M ail:
P. O . Box 12192
C ovington, KY 41012-0192

201 R ivercenter Blvd
ATTN : Extracting Stop 312
CO Vington, KY 41011
JW1559-000923
D EPAR TM EN T O F THE TR EASU R Y

IN TE R N A L R EVEN U E S E R V IC E
W A S H IN G TO N , D .C . 20224
D IV IS iO N
C ontact Person: (Specialist N am e)
D ate:
Identification N um ber: (Specialist 10 #)

C ontact N um ber: (Specialist Phone #)
Form R equired To Be Filed:
Tax Years:
, Party C om m unication
D ate:
C ategory:
e:e.-w t(1111 061ate
eecU .on if you do
th is
Den;
have a
1:b:ird P arty C01IIID 1Il.1cation.
D ear Applicant:
This is ourfinal determ ination that you do notqualify for exem ption from Federal incom e tax as
an organization described in Internal R evenue C ode section 501 (c)(). R ecently, w e sentyou a
letter in response to your application that proposed an adverse determ ination. The letter
explained the facts, law and rationale, and gave you 30 days to file a protest. Since w e did not
receive a protest w ithin the requisite 30 days, the proposed adverse determ ination is now final.
You m ustfile Federal incom e tax returns on the form and forthe years listed above w ithin 30
days ofthis letter, unless you request an extension oftim e to file.
W e w ill m ake this letter and ourproposed adverse determ ination letter available for public
inspection under C ode section 6110, after deleting certain identifying inform ation. Please read
the enclosed N otice 437, N otice ofIntention to D isclose, and review the tw o attached letters that
show our proposed deletions. Ifyou disagree w ith our proposed deletions, you should follow
the instructions in N otice 437. Ifyou agree w ith ourdeletions, you do notneed to take any
further action.
Ifyou have any questions aboutthis letter, please contactthe person w hose nam e and
telephone num ber are show n in the heading ofthis letter. Ifyou have any questions about your
Federalincom e tax status and responsibilities, please contact IR S C ustom er Service at
L etter 4040 (CG) (11-2005)
C atalog N um ber 47635Z
JW1559-000924
2
1-800-829-1040 orthe IRS C ustom er Service num ber for businesses, 1-800-829-4933. The
IRS C ustom er Service num berfor people with hearing im pairm ents is 1-800-829-4059.
Sincerely,
Lois G. Lerner
Director, Exem ptO rganizations
Rulings & Agreem ents
Enclosure
N otice 437
Redacted Proposed Adverse Determ ination Letter
Redacted FinalAdverse Determ ination Letter
L e tte r 4040 (CG ) (1 1 -2 0 0 5 )
C atalog N um ber 476352
JW1559-000925
Table 24. Tax-Exem pt O rganization and O ther Entity A pplications or D isposals, by Type ofO rganization
and Internal Revenue Code Section, Fiscal Year 2007
Type 01 organization,
Intem al R evenue C ode section
Tolal
applications
or disposals
Approved
D isapproved
(1)
(2)
(3)
91,742
72,869
1,628
17,245
91,689
d
158
85,771
1,867
233
1,615
1,036
25
356
44
116"--
174
10
d
72,856
0
111
68,278
1.394
188
1,370
711
16
286
21
94
156
7
21
3
99
101
5
1,628
d
d
1.607
8
0
6
d
0
3
0
0
0
0
d
0
0
17,205
d
d
15,886
465
131
106
5
28
20
-=
O ther [1)
(4)
0
0
0
45
239
d
9
67
23
22
18
3
d
3
32
5
0
20
20
d -N o lshow n 10 avoid disclosure aboutspecific taxpayers, However, dala are included in the appropriate totals.
[1] Includes applications w ithdraw n by the organization; applications which failed to provide the required inform ation; incom plete applications; IRS refusals to rule
on applications; applications forw arded to other than the IRS NationalO ffice; IRS correction disposals; and others.
[2) N o applications w ere filed for teachers' retirem ent funds [section 501(c)(11)); corporations to finance crop operations [section 501 (c)(16)); em ployee-funded
pension trusts [section 501 (c)(18)]; black lung trusts [section 501 (c)(21)]; m ultiem ployer pension plans [section 501(c)(22)]; veterans'associations founded prior to
1880 [section 501 (c)(23)]; trusts described in section 4049 ofthe Em ployee Security Act of1974 (ER ISA) [section 501(c)(24)); State-sponsored high-risk health
insurance organizations [section 501 (c)(26)]; and Slate-sponsored w orkers'com pensation reinsurance organizations [section 501(c)(27)].
[3] Includes private foundations. N otall InternalR evenue C ode section 501 (c)(3) organizations are required to apply for recognition oftax exem ption, including
churches, integrated auxiliaries, subordinate units, and conventions orassociations ofchurches.
SO U R C E: Tax Exem pt and G ovem m ent Entities, Exem pt O rganizations, RUlings and Agreem ents, D eterm inations SE:T:EO :R A:D
JW1559-000926
Table 24. C losures of A pplications for Tax-Exem ptStatus, by O rganization Type and Internal R evenue
C ode Section, FiscalYear 2008 (R eVised M ClrcI!101j)
Applications for tax-exem pt status (1J
Type oforganizalion,
Internal R evenue C ode section
"f,!,,-...xem pt organizations and other entities, total13
Total
Approved
D isapproved
(1)
(2)
(3)
84,220
84,180
114
79,107
1,492
269
1,477
894
20
249
40
91
155
69,957
69,943
93
65,761
1,202
235
1,296
691
11
197
18
66
148
5
15
4
101
100
d
d
1,242
1,240
0
1,221
d
0
6
d
d
4
d
0
d
0
d
0
Section 501 (c) by subsection, total

(2) Tille-holding corporalions
(3) R eligious, charitable, and sim ilar organizations [4J
(4) Social w elfare organizalions
(5) Labor and agriculture organizations
(6) Business leagues
(7) Social and recreation dubs
(8) Fraternal beneficiary societies
(9) Voluntary em ployees' beneficiary associations
(10) D om eslic fratem al benefic;ary societies
(12) Benevolent life insurance associalions
(13) C em etery com panies
(14) State-chartered credit unions
8
(15) M uluat insurance com panies
26
(17) SUpplem ental unem ploym ent benefitin.Jsts
4
(19) W ar velerans'organizalions
128
106
(25) H olding com panies for pensions and other entities
Section 521 fanners' cooD eratives
26
N onexem ptcharitable trusta
14
d--N ot shoW T'lto a\iO id disclosure ofspecific taxpayer data. H ow ever, data are included in the appropriate totals,
O ther [2J
(4)
0
d
0
13,021
12,997
21
12,125
d
34
175
d
d
48
d
25
d
3
d
0
27
6
'!
d
[1 JReftecls allcase closures for the Exem ptO rganizations D eterm inations function. These include notonly initialapplications for tax-exem pt slatus, butalso other
determ inations, such as public charity and private foundation status determ inations, advance approval of scholarship grantprocedures, and group determ inalions of
lax-exem pt stetus.
[2J Indudes applications w ithdraw n by the organization; applications thatdid notprovide the required inform ation; incom plete applications; IR S refusals 10 rule on
applications; applications forw arded to other than the W ashington, DC office; IRS correction disposals; and others.
[3J No applications w ere filed for corporations organized under an actofCongress (section 501 (c)(1)); teachers' retirem ent funds (section 501 (c)(11)); corporations
10 finance crop operations (section 501(c)(16)); em ployee-funded pension trusts (section 501(C)(18)); black lung trusts (section 501 (c)(21)); m ultiem ployer pension
plans (section 501 (c)(22)); veterans'associalions founded priorto 1880 (section 501 (c)(23)); trusts described in section 4049 ofthe Em ployee Security Act of1974
(ER ISA) (section 501(c)(24)); Stat....sponsored high-risk health insurance organizations (section 501(c)(26)); Stale-sponsored wor1<ers'com pensation reinsurance
or9anizations (seclion 501 (c)(27)); and religious and apostolic associations (section 501 (d.Tax-exem pt status for legalservices organizations (section 501 (c)(20
w as revot<ed effective June 20, 1992,
(4] Indudes private foundations. N otallInternalR evenue Code section 501(c)(3) organizations are required 10 apply for recognition oftax exem ption, includin9
churches, integrated auxiliaries. subordinate units, and conventions or associations ofchurches.
NO TE: R evised M arch 2011 to correcterrors allribuled to a transition in reporting system s.
SO U R C E: Tax Exem pt and G overnm ent Entities, Exem ptO rganizations.
JW1559-000927
Table 24. Closures of Applications for Tax-Exem pt Status, by O rganization Type and Internal
Revenue Code Section, Fiscal Year 2009 (Revised M a r c h ~ 0 1 j )
Applications for tax-exem pt status [1]
Type oforganization,
Tax-<lxem pt organizations and other entities, total [3)
S ection 501 (c) by SU bsection, total
(1) C orporations organized under an actofC ongress
(2) TiU e-hoiding corporations
(3) R eligious, charitable, and sim ilar organizations (4)
(4) Social w elfare organizations
(7) Sooal and recreation clubs
(10) D om estic fraternal beneficiary societies
(12) Benevolent tife insurance associations
(14) State1:hartered credit unions
(15) M utualinsurance com panies
(17) Supplem entalunem ploym ent benefit tnusts
(19) W ar veterans' organizations
(27) State-sponsored w orkers' com pensation reinsurance organizations
501 (d) R eligious and apostolic associations
SeC1ion 521 Farm ers' cooperatives
N onexem ptcharitable trusts
d -N o tshow n to avoid disclosure ofspecific taxpayer data. H ow ever, data are included
Total
Approved
D isapproved
(1)
(2)
(3)
480
62,459
77,305
77,221
62,392
480
0
0
6
112
137
0
472
70,624
56,943
3
1,507
1,922
543
0
601
1,742
d
1,960
848
d
1,115
16
5
0
210
257
d
45
0
25
76
56
0
209
194
0
d
d
0
6
3
d
d
0
6
142
175
0
62
57
0
0
0
d
59
55
0
13
0
7
12
5
0
in the appropriate totals when possible.
O ther [2]
(4)
14,366
14,349
6
25
13,209
412
58
d
d
11
d
20
20
15
0
d
d
33
5
d
4
6
7
[1) R eflects all case closures for the Exem pt O rganizations D eterm inations function. These include not only initial applications for tax-exem pt status,
butalso other determ inations, such as public charity and private foundation status determ inations, advance approval ofscholarship grantprocedures,
and group determ inations oftax-exem pt status.
(2) Includes applications w ithdraw n by the organization; applications that did notprovide the required inform ation; incom plete applications; IRS refusals
to nule on applications; applications forw arded to other than the W ashington, DC office; IRS oorrection disposals; and others.
[3J N o applications w ere filed for teachers'retirem ent funds (section 501 (c)(11 i); corporations to finance crop operations (section 501 (c)(16);
em ployee-funded pension trusts (section 501 (c)(18)); black lung tnusts (section 501(c)(21; m ultiem ployer pension plans (section 501 (c)(22; veterans'
associations founded prier to 1880 (section 501(c)(23)); trusts described in section 4049 ofthe Em ployee Security Actof 1974 (ER ISA) (section
501 (c)(24; and State-sponsored high-risk health insurance organizations (section 501 (C)(26)). Tax-exem pt status for legal service organizations
(section501(c)(20)) w as revoked effective June 20, 1992.
[4] Includes private foundations. N otall Intem al R evenue Code section 501 (c)(3) organizations are required to apply for recognition oftax exem ption,
inclU ding churches, integrated auxiliaries, subordinate units, and conventions or associations ofchurches.
N O TE' R evised M arch 2011 to correct errors attributed to a transition in reporting system s.
SO U R C E: Tax Exem ptand G overnm ent Entities, Exem pt O rganizations.
JW1559-000928
Table 24. Closures ofApplications for Tax-Exem pt Status, by O rganization Type and Internal R evenue
Code Section, FiscalYear 2010
Internal R evenue Code section

Total
Approved
D isapproved
(1)
(2)
(3)
65.590
53.693
Tax-exem pt organizations and other entities, total[3)
Section 501 (clby subsection, total
65,548
53.668
6
d
(1) Corporations organized under an actofCongress
155
117
(2) Title-holding corporations
(3) Religious, charitable, and sim ilarorganizations [4J
59,945
48,934
1,741
1,447
(4) Socialwelfare organizations
310
273
1,695
1,509
884
710
(7) Socialand recreation clubs
(8) Fraternalbeneficiary societies
16
11
162
133
(9) Voluntary em ployees'beneficiary associations
37
18
(10) Dom estic fraternal beneficiary societies
66
77
(12) Benevolent life insurance associations
155
148
(13) Cem etery com panies
d
d
16
8
5
d
(17) Supplem ental unem ploym ent benefi1tnusts
164
135
(19) W arveterans'organizations
177
151
(25) Holding com panies for pensions and otherentities
d
0
(26) State-sponsored high risk health insurance organizatione
Section 501 (d) R eligious and apostO liC associations
14
d
Section 521 Fanners' cooperatives
23
d
5
0
d-N ot shown to avoid disclosure ofspecific taxpayer data.However,data are included in the appropriate totals, when possible.
O ther [2]
(4)
517
11,380
511
11,363
d
38
10,511
291
37
180
d
500
6
d
d
d
o
o
o
4
o
o
o
o
o
o
o
d
d
11
7
4
d
29
26
d
d
d
[1] Reflects allcase closures for the Exem ptO rganizations Determ inations function. These include notonly initialapplications for tax-exem pt status,butalso
other determ inations, such as public charity and private foundation status determ inations, advance approvalofSCholarship grant procedures, and group
determ inations oftax-exem ptslatus.
[2] Includes applications withdrawn by the organization; applications thatdid notprovide the reqUired inform ation; incom plete applications; IRS refusats to rule
on applications; applications forwarded to other than the W ashington, DC office; IRS correction disposals; and others.
[3J No applications were filed for teachers'retirem ent funds (section 501 (c)(11 ;corporations to finance crop operations (section 501(c)(16; em ployee-funded
pension trusts (section 501(c)(18)); black lung trusts (section 501(c)(21; m ulliem ployer pension plans (section 501 (c)(22)); veterans' associations founded prior
to 1880 (section 501(c)(23; trusts described in section 4049 ofthe Em ployee Retirem ent Incom e Security Actof1974 (ERISA) (section 501 (c)(24; State
sponsored workers'com pensation reinsurance organizations (section 501(cj(27; and the NationalRailroad Retirem ent Investm ent Tnust (section 501 (c)(28)).
Tax-exem pt status for legalservices organizations (section 501 (c)(20)) was revoked effective June 20,1992.
[4J Includes private foundations. Notalliniernal Revenue Code section 501 (c)(3) organizations are required to apply for recognition oftax exem ption, including
SO URCE: Tax Exem pt and G overnm ent Entities, Exem ptO rganizations.
JW1559-000929
Table 24. C losures ofA pplications for Tax-Exem pt Status, by O rganization Type and Internal R evenue
C ode Section, FiscalYear 2011
Type of organization,
C losures ofapplications for tax-exem pt status
[1]
Total
A pproved [2]
D isapproved
O ther [2,3]
(1)
(2)
(3)
(4)
Tax-exem pt organizations and otherentities, total [4]

61,004
54,713
54,701
60,980
d
d
92
81
55,319
49,677
(3) Religious, charitable, and sim ilar organizations [5J
1,777
1,559
294
268
1,655
1,542
1,012
855
39
32
(8) Fratem al beneficiary societies
153
123
49
41
91
81
282
267
(14) State-{;hartered credit unions
5
d
13
d
d
d
(17) Supplem ental unem ploym ent benefittrusts
177
153
17
(25) Holding com panies for pensions and other entrties
14
d
(27) State-sponsored workers' com pensation reinsurance
13
6
5
Section 521 Farm ers'cooperatives
d
6
d
d -N o t shown to avoid disclosure ofspecific taxpayer data. However,data are included in the appropriate tolals, when possible.
217
217
0
0
205
6
0
4
0
0
0
0
0
0
0
d
0
0
d
0
6,074
6,062
0
11
5,437
212
26
109
157
7
30
8
10
15
d
d
0
24
d
d
7
d
d
[1J Reflects allcase closures for the Exem ptO rganizations Determ inations funelion.These include notonly initialapplications for tax-exem pt status, butalso other
determ inations, such as public charity and private foundation status determ inations, advance approvalofscholarship grantprocedures, and group determ inations oftax
exem ptstatus.
[2J Beginning with FiscalYear 2010, IRS initiated a revised application procedure thatallows additional tim e for application closures.Therefore, fewer applications are
reported in the "O ther" category and m ore applications are reported in the "Approved" category.
[3) Includes applications withdrawn by the organization; applications thatdid notprovide the required inform ation; incom plete applications; IRS refusals to rule on
applications; applications forwarded to other than the W ashington, DC, office; IRS correction disposals; and others.
[4] No applications were filed for teachers'retirem ent funds (section 501(c}(11; corporations to finance crop operations (section 501(c)(16); em ployee-funded pension
trusts (section 501 (c)(18)); black lung trusts (section 501(c)(21)); m ultiem ployer pension plans (section 501 (c)(22)); veterans'associations founded prior to 1880 (section
501 (c)(23); trusts described in section 4049 ofthe Em ployee Retirem ent Incom e Security Actof1974 (ERISA) (seelion 501 (c)(24)); State-sponsored high-risk health
insurance organizations (section 501(c)(26)); and the NationalRailroad Retirem ent Investm entTrust(section 501 (c}(28)).Tax-exem pt status for legalservices organizations
(seelion 501 (c)(20)) was revoked effective June 20, 1992.
[5J Indudes private foundations. Notallintem al Revenue Code section 501(c)(3) organizations are required to apply for recognition oftax exem ption, including churches,
integrated auxiliaries, subordinate units, and conventions orassociations ofchurches.
SO URCE: Tax Exem pt and G ovem m ent Entities, Exem pt O rganizations.
JW1559-000930
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JW1559-000944
From:
Lerner Lois G
Sent:
To:
Subject:
Attachments:
36952_Incoming_Levin_C4.pdf; 36952_Levin_Enclosure_1.pdf; 36952_Levin_Enclosure_
2.pdf; 36952_Levin_Enclosure_3.pdf; 36952_Levin_Enclosure_4.pdf; 36952
_Levin_Enclosure_5.pdf; 36952_Levin_Enclosure_6.pdf; 36952_Levin_Enclosure_7.pdf;
36952_Levin_Enclosure_8.pdf; 36952_Levin_Enclosure_9.pdf; 36952_Levin_Enclosure_
10.pdf; 36952_Levin_Final.pdf
please print
Lois G. Lerner
From: Sinno Suzanne
JW1559-000945
'llntrrd5tJtcs 5cnJtc
:.,":' :,
O ctober 21.2012
The Ilollorable D ouglas II. Shulm an

Com m issioner
Internal Revenue SCf\icc
U. S.D epartm entofthe Treasur,Y
1111 Constitution A venue
W ashington.D .C. 20224
RECEIVED
B y Executive
Executive Secretari
at at
58 pmam,
, O Oct
ct23,
2012
Secretariat
at 3:
11:40
24,
2012
By
Ik'ar Com m issioner Shulm an:

Jam in receipt oftht: O ctober 17.2012.response (h llll fvlr, M iller to Illy Idler ot'
Septem ber 27, 2012.
In the June 4.2012. response that Ireceived liom the IRS.your agelll.:Y provided the
follow ing guidance:
"The prom otion ofsocial wei[ ~ l I ' e does nol include direct or indirect panicipation nr
intervention in political cam paigns on behalfofor in opposition to any candidate for
public ot'licc. N c n ~ r t h e k s s . a section SOl (c)(4) social \\(:11:11'1.:'organization can engage
in political activities as long as it is prim arily engaged in activities that prom otl'social
w elfare.The regulations do not im pose a com pktc han on political activity by section
501 (c)(4) organizations. W hether an organi/ation Inccts the requirel1ll'nts ofsection 5\1l
(c)(4) depends upon all ofthe f ~ l c t s amI circulIlstances 0 I'the particuJar applicant.and no
one factor is dett:rm ini.ltivc,' [6/4/12 IRS response.pg. 81
Ihaw indicated previously that Ibelieve this guidalH:L'm isinterprets the law because the
law says that the organization m usl be operated "exclusively" for the prom otion ofsocial
r.accepting the IRS interpretation as accurate ti)r the purposes ofthis kllCr.
W C l f ~ H C , Ilow c\l'
please pnl\'ide the follow ing in!fl1'lnation:
1, The O ctober 17.2012. letter fftllll the IRS indic<ltt:s that it is unabk to l o c a l \ , ~ Ihe
application subm itted by :\nw ricans for Prosperity (F-:IN 75-3148(58) [f)rtax e.\t:m p!
status under Section 50 I(e)(4-). Has [he IRS askL:d A m ericans Il.!rProsperity for a
copy ofils application',' Ifso.pJease providl'a copy ofthe responsc from A llh:ricans
for Prosperity.
Has the IRS exam ined w ht'ther or notthe follow ing 50 I(c)(-O organizations a r i ; ~
engaged prim ariI) in thc prom otion ofsocial \\cll:lre'! Pkasc indicatc yes or no.and.
ifyes. w hether the eXlllninm ion is still pcnding.
JW1559-000946
..,
a.
b.
c,
d.
('rossroads (irassroots Policy Strakgic:s

Priorities U.S.A .
A m ericans for Prnspc:rity
Patriot M ajority tJSA
3. In m y !ctterofM an:h ](),2012,raskc:d t h l ~ IRS to indicate llO \V m any letter rulings

havc been isslled by the IRS since January 1.2007.to deny or revoke the lax-exem pl
Sl<ltus0 ran organizalion undc:r Seclion 50 I(c)(4) due to il1\olvem c:nt w ith po!itlcal
activity. Ifurther requested that.ifthe IRS had issued 10 or less such letter rulings.
the IRS provide copies orall such Ictters. ivk 1\lillcr responded that."The
application process 1'01' tax-exem pt status docs not involve the revocation oftax
exem ption:rather. itonly concerns the denial ofapplications," Ill'did not rm )\'ide
copies orthe denials ofapplications he referred to.
Pkasc provide the docuillentation requested in In )' j\'larch 30.2012.letter.

4. In A ugust 2012. Iasked the IRS to indicate "how m any 501 (c)(4) organizations
w hich appear 10 be prim arily engaged in political acti\ity have becn notifkd by the
IRS w ithin the last6 1110nths that they m ay he in violation ofthe law," ;vl1'.!v1ilkr
responded that."D uring thc pastsix rllonths.no notices ofproposed or linal
revocation w ere issued to section 50 I(e)(4) organizations."
a. H ow m any notices orproposed or lin'll revocation have been issued since
January 1.200T? Ifthe IRS has isslled 10 or less slleh letter rulings.please
provide copies ofall such letters.
1.2007.how m any 50 1{c)(4) organizations han,'been

exam ined by the IRS to determ ine irthey arc cngaged in political aClivit)'in
am oul1!s w hich eXi,;ced IRS guidelines?
b. Since January
'['hank you for your assistatK c. II'you have any questions.please i,;ontaet m e.or ha\I.'
yourstaffcontactK aye iv1cier orm y starratkaXLill.Li,;rl(()ji;yin,.senate.gov or202/224-91 10.
Please provide this infi:.mll<ltion by N ovem ber 9.2012.
Sincerely,
Carl Levin
Chairrnan
PernHlllent Subcom m ittee on Inn,.stigalions
cc: The IlonorabJc Tom Coburn. M D
Ranking .\linorilY 1\krnbcl'
PCffililllCIllSu[)coJllm illeC on Investigutions
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W A S H IN G T O N , D .C . 2 0 2 2 4
N ovem ber 23, 2012

C hairm an, Perm anent Subcom m ittee on Investigations
W ashington, DC 20515
D ear M r. C hairm an:
Iam responding to your letterto C om m issioner Shulm an dated O ctober 23,2012,
requesting additional inform ation aboutsection 501 (c)(4) organizations. This response
supplem ents our previous responses dated June 4,2012, July 13, 2012,
August24,2012, Septem ber 14, 2012, and O ctober 17,2012, and addresses the additional
questions raised in your recent letter.
Q uestion 1. The O ctober 17,2012, letterfrom the IRS indicates thatitis unable to
locate the application subm itted by A m ericans for P rosperity (EIN 75-3148958) for
tax exem ptstatus under section 501 (c)(4). H as the IRS asked A m ericans for
P rosperity for a copy ofits application? Ifso, please provide a copy ofthe response
from A m ericans for P rosperity.
W e have notasked Am ericans for Prosperity for a copy ofits application. As indicated in
ourresponses dated June 4,2012, and O ctober 17,2012, section 6104(d) ofthe Internal
R evenue C ode (the C ode) requires tax exem ptorganizations to m ake certain docum ents,
including applications for exem ptions, available for public inspection. Any individualm ay
requestcopies ofapplications for exem ption and determ ination letters directly from the
organizations. U nderthe C ode, ifan organization has filed an application for tax-exem ption
and w e have approved the application, the exem ptstatus application m aterials shallbe
m ade available by such organization for inspection upon request ofany individual.1
1 Section
6104(d) ofthe C ode.
JW1559-001063
Q uestion 2. Has the IRS exam ined w hether or notthe follow ing 501(c)(4)
organizations are engaged prim arily in the prom otion ofsocialw elfare? Please
indicate yes or no,and, ifyes,w hether the exam ination is still pending.
a. C rossroads G rassroots Policy Strategies
b. Priorities U .S.A
c. Am ericans for Prosperity
d. PatriotM ajority U SA
As previously stated in our response dated June 4,2012, section 6103 ofthe C ode
prohibits the disclosure ofinform ation aboutspecific taxpayers, including w hetherthey are
underinvestigation orexam ination, unless the disclosure is authorized by som e provision
ofthe C ode? Thus, w e are legally prohibited from disclosing inform ation related to
exam ination activity.
Q uestion 3. In m y letterofM arch 30, 2012, Iasked the IRS to indicate how m any
letter rulings have been issued by the IRS since January 1,2007,to deny or
revoke the tax-exem ptstatus ofan organization undersection 501(c)(4) due to
involvem entw ith politicalactivity. Ifurther requested that, ifthe IRS had issued
10 or less such letter rulings, the IRS provide copies ofallsuch letters. M r.M iller
responded that, "The application process for tax-exem ptstatus does notinvolve
the revocation oftax exem ption; rather, itonly concerns the denialof
applications." He did notprovide copies ofthe denials ofapplications he referred
to.
Please provide the docum entation requested in m y M arch 30,2012,letter.
As previously stated, section 6103 ofthe C ode prohibits the disclosure ofinform ation about
specific taxpayers unless som e provision ofthe C ode authorizes the disclosure. Section
6104(a) ofthe C ode perm its public disclosure ofan application for recognition oftax
exem ptstatus and supporting m aterials only afterthe organization has been recognized as
exem pt. U ndersection 6110 ofthe Code, ifw e ultim ately deny the application for
recognition oftax-exem ptstatus, the denialletter and background inform ation is subjectto
public inspection, with identifying and other inform ation redacted, to help the public
understand our reasoning w hile also protecting the identity ofthe organization.
2 Section
61 03(f) ofthe Code sets forth the m eans by which congressionalcom m ittees m ay obtain access
to return and return inform ation (thatis nototherw ise m ade publicly available undersections 6104 and
6110).W e are available to discuss these rules in m ore detailwith your staff.
JW1559-001064
3
Since January 1,2007,w e have issued ten adverse determ inations to section 501 (c)(4)
applicants. W e concluded thatthe organizations did notprim arily operate forthe prom otion
ofsocialwelfare. G enerally, they w ere prim arily engaged in activities thatbenefited private
individuals and interests, and/or constituted directand indirectpoliticalcam paign
intervention on behalfof, or in opposition to, candidates for public office. Iam enclosing
redacted determ ination letters denying section 501 (c)(4) tax exem ptstatus to the ten
organizations. Note, however, thatthe num berofadverse determ inations does not
representthe num beroforganizations thatapplied, butw ere notgranted tax-exem ptstatus
undersection 501 (c)(4). Som e organizations w ithdraw their application forexem ption
w hen they learn thata denialis forthcom ing. O thers do notform ally w ithdraw , butdo not
respond to requests for inform ation necessary to develop their applications. After
additionalfailed attem pts to getthe inform ation from the applicant, w e close those
applications as "failure to establish."
Q uestion 4. In A ugust2012, Iasked the IRS to indicate "how m any 501 (c)(4)
organizations w hich appearto be prim arily engaged in politicalactivity have been
notified by the IRS w ithin the last6 m onths thatthey m ay be in violation ofthe
law ." M r.M illerresponded that, "D uring the pastsix m onths, no notices of
proposed orfinal revocation w ere issued to section 501(c)(4) organizations."
a. H ow m any notices ofproposed orfinal revocation have been issued
since January 1,2007? Ifthe IRS has issued 10 or less such letter
rulings, please provide copies ofallsuch letters.
W e have issued 42 revocation notices to section 501 (c)(4) organizations since January
1,2007. These organizations w ere revoked forfailing to m eetthe requirem ents under
section 501 (c)(4). In addition to the 42 revocations, w e issued 18 organizations w ritten
advisories noting irregularities, which ifleftunchanged, posed a risk to the organizations
ofpossible loss oftheirtax-exem ptstatus undersection 501 (c)(4).
b. Since January 1,2007, how m any 501 (c)(4) organizations have been
exam ined by the IRS to determ ine ifthey are engaged in politicalactivity
in am ounts w hich exceed IRS guidelines?
As discussed in prior responses, w hen w e exam ine a section 501 (c)(4) organization, the
objective ofthe auditis to determ ine w hetherthatorganization qualifies for tax-exem pt
status as a socialw elfare organization. As discussed in our June 4,2012, response, w e
have taken no position on a fixed percentage or anyone factor in precedentialguidance.
To determ ine w hetheran organization operates prim arily forthe prom otion ofsocial
w elfare, the courts and the IRS consider allthe facts and circum stances, including, butnot
lim ited to, the organization's stated purposes, expenditures, principalsource ofrevenue,
num berofem ployees and volunteers, and tim e and effort.3
3 Treasury
Regulation section 1.501 (c)(4)-1 (a)(2) (No percentage testestablished). Rev. Rul. 68-45,1968
1
C.B. 259 (Principalsource ofincom e does notdeterm ine an organization's prim ary activity under section
501 (c)(4); allthe facts and circum stances are considered). See, generally H asw ellv. U nited States, 500
JW1559-001065
4
From January 1,2007,through Septem ber2012, we have exam ined 643 section 501 (c)(4)
organizations to determ ine w hetherthey are prim arily engaged in socialw elfare activities.
W e analyzed a variety ofissues during these exam inations, including, w here relevant, the
levelofpoliticalactivity.
O fthe 643 organizations exam ined, the PrincipalIssue Codes (PIC codes) in oursystem
indicate politicalactivity was one ofthe issues explored in the exam ination of22 section
501 (c)(4) organizations. W e use PIC codes to capture the issues on which an IRS agent
spenttim e during an exam ination orthatresulted in a change, and we enterthem as part
ofthe closing process ofa case. Although currently 96 PIC codes exist, agents m ay only
reportthe top four PIC codes. The determ ination ofwhich PIC codes are applicable to a
particular case is a judgm entthe agentm akes. Please note thatalthough PIC codes are a
toolto identify issues and trends, PIC codes do notcoverallissues in a case. Therefore,
w ithouta m anualreview ofthe case files, we cannotdefinitively conclude w hetherwe
exam ined an organization to determ ine the levelofpoliticalactivity.
Ihope this inform ation is helpful. Ifyou have questions, please contactm e orhave your
staffcontactCatherine Barre, Director, Legislative Affairs, at(202) 622-3720.
Sincerely,
Steven T. M iller
Enclosures (10)
F.2d 1133, 1142, 1147 (CI. Ct. 1974) ("A percentage test... is notappropriate. Such a testobscures the
com plexity ofbalancing the organization's activities in relation to its objectives and circum stances in the
contextofthe totality ofthe organization."). See, Contracting Plum bers v. United States, 488 F.2d 684,
686 (2d Cir. 1973) (m ultiple factors relevant in applying this standard, including form ative history, stated
purposes, and actualoperations). See generally Seasongood V. Com m issioner, 227 F.2d 907, 909, 912
(6th Cir. 1955) (expenditures, em ployees, and organization's tim e and effortconsidered).
JW1559-001066
From:
Sinno Suzanne
Sent:
To:
Subject:
Levin 501(c)(4) letters - 6 of 6
Attachments:
30794_Incoming_Levin.pdf; 30794_Final.pdf
JW1559-001067
W A S H IN G T O N , D .C . 2 0 2 2 4
June 4,2012

C hairm an
Iam responding to your letter to C om m issioner Shulm an dated M arch 30, 2012,
requesting inform ation aboutthe tax-exem pt sector. W e appreciate your interest and
supportofthe IR S efforts in the adm inistration ofthe tax law as itapplies to tax-exem pt
organizations. This response follow s the telephone conversation held w ith your staffon
M ay 4,2012.
Q uestion 1. A re entities seeking tax-exem pt status under Section 501 (c)(4)
required to subm it an application to the IR S for review and approval, or can they
hold them selves out as having tax-exem ptstatus w ithout filing an application or
undergoing IR S review ?
The law allow s section 501 (c)(4) organizations to hold them selves outas tax-exem pt.
O rganizations also can apply for IR S recognition as tax-exem pt. W hether an
organization is self-declared under section 501 (c)(4) or has been determ ined by the IR S
to m eetthe requirem ents ofsection 501 (c)(4), the organization m ustfile Form 990
annualinform ation returns.
Q uestion 2.
To assistin responding to your specific sub-questions, w e are providing background
inform ation about oursystem for processing applications for tax-exem pt status, as w ell
as the statutory disclosure rules thatgovern public inspection of IR S docum ents relating
to tax-exem pt organizations.
JW1559-001068
A pplication Process
Allapplications for tax-exem ptstatus, including applications forstatus undersection
501 (c)(4), are filed with a centralized IRS Subm ission Processing Center, which enters
the applications into the EP/EO Determ ination System and processes the attached user
fees. The application is then sentto the Exem ptO rganizations ("EO ") D eterm inations
office in Cincinnati, O hio for initialtechnicalscreening.
This technicalscreening is conducted by experienced revenue agents who review the
applications and, based on thatreview, separate the applications into the following four
categories:
Applications thatcan be approved im m ediately based on the com pleteness ofthe
application and the inform ation subm itted;
Applications thatneed only m inor additional required inform ation in the file in
orderto approve the application;
Applications thatdo notcontain the inform ation needed to be considered
substantially com plete; and
Applications that require further developm entby an agentin orderto determ ine
w hetherthe application m eets the requirem ents fortax-exem ptstatus.
O rganizations w hose applications fallinto the fourth category are sentletters inform ing
them thatm ore developm entoftheir application is needed, and thatthey willbe
contacted once their application has been assigned to a revenue agent. The
applications are sentto unassigned inventory, w here they are held untila revenue agent
with the appropriate levelofexperience forthe issues involved in the m atter is available
to further develop the case.1
O nce the case is assigned, the revenue agentnotifies the organization and reviews the
application. Based upon established precedentand the facts and circum stances set
forth in the application, the revenue agentrequests additionalinform ation and
docum entation to com plete the file pertaining to the exem ptstatus application m aterials2
(the so-called "adm inistrative record") and m akes a determ ination. W here an
application forexem ption presents issues that require further developm entto com plete
the application record the revenue agentengages in a back and forth dialogue with the
organization in orderto obtain the needed inform ation. This back and forth dialogue
helps applicants better understand the requirem ents for exem ption and w hatis needed
to m eetthem , and allows the IRS to obtain allthe inform ation relevantto the
determ ination.
I
Enclosure A describes the criteria used to determ ine the appropriate levelofexperience.
application for recognition oftax exem ptstatus, any papers subm itted in supportofthe
application, and any letter orother docum entissued by the IRS with respectto the application.
See IR e 61 04(a), (d)(5).
2 The
JW1559-001069
Tools are available to prom ote consistent handling offulldevelopm ent cases. For
exam ple, in situations where there are a num berofcases involving sim ilar issues (such
as creditcounseling organizations, down paym entassistance organizations,
organizations thatwere autom atically revoked and are seeking retroactive
reinstatem ent, and m ostrecently, advocacy organizations), the IRS willassign cases to
designated em ployees to prom ote consistency. Additionally, in these cases, EO
Technical (an office ofhighergraded specialists in Exem ptO rganizations), in
consultation with the IRS O ffice ofC hiefCounsel, m ay develop educationalm aterials to
assistthe revenue agents in issue spotting and crafting questions to develop cases
consistently.
It is im portantto develop a com plete adm inistrative record forthe application. Because
the adm inistrative record m usteithersupportexem ption ordenial, itis im portantforthe
record to be com plete. Ifthe application is approved, notonly is the adm inistrative
record m ade publicly available (with certain lim ited exceptions outlined below), but
organizations thatactas described in the adm inistrative record have reliance on the IRS
determ ination. Ifthe application is denied, the organization m ay seek review from the
O ffice ofAppeals. The Appeals O ffice, which is independent ofExem ptO rganizations,
review s the com plete adm inistrative record and m akes its own independent
determ ination ofw hetherthe organization m eets the requirem ents for tax-exem pt
status. Itis to the organization's benefitto have allofits m aterials in the file in the event
EO D eterm inations denies exem ption and the organization seeks Appeals review . If,
based on the inform ation in the adm inistrative record, the Appeals O ffice decides the
organization m eets the requirem ents fortax-exem ptstatus, the application willbe
approved. Ifthe Appeals O ffice agrees thatthe application should be denied, the
organization m ay challenge its non-exem ptstatus by paying any tax owed as a taxable
entity, and seeking a refund in federal court.
In those cases where the application raises issues forwhich there is no established
published precedentorforwhich non-uniform ity m ay exist, EO D eterm inations m ay
referthe application to EO Technical. In EO Technical, the applications are reviewed by
tax law specialists w hose job is to interpret and provide guidance on the law and who
w ork closely with IRS ChiefCounselattorneys on the issues.
Sim ilarto the process in EO Determ inations, EO Technicaltax law specialists develop
cases based on the facts and circum stances ofthe issues in the specific application.
EO Technicalstaffengages in a back and forth dialogue with the organization in order
to obtain the inform ation needed to com plete the adm inistrative record. If, upon review
ofallofthe inform ation subm itted, itappears thatan organization does notm eetthe
requirem ents fortax-exem pt status, a proposed denialexplaining the reasons the
organization does notm eetthe requirem ents is issued. The organization is then
entitled to a "conference ofright" where itm ay provide additionalinform ation. Following
the conference ofright, a finaldeterm ination is issued. Ifthe application is approved,
the adm inistrative record is m ade publicly available, and ifthe organization acts as
described in the application record, ithas reliance on the IRS determ ination. Ifthe
application is denied, the applicantm ay challenge its non-exem ptstatus by paying any
tax owed as a taxable entity, and seeking a refund in federalcourt.
JW1559-001070
Statutory Disclosure Rules

Public disclosure regarding tax exem ptorganization filings is principally governed by
sections 6103, 6104 and 6110 ofthe InternalRevenue Code. G enerally, section 6103
ofthe Code prohibits the disclosure ofinform ation aboutspecific taxpayers unless the
disclosure is authorized by a provision ofthe Code. Section 6104 ofthe Code requires
the IRS to m ake certain m aterials available for public inspection, including an
organization's approved application for recognition oftax exem ption and Form 990
annualinform ation returns. Ifthe IRS approves an organization's application fortax
exem pt status, section 6104(a) requires thatthe application and supporting m aterials be
m ade available for public inspection. The only exception to that requirem ent is found in
section 61 04(a)(1 )(0), which exem pts from disclosure inform ation thatthe IRS
determ ines relates to any "trade secret, patent, process, style ofwork, orapparatus of
the organization" thatwould adversely affectthe organization or inform ation thatcould
adversely affect nationaldefense.
The long-standing statutory requirem ents regarding exem ption applications, including
Form 1024, are separate from those requiring public availability ofForm 990 annual
inform ation returns, which are contained in section 6104(b). U ndersection 6104(b),
Form 990 annualinform ation returns are also subjectto public inspection, with the sole
exception ofdonor inform ation contained in Schedule B ofthe Form 990. The
w ithholding ofnam es and addresses ofdonors from public disclosure applies only to
Form 990;this exception does notextend to inform ation obtained from Form 1024 and
supporting m aterials.4
In lightofthe statutory requirem entto m ake approved applications public, organizations
are notified thatinform ation they provide willbe available for public inspection on page
tw o ofthe Form 1024 instructions. This notice is reiterated in any developm ent letters
sentto the organizations. The adm inistrative record ofapproved applications, including
the application, supporting docum ents and correspondence between the applicant and
the IRS are available upon request.
U ndersection 6110 ofthe Code, ifthe IRS ultim ately denies the application for
recognition oftax-exem ptstatus, the denialletterand background inform ation willbe
open to public inspection, with certain identifying and other inform ation redacted.
n place since 1958, and the legislative history provided the

3 The disclosure rules have been i
following rationale for pUblic disclosure ofexem ption applications: "[the]com m ittee believes that
m aking these applications available to the public willprovide substantial additional aid to the
Internal Revenue Service in determ ining w hether organizations are actually operating in the
m anner in which they have stated in theirapplications for exem ption." H.R. Rep. No. 85-262, at
41-42 (1957). In 1987, C ongress added w hat is now section 6104(d) to the Code, thatrequires
organizations to m ake their returns available to the pUblic, and in 1996 extended this rule to
application m aterials.
4 The withholding exception does notapply to donor inform ation for organizations thatfile Form
990-PF orto those section 527 organizations thatare required to file Form 990 or 990-EZ.
JW1559-001071
For entities thatsubm itan application for tax-exem ptstatus under Section
501 (c)(4), please indicate:
(a) the approxim ate average num berofdays betw een the date on w hich an entity
subm its an application for 501 (c)(4) tax-exem ptstatus and the date on w hich
the application is approved ordenied;
The average case processing tim e for determ ination cases closed in FY2011 was
104 days. However, itis difficultto predicthow long itwilltake to fully process any
specific application. Case processing tim e can vary greatly depending on a num ber
offactors, including w hetherthe case can be closed through technicalscreening or
requires full developm ent, the availability ofan agentwith the appropriate
experience levelto fully develop the application, the particular issues and
individualized facts and circum stances presented in the application, the back and
forth dialogue between the revenue agentand the applicantto fully develop the
application, and w hether a case is transferred to EO Technical.
(b) ifitis notprovided on a routine basis, approxim ately w hatpercentage ofsuch

applicants receive an IRS questionnaire seeking inform ation aboutany
politicalactivities, and how the IRS determ ines w hether and w hen to send that
questionnaire;and
W e understand thatthe reference in your letterto "questionnaire" is intended to
relate to developm ent letters the IRS sends to organizations in the ordinary course
ofthe application process to obtain the inform ation as the IRS deem s necessary to
m ake a determ ination w hether the organization m eets the legalrequirem ents for
tax-exem ptstatus. There is no standard questionnaire used in the determ inations
process seeking inform ation about politicalactivities.
The IRS contacts the organization and solicits additional inform ation w hen the
organization does notprovide sufficient inform ation in response to the questions on
the Form 1024 to m ake a determ ination orifissues are raised by the application.
W hen an application needs further developm ent, the case is assigned to a revenue
agentwith the appropriate levelofexperience forthe issues involved in the
application.
The generalprocedures for requesting additional inform ation to develop an
application are included in section 7.20.2 ofthe Internal R evenue M anual.
Although there is a tem plate letterthatdescribes the generalinform ation on the
case developm entprocess,the letter does not, and could not, specify the
inform ation to be requested from any particular organization because ofthe broad
range ofpossible facts. Enclosure B is a copy ofthe tem plate letter.
JW1559-001072
The am ountand nature ofdevelopm ent necessary to process an application to

ensure thatthe legalrequirem ents oftax-exem ption are satisfied depends on
severalfactors, which include the com prehensiveness ofthe inform ation provided in
the application and the issues raised by the application. C onsequently, revenue
agents prepare individualized questions and requests for docum ents relevant to the
application, which are attached to the above described generaltem plate letter. W ith
certain types ofapplications where the issues are sim ilar or m ore com plex, EO
Technical, in coordination with C hiefCounsel, m ay develop educational m aterials to
assistthe revenue agents in issue spotting and crafting questions to develop those
cases consistently.
The revenue agentuses sound reasoning based on tax law training and his orher
experience to review the application and identify the additionalinform ation needed
to m ake a proper determ ination regarding the organization's exem ptstatus. The
revenue agentprepares individualized questions and requests for docum ents based
on the facts and circum stances setforth in the particular application.
The below chart provides the totalnum berofapplications closed for FY 2008-2011,5
as wellas prelim inary inform ation for partof2012.6 The below chart provides the
percentage ofallexem ption applications closed each year through the technical
screening process (i.e., no developm ent letters sent).
Totalnum berofapplications closed

Percentage ofapplications closed through
technicalscreening
FiscalYear
2010
2011
77,305
65,590
61,004
28,570
57%
56%
60%
70%
2008
2009
84,220
59%
2012
Although we are able to produce the num berofcases closed during this tim e period
that received developm ent letters, oursystem s do nottrack the specific types of
questions asked in the developm entletters forthese cases. Therefore, m anual
review ofeach file would be necessary to determ ine the particular organization and
the developm ent letters sent.
Reports ofthe IRS data requested are created and published by Statistics ofIncom e (SO l)
Division. The IRS Data Book provides inform ation on IRS activities conducted during a fiscal year
period (O ctober 1 through Septem ber 30). Data Book inform ation is updated annually. This SO l
data is from IRS Data Book, Table 24, Closures ofApplications for Tax-Exem ptStatus, by
O rganization Type and Internal Revenue Code Section, FiscalYear 2008 (and subsequent fiscal
years 2009-2011) athttp://w w w .irs.gov/taxstats/index.htm I.This data reflects allcase closures
for the Exem ptO rganizations Determ inations function. These include notonly initial applications
for tax-exem ptstatus, butalso other determ inations, such as public charity and private foundation
status determ inations, advance approvalofscholarship grant procedures, and group
determ inations oftax-exem ptstatus.
6 The data for FY 2012 reflects the prelim inary inform ation available through the second quarter
from O ctober 1,2011 through M arch 30,2012. SO l Data Book inform ation is updated annually,
with the com plete FY 2012 inform ation expected in M arch 2013.
5
JW1559-001073
(c) approxim ately how m any days afteran application is filed thatquestionnaire
is typically sent.
As m entioned above, organizations whose applications fallinto the fourth category
are sent letters inform ing them thatm ore developm ent oftheir application is
needed, and thatthey willbe contacted once their application has been assigned to
a revenue agent. The applications are sentto unassigned inventory, where they are
held untila revenue agentwith the appropriate levelofexperience forthe issues
involved in the m atter is available to further develop the case. O nce the case is
assigned, the revenue agentnotifies the organization and reviews the application.
Based upon the established precedent and the facts and circum stances setforth in
the application, the revenue agentwillrequestadditional inform ation and
docum entation to com plete the file. Ifapplicable, the revenue agentwillcoordinate
with EO Technicaland C hiefCounselto develop requests for inform ation to be
issued to the organization. Forallofthese reasons, itis difficultto predictthe tim e
fram e between the filing ofan application fortax-exem ption and the issuance ofa
developm ent letter.
Q uestion 3. A 1997 letterfrom the IRS denying tax-exem ptstatus to the N ational
Policy Forum , copy attached, m ade public in connection w ith a Senate
investigation into federalelection cam paigns, indicates thatthe IRS based its
denialon the factthatthe organization w as engaged in partisan politicalactivity,
stating that"partisan politicalactivity does notprom ote socialw elfare as defined
in section 501 (c)(4)," and "benefit[s] selectindividuals orgroups, instead ofthe
com m unity as a w hole." Is itstillthe position ofthe IRS thata 501 (c)(4)
organization cannotengage in any partisan politicalactivity, even as a secondary
activity?
As noted above, section 6103 ofthe Internal Revenue Code prohibits the disclosure of
inform ation aboutspecific taxpayers unless the disclosure is authorized by som e
provision in the InternalRevenue Code. Section 6104(a) ofthe Code perm its public
disclosure ofan application for recognition oftax exem ptstatus and supporting
m aterials only afterthe organization has been recognized as exem pt. Under section
6110 ofthe Code, ifthe IRS ultim ately denies the application for recognition oftax
exem ptstatus, the denialletter is subjectto public inspection, with identifying and other
inform ation redacted, to assistthe public in understanding the IRS'reasoning while also
protecting the identity ofthe organization. Although you reference whatappears to be a
proposed denialletterthatm ay have been m ade available publicly by sources other
than the IRS, IRS Disclosure Counselhas advised thatsection 6103 continues to apply
and we are legally prohibited from discussing taxpayer inform ation.? However, we are
able to respond to your question generally.
To qualify forexem ption as a socialwelfare organization described in section 501 (c)(4),
7 Section 61 03(f) ofthe C ode sets forth the m eans by which congressionalcom m ittees m ay
obtain access to return and return inform ation (thatis nototherwise m ade publicly available under
sections 6104 and 6110). W e are available to discuss these rules in m ore detailwith your staff.
JW1559-001074
the organization m ustbe prim arily engaged in the prom otion ofsocialwelfare, not
organized oroperated for profit, and the netearnings ofwhich do notinure to the benefit
ofany private shareholder or individual.8 The prom otion ofsocialwelfare does not
include director indirectparticipation or intervention in politicalcam paigns on behalfof
or in opposition to any candidate for public office.9 Nevertheless, a section 501 (c)(4)
socialwelfare organization can engage in politicalactivities as long as itis prim arily
engaged in activities thatprom ote socialwelfare.1o The regulations do notim pose a
com plete ban on politicalactivity by section 501 (c)(4) organizations.11 W hether an
organization m eets the requirem ents ofsection 501 (c)(4) depends upon allofthe facts
and circum stances ofthe particular applicant, and no one factor is determ inative.
A revenue agentm ustfirstdeterm ine w hether activities undertaken by the organization
prim arily further an exem ptpurpose. Ifthe organization is engaged in som e activities
thatdo notprom ote socialwelfare, then the agentm ustreview the scope ofthe
activities to determ ine whether, based on allthe facts and circum stances, the
organization's exem ptactivities are the prim ary activities. Ifthe application is unclearor
notsufficiently detailed as to w hetherthe prim ary activity conducted by the organization
is exem ptsocialwelfare activity, the revenue agentwillneed to follow-up on this issue
in a developm entletter.
Itis also im portantto note thatsection 611 0(k)(3) provides thatdeterm ination letters
(including both proposed and final letters) m ay notbe used orcited as precedent.
Determ ination letters are based on the specific facts and circum stances ofthe applicant.
Q uestion 4. Is itthe position ofthe IRS thatan entity claim ing tax-exem ptstatus
undersection 501(c)(4) can engage in nonpartisan political activity as a
secondary activity, and thatpoliticalactivity can consum e up to 49% ofthe
entity's expenditures and resources.
To determ ine w hether an organization operates prim arily forthe prom otion ofsocial
welfare, the courts and the IRS consider allthe facts and circum stances, including but
notlim ited to the organization's stated purposes, expenditures, principalsource of
revenue, num berofem ployees and volunteers, and tim e and effort.12 The IRS has
taken no position on a fixed percentage oranyone factor in precedentialguidance.
501(c)(4); Treas. Reg. 1.501(c)(4)-1.

B IRC
9 Treas. Reg. 1.501 (c)(4)-1 (a)(2)(ii).
10 Rev. Rul
. 81-95,1981-1 C.B. 332.
11 Rev. Rul
. 81-95,1981-1 C.B. 332.
12 Treas. Reg. 1.501(c)(4)-1(a)(2) (No percentage testestablished). Rev. Rul. 68-45,1968-1

C.B. 259 (Principalsource ofincom e does notdeterm ine an organization's prim ary actiVity under
501 (c)(4); allthe facts and circum stances are considered). See, generally H asw ellv. U nited
States, 500 F.2d 1133,1142,1147 (CI. Ct. 1974) ("A percentage test... is notappropriate. Such
a testobscures the com plexity ofbalancing the organization's activities in relation to its objectives
and circum stances in the contextofthe totality ofthe organization."). See, Contracting Plum bers
v. U nited States, 488 F.2d 684, 686 (2d Cir. 1973) (m ultiple factors relevantin applying this
standard, including form ative history, stated purposes, and actualoperations). See generally
Seasongood V. Com m issioner, 227 F.2d 907, 909, 912 (6th Cir. 1955) (expenditures, em ployees,
and organization's tim e and effortconsidered).
JW1559-001075
Q uestion 5. A Treasury regulation applicable to 501 (c)(4) organizations states:

"The prom otion ofsocialw elfare does notinclude director indirectparticipation
or intervention in politicalcam paigns on behalfofor in opposition to any
candidate for public office." Treas. Reg. 1.501(c)(4)-1(a)(2)(ii). W ould the IRS
generally view itas a violation ofthatregulation ifa 501 (c)(4) organization:
(a) M ade a cash contribution to a politicalorganization w hich is tax-exem pt under
Section 527 and functions as a cam paign com m ittee to electa particular
candidate to public office?
(b)M ade a cash contribution to a politicalaction com m ittee w hich w as
established underthe FederalElection C am paign A ct(FEC Act) and w hich
routinely m akes cash contributions to cam paign com m ittees, each ofw hich
w as established to electa particularcandidate to public office?
(c) M ade a cash contribution to a politicalaction com m ittee orSection 527
politicalorganization w hich m akes independentexpenditures on behalfofor
in opposition to one orm ore candidates for public office?
(d) M ade a cash contribution to a national politicalparty w hich engages in
partisan politicalcam paigns to electm ultiple candidates from the sam e
political party to public office?
(e) M ade a cash contribution to a politicalaction com m ittee orSection 527
politicalorganization w hich is engaged in partisan politicalactivity, butdoes
notcam paign on behalfofor in opposition to any particular candidate for
public office?
(f) M ade a cash contribution to a politicalaction com m ittee or Section 527
politicalorganization w hich is engaged in nonpartisan politicalactivity and
does notcam paign on behalfofor in opposition to any particular candidate
for public office?
As noted previously, a section 501 (c)(4) organization m ay directly or indirectly
participate or intervene in a politicalcam paign as long as itis prim arily engaged in
activities thatprom ote socialwelfare. Treasury regulations provide thatprom otion of
socialw elfare does notinclude certain activities, including political cam paign
intervention.13 This regulation does notprohibita section 501 (c)(4) organization from
engaging in such activity. Rather, the politicalcam paign intervention activity does not
counttow ards the organization's exem ptactivities thatprom ote socialwelfare.
Therefore, ifthe organization engages in such activity, ithas "violated" no rule underthe
regulations. As discussed, allfacts and circum stances are relevant in determ ining
w hetherthe requirem ents fortax exem ption are ultim ately satisfied.
The sam e legalrequirem ents apply in each ofthe facts patterns articulated in your
questions. W ith respectto each ofthe factpatterns thatyou specify, w hile depending
13
Treas. Reg. 1.501 (c)(4)-1(a)(2)(ii).
JW1559-001076
10
on the facts and circum stances, politicalactivity would notbe for a socialw elfare
purpose, the organization does notviolate any InternalR eview C ode rule applicable to
section 501 (c)(4) organizations ifitengages in such activity. Allthe facts and
circum stances need to be considered to determ ine w hetherthis activity affects the
section 501 (c)(4) organization's tax-exem ptstatus.14
Q uestion 6. W ould the IRS generally view itas a violation ofTreasury R egulation
1.501(c)(4)-1(a)(2)(ii), ifa 501(c)(4) organization w ere to coordinate its political

activities w ith a cam paign com m ittee, politicalaction com m ittee, or national
politicalparty? Please explain.
As stated, section 501 (c)(4) organizations m ay engage in som e politicalcam paign

activity provided thatsuch intervention, along with other activity thatdoes notprom ote
socialwelfare, does notconstitute the organization's prim ary activities. The tax law
does notexplicitly prohibita section 501 (c)(4) organization from coordinating political
activity.
H ow ever, such coordination could raise issues ofprim ary activity, inurem ent orprivate
benefit. Thus, for exam ple, ifan organization's activities are conducted prim arily forthe
benefitofa politicalparty orany other private group ofindividuals, rather than the
com m unity as a whole, the organization is notoperated prim arily to prom ote social
w elfare. Accordingly, conferring a sufficientam ountofprivate benefiton select
individuals willpreclude exem ption under section 501 (c)(4) ifthatprivate benefit is the
prim ary activity ofthe organization.15
Q uestion 7. Iunderstand thatsom e persons have petitioned the Treasury

D epartm entto clarify or revise Treasury R egulation 1.501(c)(4)-1 (a)(2)(ii).
Please indicate w hetherthe IRS plans to engage in such a rulem aking, w hether it
w ould firstsolicitcom m ents on w hatshould be included in thatrulem aking, and
w hether orw hen any such rulem aking efforthas been scheduled to begin.
The IRS, in collaboration with the Treasury Departm ent's O ffice ofTax Policy
("Treasury"), annually develops a listofthe guidance thatTreasury and the IRS intend
to w ork on during the upcom ing guidance plan year. Certain types ofguidance are
issued in proposed form to allow an opportunity for public com m ent.
The IRS is aware ofthe currentpublic interestin this issue and willseriously consider
any proposed changes. Treasury and the IRS have notyetestablished the listofthe
Rev. Rul. 68-45, 1968-1 C.B. 259. See also, e.g. Contracting Plum bers Coop. R estoration
Corp. v. U.S., 488 F.2d 684 (2d Cir. 1973)(There are m ultiple factors relevant in applying this
standard, including form ative history, stated purposes, and actualoperations). Note thattax m ay
apply in certain cases underInternalRevenue Code section 527(f).
1 IRC 501 (c)(4); Treas. Reg. 1.501(c)(4)-1. See Contracting Plum bers Coop. Restoration
Corp. V. U.S., 488 F.2d 684, 687 (2d Cir. 1973) (O rganization was notprim arily devoted to the
com m on good when itprovided substantial and different benefits to both the public and its private
m em bers). Am erican Cam paign Academ y V. Com m issioner, 92 T.C. 1053, 1078 (1989), a
section 501 (c)(3) case, held thatan organization was notoperated exclusively for exem pt
purposes when itconferred substantial private benefits on a politicalparty and its candidates.
14
JW1559-001077
11
guidance thatTreasury and the IRS intend to work on from July 1,2012, through June
30, 2013. The selection ofitem s forthe 2012-2013 G uidance Priority Listwillbe m ade
in collaboration with Treasury after review and evaluation ofcom m ents received.
Q uestion 8. Ifthe IRS w ere to deny an entity's requestto be treated as tax
exem ptunder Section 501 (c)(4),w ould the IRS autom atically apply corporate
incom e taxes to thatentity orw ould itallow the entity to apply for tax-exem pt
status on other grounds?
W hen a section 501 (c)(4) organization receives a finaldeterm ination letterdenying its
application fortax-exem ptstatus, the letteradvises the organization thatitm ustfile
Federal incom e tax returns forthe years listed in the letterwithin 30 days ofthe
issuance ofthe denialletter, unless the organization requests an extension oftim e to
file. Enclosure C is a copy ofthis standard finaldenialletter.
Ifthe revenue agentassigned to the case believes thatthe organization m ay notm eet
the requirem ents ofa section 501 (c)(4) organization, butm ay m eetthe requirem ents of
anothertax-exem pt provision, the issue ofw hetherthe organization w ants to be
considered for exem ption underthatotherprovision could be discussed with the
organization through developm entletters priorto the final resolution ofthe application.
Ifthe organization indicates thatitdoes notw antto proceed underthe other provision
and continues to pursue section 501 (c)(4) exem ption, the IRS would deny the
application and the organization would be treated as a taxable entity.
Please note thatsom e organizations w ithdraw their application for exem ption w hen they
learn thata denialis forthcom ing. O thers do notform ally withdraw, butdo notrespond
to requests for inform ation necessary to develop their applications. After additional
failed attem pts to getthe inform ation from the applicant, those applications are closed
as "failure to establish."
Q uestion 9. Ifthe IRS w ere to determ ine thatan entity w as im perm issibly
participating in partisan politicalactivity, does the IRS have unilateralauthority to
reclassify itas a Section 527 political organization instead ofa Section 501(c)(4)
socialw elfare organization?
W hether an organization fails to qualify undersection 501 (c)(4) does notdeterm ine
w hether itis a politicalorganization undersection 527. Section 527 applies to a party,
com m ittee, orother organization thatis organized and operated prim arily for the
purpose ofaccepting contributions orm aking expenditures for an exem ptfunction (as
defined in section 527(e)(2)). Subjectto certain exceptions, to be tax-exem pt under
section 527, a politicalorganization is required to give notice electronically to the
Service.16
16 Section 527(i)(1); Rev. Rul. 2003-49, 2003-1 C.B. 903. Section 527 also provides for the
taxation ofcertain organizations thatdo notprovide notice to the IRS. IRC 527(f), (i)(4)
JW1559-001078
12
A s noted above, Ifthe revenue agentassigned to the case believes thatthe

organization m ay notm eetthe requirem ents ofa section 501 (c)(4) organization, but
m ay m eetthe requirem ents ofanothertax-exem pt provision, the issue ofw hether the
organization w ants to be considered for exem ption underthat other provision could be
discussed with the organization through developm ent letters priorto the final resolution
ofthe application. Ifthe organization indicates thatitdoes notw antto proceed under
the other provision and continues to pursue section 501 (c)(4) exem ption.the IRS would
deny the application and the organization would be treated as a taxable entity.
Q uestion 10. Ifan entity w ere denied tax-exem ptstatus by the IRS under Section
501(c)(4), how w ould pastcontributions and incom e earned on those funds
generally be treated underthe tax code?
Ifan organization is denied tax-exem pt status, the organization is a taxable entity as of
the date the organization originated. The finaladverse determ ination letterstates that
the organization is required to file Federalincom e tax returns, generally a Form 1120,
U .S. Corporation Incom e Tax. The tax treatm ent ofthe organization's contributions and
other incom e is determ ined undernorm alrules ofSubtitle A.
Q uestion 11. W hatconsiderations does the IRS use to determ ine w hen an entity
thatis denied tax-exem ptstatus underSection 501 (c)(4) should be subjectto a
penalty? W hatpenalties are available and how are they calculated?
There is no penalty specifically applicable to an organization as a resultofa denialof
tax-exem pt status. An organization thatis denied tax-exem ptstatus is advised in the
finaldenialletterthatithas 30 days from the 'finaldenialletterto eitherfile its incom e
tax returns or requestadditionaltim e to file the taxable returns. Ifthe organization
tim ely filed Form 990 annualreturns during the period oftim e thatthe application for
tax-exem pt status was pending and tim ely files its taxable returns once tax-exem ption is
denied, the organization willnotbe subjectto penalties. Ifthe organization does not
tim ely file taxable returns, the organization m ay be subjectto failure to file orfailure to
pay penalties undersection 6651 ofthe Code.
The failure to file penalty undersection 6651 (a)(1) ofthe Code, is calculated ata rate of
5 percentofthe am ountrequired to be shown as tax on the return ifthe failure to file is
for notm ore than 1 m onth, with an additional5 percentforeach additional m onth or
fraction thereofthatthe failure to file continues, notto exceed 25 percent in the
aggregate.
The failure to pay tax penalty undersection 6651 (a)(2) ofthe Code, is calculated ata
rate of0.5 percentofthe am ountofthe tax shown on the return ifthe failure to pay is for
notm ore than 1 m onth, with an additional0.5 percentforeach additional m onth or
fraction thereofthatthe failure to pay continues, notto exceed 25 percent in the
aggregate.
JW1559-001079
13
Penalties assessed m ay be abated ifthe organization can show thatthe failure to file or
failure to pay was due to reasonable cause and notdue to willfulneglect.17
Q uestion 12. Please provide a copy ofthe standard questionnaire thatthe IRS
sends to entities claim ing tax-exem ptstatus underSection 501(c)(4) to obtain
inform ation abouttheirpoliticalactivities. In addition, please provide any w ritten
guidance provided to IRS agents regarding the issue ofpoliticalactivity in
connection w ith Section 501 (c)(4).
There is no standard questionnaire used to obtain inform ation aboutpolitical activities.
Although there is a tem plate developm ent letterthatdescribes the generalinform ation
on the case developm entprocess, the letterdoes notspecify the inform ation to be
requested from any particular organization. Enclosure B is a copy ofthe tem plate letter.
The am ountand type ofdevelopm ent necessary to process a section 501 (c)(4)
application to ensure thatthe legalrequirem ents oftax-exem ption are satisfied depends
on severalfactors, which include the com prehensiveness ofthe inform ation provided in
the application and the issues raised by the application. Consequently, revenue agents
prepare individualized questions and requests for docum ents relevantto the application,
which are then attached to the above described generaltem plate letter.
In connection with recentcases, EO Technicalprepared a drafteducationalguide sheet
on the issue ofpoliticalactivity for section 501 (c)(4) applications thatwas shared for
com m entwith som e em ployees in EO Determ inations. Thatguide sheetw as neither
m andated norfinalized.
Q uestion 13. Please indicate how m any letter rulings have been issued by the
IRS since January 1,2007,to deny or revoke the tax-exem ptstatus ofan
organization underSection 501 (c)(4) due to involvem entw ith partisan or
nonpartisan politicalactivity. Ifthe IRS has issued 10 or less such letterrulings,
please provide copies ofallsuch letters. Ifthe IRS has issued m ore than 10 such
letterrulings, please provide a sam ple containing discussions ofthe w idest
variety ofissues related to the denialoftax-exem ptstatus underSection 501(c)(4)
due to partisan or nonpartisan politicalactivity.
Prelim inarily, as previously stated, section 6103 ofthe InternalRevenue Code prohibits
the disclosure ofinform ation aboutspecific taxpayers unless the disclosure is
authorized by som e provision ofthe InternalRevenue Code. Section 6104(a) ofthe
C ode perm its public disclosure ofan application for recognition oftax-exem ptstatus
and supporting m aterials only after the organization has been recognized as exem pt.
recognition oftax-exem ptstatus, the denial letterand background inform ation is subject
to public inspection, with identifying and otherinform ation redacted, to assistthe public
understand the IRS reasoning while also protecting the identity ofthe organization.
17
IR e 6651 (a).
JW1559-001080
14
The application process for tax-exem pt status does notinvolve the revocation oftax
exem ption; rather, itonly concerns the denialofapplications. IRS data on the denialof
applications is kept in reports published by the IRS Statistics ofIncom e (SO l) Division.
The Data Book provides inform ation on IRS activities conducted during a fiscalyear
period (O ctober 1 through Septem ber 30). W e have attached these reports as
Enclosures 0-1 through 0-5. Foryour convenience, however,we are replicating the
totalnum ber ofdeterm ination denials for section 501 (c)(4) organizations for FY 2007
2012 in the chartbelow.

N ote thatthe num ber ofdenials does notreflecta fullpicture ofapplications not
approved. Som e organizations withdraw their application for exem ption when they
failed attem pts to getthe inform ation, those applications are closed as "failure to
establish."
FiscalYear
The Num ber ofSocialW elfare O rganization

Applications thatwere Denied
2007
2008
2009
2010
2011
2012111
* Few erthan 3
Please note thatalthough IRS autom ated system s track the num bers ofapplications
closed as denied, they do nottrack the nam es ofthe applicantorganizations or the
reasons forthe denials. Absentm anualreview ofthe files, we are unable to state
w hether any ofthese denials were issued due to involvem entwith partisan or
nonpartisan politicalactivity.
18 The data for FY 2012 reflects the prelim inary inform ation available for O ctober 1, 2011 through
April 11 ,2012. SO l Data Book inform ation is updated annually, with the com plete FY 2012
inform ation expected in M arch 2013.
JW1559-001081
15
Ihope this inform ation is helpful. Ifyou have questions, please contact m e or have your
Sincerely,
Steven T. M iller
D eputy C om m issioner for Services and
Enforcem ent
Enclosures
JW1559-001082
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W ASH IN G TO N , DC 205106250
M arch 30,2012
VIA U.S.M AIL & EM A IL (Floyd.W illiam s@ IRS.gov)

The H onorable D ouglasH.Shulm an
Com m issioner
RECEIVED
MAR 30 2012
CONG.CORR.BR
CL:LA
Som e entities claim ing tax-exem ptstatus as socialw elfare organizations under26 U .S.C.
501(c)(4)appearto be engaged in political activities m ore appropriate forpolitical
organizationsclaim ing tax-exem ptstatus under26 U .S.C.527. Because oftheurgency ofthe
issues involved in this m atter,please provide the follow ing infonnation by April20,2012.
(I) Are entities seeking tax-exem ptstatus underSection 501 (c)(4)required to subm itan
application to the IRS for review and approval,orcan they hold them selves outas
having thattax-exem ptstatus w ithoutfiling 811 application orundergoing IRS
review ?
(2) Forentities thatsubm itan application for tax-exem ptstatus underSection 501(c)(4),
. please indicate: .
(a) the approxim ate average num berofdays betw een the date on which an
entity subm itsan application for 501(c)(4) taJ(-exem ptstatus and the date on
w hich thatapplication is approved ordenied;
(b) ifitis notprovided on a routine basis,approxim ately w hatpercentage of
such applicants receive an IRS questionnaire seeking inform ation aboutany
politicala c t i v i t i e s ~ and how the IRS determ ines w hetherand w hen to send
thatquestionnaire;and
istypically sent.
(3) A 1997 letter from the IRS denying tax-exem ptstatus to the N ationalPolicy Forum ,
copy attached,m ade public in connection w ith a Senate investigation into federal
election cam paigns,indicates thatthe IRS based its denialon the factthatthe
organization w as engaged in partisan politicalactivity,stating that"partisan
politicalactivity does notprom ote social w elfare as defined in section 50 I(c)(4)."
and "benefit[s] selectindividuals orgroups,instead ofthe com m unity as a w hole."
JW1559-001083
2
Is itstillthe position ofthe IRS thata 501(c)(4)organization cannotengage in any
partisan politicalactivity,even as a secondary activity?
(4) Is itthe position ofthe IRS thatan entity claim ing tax-exem ptstatus W IderSection
501(c)(4)can engage in nonpartisan politicalactivity as a secondary activity,and
thatpoliticalactivity can consum e up to 49% ofthe entity's expenditures and
resources?
(5) A Treasury regulation applicable to 501(c)(4)organizations states: "The prom otion
ofsocialwelfare does notinclude directorindirectparticipation orintervention in
politicalcam paigns on behalfoforin opposition to any candidate forpublic office."
Treas.Reg.1.50l(c)(4)-1(a)(2)(ii). W ould the IRS generally view itas aviolation
ofthatregulation ifa 501(c)(4)organization:
(a) m ade a cash contribution to apoliticalorganization which is tax-exem ptunder
Section 527 and functions asa cam paign com m itteeto electa particular
candidate to public office'?
(b) m ade a cash contribution to a politicalaction com m ittee which was
established underthe FederalElection Cam paign Act(FEC Act)and which
routinely m akescash contributions to cam paign com m ittees,each ofwhich
wasestablished toelecta particularcandidate to public office?
(c) m ade a cash contribution to a politicalaction com m ittee orSection 527
politicalorganization which m akes independentexpenditures on behalfofor
in opposition to one orm ore candidates forpublic office?
(d) m ade a cash contribution to a nationalpoliticalparty which engages in
politicalparty to public office?
(e) m ade a cash contribution to apoliticalaction com m ittee orSection 527
politicalorganization which isengaged in partisan politicalactivity,but
does notcam paign on behalfoforin opposition to any particularcandidate
forpublic office?
(t) m ade a cash contribution to a politicalaction com m ittee orSection 527
politicalorganization which isengaged in nonpartisan politicalactivity and

forpublic office?
(6) W ould the IRS generally view itasa violation ofTreasury Regulation 1.501(c)(4)
1(a)(2)(ii),ifa 501(c)(4)organization were to coordinate itspoliticalactivities with

a cam paign com m ittee,politicalaction com m ittee,ornationalpoliticalparty?
Please explain.
JW1559-001084
3
(7) Junderstand thatsom e personshave petitioned theTreasury Departm entto clarify
orrevise Treasury Regulation I.S01(c)(4)-1(aX2)(ii). Please indicate whetherthe
IRS plansto engage in such a rulem aking,whetheritwould fIrstsolicitcom m ents
on whatshould be included inthatrulem aking,and whetherorwhen any such
rolem aking efforthas been scheduled to begin.
(8) Ifthe IRS wereto deny an entity's requestto be.treated as tax exem ptunderSection
501(c)(4),would the IRS autom atically apply corporate incom e taxes to thatentity
orwould itallow the entity to apply fortax-exem ptstatus on othergrounds?
(9) Ifthe IRS were to detennine thatan entity wasim perm issibly participating in
partisan politicalac,tivity,doesthe IRS have unilateralauthority to reclassify itas.a

Section 527 politicalorgtm izationinstead ofa Section 501(c)(4)socialwelfare
organization?
.(10) Ifan entity were deniedtax..exem ptstatusby theiRS underSection 50I(c)(4),how

w ould pasteontributi()DS a11dincom e earned on those funds generally be treated
.underthe tax code?
(11) W hatconsiderations doesthe IRS use to determ ine when an entity thatisdenied
tax-exem ptstatus underSection 501(c)(4)should be subjectto a penalty? W hat
penaltiesare available and how are they calculated?
(12) Please provide a copy ofthe standard questionnaire thatthe IRS sends to entities
claim ing tax-exem ptstatus underSection 501(c)(4)to obtain infonnation about
theirpoliticalactivities. In addition,please provide any written guidance provided

tQ IB-S ~ t s r e ~ d i n g the issue ofpoliticalactivity in c o ~ e c t i o n with Section
..
..
. .
SOl(F}(,f}.' ...' .
(13) Please indicate how m any letterrulings.have been issued by the IRS since January
1,2007,to deny orrevoke the tax-exem ptstatus ofan organization under Section
SO I(cX 4) due to involvem entwith partisan ornonpartisan political activity. Ifthe
IR S hasissued 10 orless such letterrulings,please provide copies ofallsuch
letters.. Ifthe IRS has issued m ore than 10 such letterrulings,please provide a
sam ple coritaining discussionS ofthe widestvariety ofissues related to the denialof
tax-exem ptstatus underSection 50l(c)(4)due to partisan ornonpartisan political

actiVity.
Thank you for yourassistance on this m atter. Ifyou have any questions,please contact
m e.orhave yourstaffcontactKayeM eierofm y staffatkaye_m eier@ levin.senate.gov or
2021224-9110.
CarlLevin
Chairm an
PennanentSubcom m ittee on Investigations
JW1559-001085
From:
Sinno Suzanne
Sent:
To:
Lerner Lois G
Cc:
RE: Levin 501(c)(4) letters - 2 of 6
Subject:
will do.
From: Lerner Lois G
To: Sinno Suzanne
Cc:
Subject: RE: Levin 501(c)(4) letters - 2 of 6
Please cc
b(6) and b(7)(C)\pe...
so she can print out for me and put into notebook.
Thanks
Lois G. Lerner
From: Sinno Suzanne
Subject: Levin 501(c)(4) lette rs - 2 of 6
JW1559-001086
From:
Lerner Lois G
Sent:
To:
Subject:
Attachments:
38571_Final_Levin.pdf; 38571_Levin_incoming.pdf; 38571_PLR 200720026_Encl1.pdf;
38571_PLR 200720030_Encl2.pdf; 38571_PLR 200809035_Encl3.pdf; 38571_PLR
200817061_Encl4.pdf; 38571_PLR 200829036_Encl5.pdf; 38571_PLR 200909072
_Encl6.pdf; 38571_PLR 200910067_Encl7.pdf; 38571_PLR 201013060_Encl8.pdf; 38571
_PLR 201037034_Encl9.pdf
Please print--I will need all Levin materials in a notebook
Lois G. Lerner
From: Sinno Suzanne
JW1559-001087
W A S H IN G T O N , D .C . 2 0 2 2 4
M arch 15, 2013

C hairm an
C om m ittee on H om eland Security
W ashington, DC 20510
D ear M r. C hairm an:
Iam responding to your letterdated January 4, 2013, requesting additional inform ation about
501 (c)(4) organizations. This response supplem ents the previous responses dated
June 4,2012, July 13,2012, August 24,2012, Septem ber 14, 2012, O ctober 17,2012, and
N ovem ber 23,2012, and addresses the additionalquestions raised in your recent letter.
Q uestion 1. In the IRS response ofSeptem ber 14,2012, you w rite that "during the past
six m onths, no notices ofproposed or final revocation w ere issued to section 501 (c)(4)
organizations." In the N ovem ber 23,2012 IRS response, you w rite that"w e have issued
42 revocation notices to section 501 (c)(4) organizations since January of2007." A lso in
the N ovem ber 23, 2012, response you w rite "since January 1,2007, w e have issued ten
adverse determ inations to section 501 (c)(4) applicants." Please respond to the
follow ing:
a. Please explain the difference betw een a "revocation notice" and an
"adverse determ ination."
An adverse determ ination is a w ritten ruling denying tax-exem pt status to an organization that
has applied for tax exem ption, buthas failed to m eetthe applicable requirem ents. A
revocation notice is a w ritten notice thattax exem ptstatus is being revoked, as the resultofan
exam ination.1
R evocation notices also m ay be issued to organizations thatare autom atically revoked for failing to file a
Form 990 series return for three consecutive years. The revocation notices noted in Q uestion1 above
resulted from exam inations.
JW1559-001088
2
b. Please explain w hetheror nota totalof52 organizations have now been
deem ed by the IRS as having notm ettheirobligations as a 501 (c)(4) social
w elfare organization, and ifso,please describe the consequences for those
organizations
in term s ofw hether or notthey w ere subjectto tax or penalties
forfailure to m ake properdisclosure, w hether they w ere
under 527(i) and
then required by the IRS to pay othertaxes, including back taxes, and w hether
or notthey did so.
See Q uestion 1bibelow for inform ation regarding the num beroforganizations thathave not
m etthe requirem ents for 501 (c)(4) socialwelfare status.
As discussed in the June 4,2012 and Septem ber 14,2012 responses, failure to qualify under
501 (c)(4) is notdeterm inative ofw hether an organization qualifies as tax-exem pt under
527. Sections 501 (c)(4) and 527 both provide avenues fortax exem ption underthe Code, but
for differenttypes and levels ofactivity. To be tax-exem pt under 527, an organization m ust
be operated prim arily forthe purpose ofaccepting contributions orm aking expenditures for an
exem ptfunction (i.e., influencing orattem pting to influence the selection, nom ination, election,
orappointm entofany federal, state, or localpublic office oroffice in a politicalorganization).
To be tax-exem ptunder 501 (c)(4) an organization m ustbe prim arily engaged in social
w elfare activity, butm ay conductsom e am ountofnon-socialw elfare activity. Ifa 501 (c)(4)
organization is determ ined notto be prim arily engaged in socialw elfare by virtue ofconducting
high levels ofnon-socialwelfare activity, which could include politicalcam paign intervention
activity, thatdoes notautom atically m ean the organization qualifies to be a 527 political
organization. To be tax-exem pt under 527, an organization m ustm eetthe requirem ents for
thatsection, including taking action to be so treated by filing Form 8871, unless itm eets one of
the statutory exceptions. Ifitfails to tim ely file Form 8871, the organization willnotbe treated
as a tax-exem ptpoliticalorganization for any period before the date the Form is filed, and its
incom e willbe subjectto tax.
i. Ifyou have notalready done so, please provide the notices or

letters thatthe IRS sentto the groups w hich the IRS determ ined did
notm eettheirobligations as 501 (c)(4) charitable organizations.
U nderthe disclosure restrictions of 6103 and 6110, we can only provide adverse
determ ination letters and revocation notices in which taxpayer identifying and certain other
inform ation have been redacted.
O nce w e redactidentifying inform ation from an adverse determ ination letteror a revocation
notice, copies ofthe originaland redacted versions are sentto the organization, along with
Notice 437, N otice ofIntention to Disclose. Notice 437 provides the organization with an
opportunity to requestadditionaldeletions ora delay in public disclosure. Ifthe
organization does nottake any further action within a specified period generally 60 days
I
JW1559-001089
--
-------------
3
afterthe m ailing date ofthe notice, the redacted docum ents can then be m ade public. If,
however, the organization disagrees with the redactions or requests a delay in publication,
the process can take longer.
W ith regard to your request, we provided the ten redacted adverse determ ination letters
with the N ovem ber23,2012 response to your O ctober 23,2012 letter. The 42 instances of
revocation notices identified in ourearlier response resulted from queries to our autom ated
system s, which have som e lim itations. In searching forthe revocation notices, w e noted
som e discrepancies between system -generated inform ation and the actualrevocation
notices. To ensure thatwe provide responsive inform ation to your request, w e are
m anually reviewing case files for som e ofthese m atters. W e willprovide an update as we
com plete our review . W e have enclosed nine revocation notices thathave com pleted the
redaction and taxpayer review process. O thers are atvarious stages in thatprocess and
we willprovide them as the process is com pleted.
Q uestion 2. In the IRS response ofN ovem ber23, 2012, you w rite thatfrom
January 1,2007 to Septem ber2012,the IRS has exam ined 643 501 (c)(4)
organizations to determ ine w hetherornotthey w ere prim arily engaged in social
w elfare activities butthatthe IRS "cannotdefinitively conclude w hetherw e
exam ined an organization to determ ine the levelofpoliticalactivity" w ithout
conducting a m anualreview ofthese cases. Please respond to the follow ing:
a. Please conductthis m anualreview and provide the num berofthese 643
exam inations w hich involved politicalactivity;
b. Please provide the num berand nam es ofthe organizations thatw ere
determ ined to notbe valid 501(c)(4) organizations from this review .
As stated in the N ovem ber23, 2012, response, oursystem reflects that22 ofthe 643
exam ined 501 (c)(4) organizations had political cam paign activity as one ofthe issues
explored during exam ination. W e derived this inform ation from the selected PrincipalIssue
C odes (PIC codes), w hich identify issues during an exam ination. Although there are som e
lim itations to PIC codes, we do notbelieve a m anualreview ofthe files would significantly
change the num ber ofexam inations in which politicalcam paign activity was an issue
considered. W e would like to discuss with yourstaffany rem aining concerns with this
m ethodology.
Please note thatthe law would notallow us to provide the nam es ofthe organizations. As
previously noted, 6103 ofthe InternalRevenue Code prohibits the disclosure of
inform ation aboutspecific taxpayers, including w hetherthey are under investigation or
exam ination, unless the disclosure is authorized by som e provision ofthe Internal R evenue
Code.2
2 IR C 61 03(f) ofthe C ode sets forth the m eans by which congressional com m ittees m ay obtain access
to return and return inform ation (that is nototherwise m ade publicly available under
JW1559-001090
c. Please provide an explanation as to how the IRS determ ined w hether or not
the 501 (c)(4) organization w as prim arily engaged in political activity
including any guidance, m em orandum , criteria used by the IRS to determ ine
w hether or nota 501 (c)(4) organization w as prim arily engaged in political
activity during these exam inations.
To m aintain tax exem ption as described in 501 (c)(4), the organization m ustm eetthe
statutory requirem ents in the InternalRevenue Code and accom panying regulations. W hether
an organization m aintains the statutory and regulatory requirem ents of 501 (c)(4) depends
upon allofthe facts and circum stances, and no one factor is determ inative. Thus, in m aking a
determ ination, we m usttake into accountallfacts and circum stances in evaluating w hether
legalrequirem ents are satisfied. A variety oflegaland proceduralguidance is relevant in
m aking such determ ination.
Legalguidance used to determ ine w hether a 501 (c)(4) organization prim arily engages in
exem ptactivities include the following:
IRC 501 (c)(4)
Treas. Reg. 1.501 (a)_1 3
Treas. Reg. 1.501(c)(4)-1; i.e., Treas. Reg. 1.501(c)(4)-1(a)(2)(i)-(ii)4
Rev. Rul. 2007-41,2007-1 C.B. 1421
6104 and 6110). W e are available to discuss these rules in m ore detailw ith your staff.
Treas. Reg. 1.501 (a)-1 (a)(3). In general; proofofexem ption. An organization claim ing exem ption
under 501(a) and described in any paragraph of 501(c) (other than 501(c)(1)) shallfile the form of
application prescribed by the IRS and shall include thereon such inform ation as required by such form
and the instructions issued w ith respect thereto. For rules relating to the obtaining ofa determ ination of
exem ptstatus by an em ployees' trustdescribed in 401 (a), see the regulations under 401. Treas.
Reg. .1.501 (a)-1 (b)(2). In addition to the inform ation specifically called for by this section, the IR S m ay
require any additional inform ation deem ed necessary for a proper determ ination ofw hether a particular
organization is exem pt under 501 (a), and w hen deem ed advisable in the interestofan efficient
adm inistration ofthe internal revenue law s, the IR S m ay in the cases ofparticular types oforganizations
prescribe the form in w hich the proofofexem ption shallbe furnished.
An organization is operated exclusively for the prom otion ofsocialw elfare ifitis prim arily engaged in
prom oting in som e w ay the com m on good and generalw elfare ofthe people ofthe com m unity. An
organization em braced w ithin this section is one w hich is operated prim arily for the purpose ofbringing
aboutcivic betterm ents and socialim provem ents. A socialw elfare organization w illqualify for exem ption
as a charitable organization ifitfalls w ithin the definition ofcharitable setforth in paragraph (d)(2) ofReg.
1.501 (c)(3)-1 and is notan action organization as setforth in paragraph (c)(3) ofReg. 1.501 (c)(3)-1.
The prom otion ofsocialw elfare does notinclude director indirect participation or intervention in political
cam paigns on behalfofor in opposition to any candidate for public office. N or is an organization
operated prim arily for the prom otion ofsocialw elfare ifits prim ary activity is operating a socialclub for the
benefit, pleasure, or recreation ofits m em bers, or is carrying on a business w ith the general pU blic in a
m annersim ilar to organizations w hich are operated for profit.
~
JW1559-001091
5
Rev. Rul. 2004-6, 2004-1 C.B. 328
Rev. Rul. 81-95,1981-1 C.B. 3325
Rev. Rul. 67-368, 1967-2 C.B. 1946
Rev. Rul. 60-193,1960-1 C.B. 1957
A revenue agentworking a case uses sound reasoning based on tax law training and his or
herexperience in exam ining an organization. Because ofthe facts and circum stances nature
and the need forprofessionaljudgm enton the partofthe revenue agentdoing the review,
proceduralguidance is necessary to m inim ize variances in how cases are developed. As
such, the IRS utilizes proceduralguidance to prom ote quality and consistency in sim ilar cases,
such as the following:
Rev. Proc. 2013-98

Form 10249
IRM 4.7510
IRM 4.76.1311
Rev. Rul. 81-95 provides that"an organization m ay carry on lawfulpoliticalactivities and rem ain exem pt
under 501 (c)(4) as long as itis prim arily engaged in activities thatprom ote socialw elfare."
6 In Rev. Rul. 67-368, an organization form ed for the purpose ofprom oting an enlightened electorate,
w hose prim ary activity was rating candidates for public office, w as notexem ptunder
501 (c)(4) because such activity w as not"the prom otion ofsocialw elfare." The ruling stated that
com parative rating ofcandidates, even though on a non-partisan basis, constitutes participation or
intervention in a politicalcam paign on behalfofcandidates favorably rated and in opposition to those less
favorably rated.
7 Rev. Rul. 60-193 concludes thatan organization w hose purpose w as to encourage greater participation
in governm entaland politicalaffairs prom oted socialw elfare and therefore qualified for recognition of
exem ption under 501 (c)(4). Activities ofthe organization included conducting nonpartisan sem inars
and w orkshops relating to the Am erican politicalsystem . Alllecturers w ere required to m aintain certain
technical standards and w ere notallowed to advocate for any particular political group. Sem inars and
w orkshops w ere m o<:ierated by perm anentstaffpersonnelofthe organization in orderto preventthe
program from becom ing partisan in character.
Rev. Proc. 2013-9 sets forth IRS procedures for issuing, as wellas for revoking and m odifying,
determ ination letters and rUlings on the exem ptstatus oforganizations under 501 ofthe Internal
R evenue Code.
9 IRS application form for organizations seeking IRS recognition ofexem ption under 501, including
. ~ 501 (c)(4).
a IR M 4.75 provides generalexam ination procedures.
11 IR M 4.76.13 provides exam ination guidelines on socialw elfare organizations.
5
JW1559-001092
6
Q uestion 3. In the IRS response ofN ovem ber 23,2012,you w rite "Section 6104(a) of
the C ode perm its public disclosure ofan application for recognition oftax exem pt
status and supporting m aterials only afterthe organization has been recognized as
exem pt." O n D ecem ber14,2012,Propublica released the 1024 application for tax
exem ptstatus filed by C rossroads G rassroots Policy Strategies w ith the IRS. Please
respond to the follow ing:
a. D id the IRS release the 1024 application filed by CrossrQ ads G rassroots Policy
Strategies to Propublica orany otherentity?
b. Ifthe IRS released the 1024 application filed by C rossroads G rassroots Policy
Strategies,w hy did itdo so since the IRS has yetto approve C rossroads'
application?
Section 6103 ofthe InternalRevenue Code prohibits the disclosure ofinform ation about
specific taxpayers unless the disclosure is authorized. The protection and confidentiality oftax
inform ation is one ofourtop priorities. W hen questions arise aboutthe release oftax
inform ation, ournorm alprocedure is to referthe m atterto the Treasury Inspector G eneralfor
Tax Adm inistration. W e are unable to com m entfurther.
c. Please also provide an update as to the status ofthe application for tax
exem ptstatus filed by C rossroads G rassroots Policy Strategies.
Section 61 04(a) ofthe Code does perm itpublic disclosure ofan application for recognition of
tax-exem ptstatus and supporting m aterials only afterthe application has been approved for
the organization to be recognized as exem pt. The IRS has no record ofan approved
application for Crossroads G PS.
Q uestion 4. W ith regard to yourJune 4, 2012 response:

a. W hen describing the 501(c)(4) application process, you w rite that"...in
situations w here there are a num berofcases involving sim ilar issues (such
as creditcounseling organizations, dow n paym entassistance
organizations, organizations thatwere autom atically revoked and are
seeking retroactive reinstatem ent, and m ostrecently, advocacy
organizations), the IRS w illassign cases to designated em ployees to
prom ote consistency." Please explain the term "advocacy organization"
and provide any guidelines, m em orandum , orprocedures used by the IRS
to evaluate 501 (c)(4) advocacy organizations including w hether or notthe
IRS considers an "advocacy organization" to be an organization thatis
engaged in politicalactivity.
JW1559-001093
7
As the chartbelow illustrates, the Code distinguishes between advocacy activities that
influence legislation, those thatinfluence candidate elections, and those thatdo neither.
D epending on the subsection underwhich an organization is exem pt,there are differing
rules regarding the nature and am ountofadvocacy an organization can conductand still
retain its exem ption. As used in the prior response, "advocacy organizations" w as a short
hand w ay ofdescribing cases thatraise questions w hetherthe type and am ountof
advocacy an organization undertakes is consistentwith the code section underw hich it
seeks exem ption.
R eceive tax-deductible charitable contributions

R eceive contributions orfees deductible as a business
expense
Substantially related incom e exem ptfrom federal incom e
tax
Investm entincom e exem ptfrom federal incom e tax
Engage in legislative advocacy
Engage in candidate election advocacy
Engage in pUblic advocacy notrelated to legislation or
election ofcandidates
501 (c)(3) 501 (c)(4) 501 (c)(5) 501 (c)(6) 527

YES
NO
NO
NO
NO
YES
YES
YES
YES
NO
YES
YES
YES
YES
YES
LTD "
LTD
YES
YES
YES
YES
YES
YES
LTD
YES
YES
YES
YES
NO
LTD
LTD
LTD
NO
YES
LTD
"Private foundations are subjectto tax on their netinvestm ent incom e.
See also response to question 2(c) above forguidance and procedures used to determ ine
w hether a 501 (c)(4) organization prim arily engages in exem ptactivities.
b. Please provide the "drafteducationalguide sheeton the issue ofpolitical

activity forsection 501(c)(4) applications thatw as shared for com m entw ith
som e em ployees in EO D eterm inations" thatyou reference on page 13 of
the letter.
W e would like to provide som e additionaldetails regarding this docum ent. The guide sheet
draftreferenced in this question was an initialstaffdraft,which w as neverapproved nor
finalized. Itw as distributed for com m entonly. W e are able to discuss with your staffin
m ore detail.
Q uestion 5. Please explain the difference betw een Rev. R uling 2007-41, 2007-1 C.B.
1421,w hich is generally used by the IRS to determ ine w hether issue advocacy crosses
the line into cam paign intervention and Rev. R uling 2004-6, 2004-1 C.B. 328,w hich
generally addresses w hether an expenditure for an issue advocacy expenditure is
subjectto the 527(f) tax. Please also explain w hich ofthese is used by the IRS to
determ ine w hether a 501 (c)(4) organization is prim arily engaged in politicalactivity.
JW1559-001094
8
As you note in yourquestion, Rev. Rul. 2004-6 and Rev. Rul. 2007-41 provide guidance
undertw o differentstatutory provisions. Rev. Rul. 2004-6 provides guidance on the
circum stances in which a public policy advocacy com m unication m ay constitute an e x e m ~ t
function w ithin the m eaning of 527(e)(2), w hich w ould be subjectto tax under 527(f).1
The ruling describes six factual situations involving organizations thatare exem ptfrom
federal incom e tax under 501 (a) as organizations described in 501 (c)(4), 501 (c)(5) or
501 (c)(6). Each ofthe situations assum es thatthe organization w ould continue to be
exem ptunder 501(a), even ifthe described activity is nota 501(c) exem ptactivity. The
ruling provides nonexclusive lists offactors thattend to show thatan advocacy
com m unication on a public policy issue is (or is not) for an exem ptfunction under
527(e)(2), butalso states thatallfacts and circum stances m ustbe considered.
Rev. Rul. 2007-41 provides guidance on w hen an organization exem ptfrom federal incom e
tax under 501 (a) as an organization described in 501 (c)(3) has participated or
intervened in a politicalcam paign on behalfof(or in opposition to) any candidate for public
office in violation of 501 (C)(3).13 The ruling describes 21 factual situations. In each
factualsituation, allthe facts and circum stances are considered in determ ining w hether the
organization's activities result in political cam paign intervention for purposes of 501 (c)(3).
N either R ev. Rul. 2004-6 nor Rev. Rul. 2007-41 specifically addresses w hether a
501 (c)(4) organization is engaged in politicalcam paign activity w ithin the m eaning of
Treas. R eg. 1.501(c)(4)-1(a)(2)(ii).14 N evertheless, consistent w ith both ofthese revenue
rulings, the Service analyzes allthe facts and circum stances to determ ine w hether a
501 (c)(4) organization participated or intervened in a political cam paign.
Q uestion 6. Ithas been reported in the press thatsom e 501 (c)(4) organizations report
to the IR S thatthey do notengage in politicalactivity butthen reporteither they do
engage in political activity to the Federal Election C om m ission (FEC ) or reportw idely
varying am ounts ofpoliticalactiVity to the FEC and the IR S. Please respond to the
follO W ing:
Section 527(e)(2) provides: "The term "exem ptfunction" m eans the function ofinfluencing or
attem pting to influence the selection, nom ination, election, or appointm ent ofany individual to any
Federal, State, or local public office or office in a politicalorganization, orthe election ofPresidential or
Vice-Presidential electors, w hether or notsuch individual or electors are selected, nom inated, elected, or
appointed. Such term includes the m aking ofexpenditures relating to an office described in the preceding
sentence w hich, ifincurred by the individual, w ould be allow able as a deduction under section 162(a)."
13 To qualify under 501 (c)(3) an organization m ust"notparticipate in, or intervene in (including the
pU blishing or distributing ofstatem ents), any politicalcam paign on behalfof(or in opposition to) any
candidate for public office."
14 Treas. R eg. 1.501 (c)(4)-1 (a)(2)(ii) provides: "The prom otion ofsocialw elfare does not include direct
orindirect participation or intervention in political cam paigns on behalfofor in opposition to any candidate
for pU blic office."
12
JW1559-001095
a. Does the IRS track a 501 (c)(4) organization's filings w ith the FEe?
b. W hatactions does the IRS take w hen there are differences in w hata
501 (c)(4) organization reports to the IRS versus w hatitreports to the FEC?
c. H ow does the IRS coordinate w ith the FEC w ith regard to 501 (c)(4)
organizations?
W e use allpublicly-available inform ation, including FEC filings, w hen considering an
application or conducting an exam ination. However, we do nothave a system thatform ally
tracks FE e filings of 501 (c)(4) organizations. W e also do notform ally coordinate w ith the
FEC on m atters related to 501 (c)(4) organizations as 6103 ofthe Internal R evenue C ode
prohibits the disclosure ofinform ation aboutspecific taxpayers unless the disclosure is
authorized by som e provision ofthe InternalR evenue Code. Therefore, exchange of
confidentialtaxpayer inform ation with the FEC generally is barred.
Further, differences in reporting requirem ents such as the following m ake coordination
betw een the agencies difficult. These include,forexam ple, differences in w ho is responsible
forfiling the reports, w hatconstitutes reportable political cam paign activity, and the tim ing of
reports.
The party responsible forfiling w ith the FEC depends upon the nature ofthe politicalcam paign
expenditure. So, for exam ple, ifa 501 (c)(4) organization m akes any contributions, including
in-kind contributions and coordinated expenditures, to an FEC politicalorganization (cam paign
com m ittee, party com m ittee or PAC), itis our understanding thatthe 501 (c)(4) organization
is notrequired to file anything with the FEC . Instead, itis our understanding thatthe recipient
politicalorganization is required to include the contribution on its reportto the FEC . O n the
otherhand, ifa 501 (c)(4) organization m akes independent expenditures orelectioneering
com m unications, itis required to file a reportwith the FEC.
The definition ofw hatconstitutes reportable politicalcam paign expenditures underthe tw o
filing regim es also differs. Although m ostpoliticalcam paign expenditures required to be
reported to the FEC m ay constitute politicalcam paign intervention underthe InternalR evenue
Code, som e m ight not.
In addition, w e are notlim ited by the express advocacy standard or FEC case law in
determ ining w hether an activity is politicalcam paign intervention for 501 (c)(4) purposes.
The regulations under 501 (c)(4) provide thatdirectly or indirectly participating or intervening
in a politicalcam paign on behalfofor in opposition to a candidate for public office is notin
furtherance of 501 (c)(4) exem ptpurposes. This determ ination is based upon allofthe facts
and circum stances.
Anotherfactorthat can lead to differences in reporting is tim ing ofthe reports.
O rganizations reportto the FEC based upon the election cycle; w hile organizations report
to the IR S based upon theirfiscaltax year, which differs am ong organizations. Form s 990
JW1559-001096
10
filed with the IR S are due 5 m onths and 15 days afterthe end ofthe organization's fiscal
tax year. So, for exam ple, an organization with a June fiscaltax year m ightm ake
independentexpenditures in O ctoberthatare reported to the FE e priorto the N ovem ber
election. H ow ever, because the Form 990 is notdue untilthe 15th day ofthe fifth m onth
afterthe end ofthe fiscaltax year, those sam e expenses would be reported on the Form
990 thatis due on N ovem ber 15th ofthe following year (and, because ofextensions, m ay
notactually be filed for another six m onths afterthat).
Allofthese factors can contribute to perceived inconsistencies betw een FEC and IR S
records ofpoliticalcam paign activity by 501 (c)(4) organizations.
Ihope this inform ation is helpful. Ifyou have questions, please contact m e orhave yourstaff
contactC atherine Barre, Director, Legislative Affairs, at(202) 622-3720.
Sincerely,
~ n ~ ~
D eputy C om m issioner for

Services and Enforcem ent
Enclosures (9)
JW1559-001097
By Executive Secretariat at 11:24 am, Jan 07, 2013
January 4,2013
Y lt\JJ.S.M A IL & E M A lld.~.a t h e r i n c " M . B a r r e @ i r s . g o v )
The H onorable Steven T.M iller

A cting Com m issioner and D eputy Com m issioner for Services and Enforcem ent
lntem alRevenue Service
1111 Constitution A venue,NoW .
W ashington, D .C.20224
D ear A cting Com m issioner M iller:

Iappreciate your N ovem ber 23,2012 response to m y letter ofO ctober 23.2012.Please
provide the foJlow ing inform ation by January 25,2012.
1) fn the IRS response ofSeptem ber 14,2012,you w rite that"during the pastsix m onths,
no notices ofproposed orfinal revocation w ere issued to section 501 (c)(4)
organizations." In the N ovem ber 23,2012 IRS response, you w rite that"w e have issued
42 revocation notices to section 501 (c)(4) organizations since January of2007." A lso in
the N ovem ber 23,2012 response you w rite "Since January 1,2007, we have issued ten
adverse determ inations to section 501(c)(4)applicants." Please respond to the
follow ing:
a. Please explain the difference betw een a "revocation notice" and an "adverse
determ ination."
b. Please explain w hether ornota total of52 organizations have now been deem ed
by the IRS as having notm ettheir obligations as a 501 (c)(4) social w elfare
organization,and ifso,please describe the consequences for those organi71ltiolls
in term s ofw hether or notthey w ere subjectto tax orpenalties under 527(i) and
(j)for failure to m ake proper disclosure,w hetherthey w ere then required by the
IRS to pay other taxes, including back ta.xes.and w hether or notthey did so.
i. Ifyou have notalready done so,please provide the notices or letters that
the IRS sentto the groups w hich the IRS determ ined did notm eettheir
obligations as 501(c)(4)charitable organiz;itions.
2) In the IRS response ofN ovem ber 23,2012, you w rite thatfrom January 1,2007 to
Septem ber2012,the IRS has exam ined 643 501 (c)(4) organizations to determ ine
w hetherornotthey w ere prim arily engaged in social w elffue activities butthatthe IRS
"cannotdefinitively conclude w hether we exam ined an organi7..ation to dctem line the
JW1559-001098
2
levelofpoliticalactivity" w ithoutconducting a m anualreview ofthese cases. Please
respond to the follo'\ving:
a. Please conductthis m anualreview and provide the num berofthese 643

exam inations w hich involved politicalactivity;
b. Please provide the num berand nam es ofthe organizations thatwere determ ined
to notbe valid 501 (c)(4) organizations from this review .
c. Please provide allexplanation as to how the IRS determ ined w hetherornotthe
50l(c)(4)organization wa'> prim arily engaged in politicalactivity including any
guidance,m em orandum ,orcriteria used by the IRS to determ ine whetherornota
501(c)(4) organization was prim arily engaged in political activity during these
exam inations.
3) In the IRS response ofN ovem ber23,2012,you write "Section 6104(a)ofthe Code
pennits public disclosure ofan application forrecognition oftax exem ptstatus and
supporting m aterials only afterthe organization has been recognized as exem pt." O n
D ecem ber 14,2012,Propublica released the 1024 application for tax exem ptstatus tiled
by Crossroads G rassroots Policy Strategies with the IRS.! Please respond to the
follow ing:
a. D id the IRS release the 1024 application filed by Crossroads G rassroots Policy
Strategies to Propublica orany otherentity?
b. Ifthe IRS released the 1024 application filed by Crossroads G rassroots Policy
Strategies,w hy did itdo so since the IRS has yetto approve Crossroads'
application?
c. Please also provide an update as to the status ofthe application for tax exem pt
status filed by Crossroads Grassroots Policy Strategies.
4) W ith regard to your June 4,2012 response:
a. W hen describing the 501(c)(4)application process,you w rite that"...in
situations w here there are a num berofcases involving sim ilarissues (such as
creditcounseling organizations,dow n paym entassistance organizations,
organizations thatw ere autom atically revoked and arc seeking retroactive
reinstatem ent,and m ostrecently,advocacy organizations),the IRS wi!! assign
cases to designated em ployees to prom ote consistency." Please explain the term
"advocacy organization" and provide any guidelines,m em orandum ,or procedures
used by the IRS to evaluate 501 (c)(4) advocacy organi7.ations including whether
ornotthe IRS considers an "advocacy organization" to be an organization thatis
engaged in politicalactivity.
b. Please provide the "drafteducationalguide sheeton the issue ofpoliticalactivity
for section 501(c)(4)applications thatwas shared forcom m entw ith som e
em ployees in EO D etenninations" thatyou reference on page 13 ofthe letter.
I See KarlRove's D ark M oney G roup Prom ised IRS It W ould Spend Lim ited M on!?),on ElectIOns, Propublica,
(12114/20 12),h t t l ' E ! ( ~ w w . p r o p u b l j c a . o r o / a r t i c i e / w h a t - k a r l - r o v e s - d a r k - m o n e y - n o n . rofiH old-the-irs.
JW1559-001099
3
5) Please explain the difference betw een Rev.Ruling 2007.41,2007-1 C.B. 1421.which is
generally used by the IRS to determ ine w hetherissue advocacy crosses the line into
cam paign intervention2 and Rev.Ruling 2004-6,2004-1 c.B.328,w hich generally
addresses w hether an expenditure foran issue advocacy expenditure is subjectto the
527(0 tax.3 Please also explain which ofthese is used by the IRS to determ ine whethera
501(c)(4)organization is prim arily engaged in politicalactivity.
6) Ithas been reported in the press thatsom e 501(c)(4)organizations reportto the IRS that
they do notengage in politicalactivity butthen reporteitherthey do engage in political
activity to the FederalElection Com m ission (FEC) orreportw idely varying am ounts of
political activity to the FEC and the IRS.4 Please respond to the follow ing:
a. D oes the IRS track a 501(c)(4)organization's filings w ith the FEe?
b. W hatactions does the IRS take w hen there are differences in w hata 50 I(c)(4)
organization reports to the IRS versus w hatitreports to the FEC?
c. H ow does the IRS coordinate with the FEC w ith regard to 50J(c)(4)
organizations?
Thank you l{)fyourassistance. Ifyou have any questions, please contactme,orhave yourstaff
contactLaura Stuberofm y stafrat202/224-9579 orLaura_Stuber(q)hsgac.senate.gov.
Sincerely,
CarlLevin
Chairm an
PoliricalAds: Issue Advocacy or Campaign Activiry Under the Tax Code, CongressionalResearch Service.August
29,2012.
;ld.
4 See How Non Prof
its Spend M illions on Elections and CallitPublic W elfare, Propublica,August 18.2012.
http://www .propublica.orglarticle:how-nonprofits-spend-m illions-on-elections-and-call-it-public-welfare .
2
JW1559-001100
JW1559-001101
JW1559-001102
JW1559-001103
JW1559-001104
,
,
,
,
JW1559-001105
JW1559-001106
JW1559-001107
JW1559-001108
JW1559-001109
JW1559-001110
JW1559-001111
JW1559-001112
JW1559-001113
JW1559-001114
JW1559-001115
JW1559-001116
JW1559-001117
JW1559-001118
JW1559-001119
JW1559-001120
JW1559-001121
JW1559-001122
JW1559-001123
JW1559-001124
JW1559-001125
JW1559-001126
JW1559-001127
JW1559-001128
JW1559-001129
JW1559-001130
JW1559-001131
JW1559-001132
JW1559-001133
JW1559-001134
JW1559-001135
JW1559-001136
JW1559-001137
JW1559-001138
JW1559-001139
JW1559-001140
JW1559-001141
JW1559-001142
JW1559-001143
JW1559-001144
JW1559-001145
JW1559-001146
JW1559-001147
JW1559-001148
JW1559-001149
JW1559-001150
JW1559-001151
JW1559-001152
JW1559-001153
JW1559-001154
JW1559-001155
JW1559-001156
JW1559-001157
JW1559-001158
JW1559-001159
JW1559-001160
JW1559-001161
JW1559-001162
JW1559-001163
JW1559-001164
JW1559-001165
JW1559-001166
JW1559-001167
JW1559-001168
JW1559-001169
JW1559-001170
JW1559-001171
JW1559-001172
JW1559-001173
JW1559-001174
JW1559-001175
JW1559-001176
JW1559-001177
JW1559-001178
JW1559-001179
JW1559-001180
JW1559-001181
JW1559-001182
JW1559-001183
JW1559-001184
JW1559-001185
JW1559-001186
JW1559-001187
JW1559-001188
JW1559-001189
JW1559-001190
JW1559-001191
JW1559-001192
JW1559-001193
JW1559-001194
JW1559-001195
JW1559-001196
JW1559-001197
JW1559-001198
From:
Lerner Lois G
Sent:
To:
Subject:
Attachments:
30794_Enclosure_1.pdf; 30794_Enclosure_2.pdf; 30794_Enclosure_3.pdf; 30794
_Levin_Attachment.pdf
More Levin stuff--need printed and put into notebook please
Lois G. Lerner
From: Sinno Suzanne
JW1559-001199
EXEM PT O R G A N IZA TIO N D ETER M IN A TIO N S C A SE A SSIG N M EN T G U ID E

C A SE G R A D IN G C R ITER IA
C A SE C O M PLEXITY
FA C TO R S
A nalysis of
A pplication
FactualC om plexity
ofIssues
A pplication of Tax
Law
Interpersonal Skills
Im pactofW ork
G S-11
G R A D E LEVEL D ISTIN C TIO N S

G S-12
Application is com plex and facts

Application is basic; facts
m ust be determ ined through
regarding nature and purpose
analysis and questioning of
are easily discernible. Private
benefit/inurem ent issues unlikely applicant
. Private benefit/inurem ent
issues possible.
butpossible.
Issues are ofaverage com plexity Issues m ay be sensitive or involve
and sensitivity. Established
controversy. C ase developm ent
case developm ent m ethods and m ethods and procedures m ustbe
adapted to case.
procedures are usually
adequate.
Tax
laws are in m ostcases
Tax law s are notalw ays directly
applicable butoccasionally
applicable. R esearch and analysis
involve unusual interpretation
are required to establish proper
and application.
interpretation and use of
precedents.
C ontacts are w ith
C ontacts are with a variety ofEO
representatives ofapplicants,
representatives and officers of
considerable prom inence in the
organization m em bers and
com m unity including accountants
contributors. Tactand
and legalrepresentatives.
diplom acy are required to
resolve and elicitinform ation and C onsiderable tact and skillful
resolve questions and problem s. negotiations are necessary since
issues discussed are som etim es
controversial and sensitive.
D eterm ination decision m ay
D eterm ination decision m ay affect
im pactother organizations;
larger organizations ofregionalor
applicant's sole source of
nationalstature; applicant's incom e
incom e m ay be from donations; is from a variety ofsources; and
and, the likelihood ofm edia
m edia attention is likely.
attention is lim ited.
G S-13
Application is extrem ely com plex (e.g.,

involves inurem ent, private benefit, related
entities) and significant additional
docum entation is required ofapplicant.
C ase developm ent m ethods and procedures
m ust be adapted to unique situations. Issues
are noveland unusualand involve the largest
and m ostcom plex EO 's.
Tax law s orother legal issues involve points
oflaw w ithout precedent orw ith conflicting
precedents. R esearch and analysis are
necessary to establish significant sim ilarities
w ith related issues.
C ontacts are w ith officials ofvery large or
prom inent organizations and persons w ith
nationalreputations in business, legaland
accounting circles and others ofoutstanding
political, social or econom ic influence.
C onsiderable tactand discretion are required
for resolution ofissues.
D eterm ination decision m ay im pactother
organizations nationw ide; applicant has
significant resources and determ ination
decision m ay have significant social and
econom ic im plications w ith recurring effects in
prior or subsequent tax years; and,
w idespread m edia attention is probable.
R evised N ovem ber 25, 2002
JW1559-001200

P.O. Box 2508
C incinnati, OH 45201
Date:
*
*
*
*
D epartm ent ofthe Treasury

XX-XXXXXXX
Person to C ontact- G roup #:
Specialist N am e -XXXX
ID #X X X X X X X
C ontactTelephone N um bers:
C ases)
D ear Sir or M adam :
XXX-XXX-XXXX P hone
XXX-XXX-XXXX Fax (859-669-3783 for TE D S )
R esponse Due Date:

*
W e need m ore inform ation before w e can com plete our consideration ofyour application for
exem ption. Please provide the inform ation requested on the enclosed Inform ation R equest by
the response due date show n above. Your response m ust be signed by an authorized person or
an officer w hose nam e is listed on your application. Also, the inform ation you subm it should be
accom panied by the follow ing declaration:
U nder penalties ofperjury, Ideclare thatIhave exam ined this inform ation, including
accom panying docum ents, and, to the besto fm y know/edge and belief,the
inform ation containsallthe relevantfacts relating to the requestfor the inform ation,
and suchfacts are true, correct, and com plete.
Ifw e approve your application for exem ption, w e w illbe required by law to m ake the application
and the inform ation thatyou subm itin response to this letter available for public inspection.
Please ensure that your response doesn't include unnecessary personalidentifying inform ation,
such as bank account num bers or SocialSecurity num bers, that could result in identity theft or
other adverse consequences ifpublicly disclosed. Ifyou have any questions about the public
inspection ofyour application or other docum ents, please callthe person w hose nam e and
telephone num ber are show n above.
To facilitate processing ofyour application, please attach a copy ofthis letter and the enclosed
Application Identification Sheet to your response and allcorrespondence related to your
application. This w illenable us to quickly and accurately associate the additionaldocum ents
w ith your case file. Also, please note the follow ing im portant response subm ission inform ation:
Please don't fax and m ail your response. Faxing and m ailing your response w ill result in
unnecessary delays in processing your application. Each piece of correspondence
subm itted (w hether fax or m ail) m ust be processed, assigned, and review ed by an E O
D eterm inations specialist.
Please don't fax your response m ultiple tim es. Faxing your response m ultiple tim es w ill
delay the processing ofyour application for the reasons noted above.
JW1559-001201
N am e
EIN
Please don't call to verify receipt of your response without allowing for adequate
processing tim e. It takes a m inim um ofthree workdays to process your faxed or m ailed
response from the day itis received.
Ifwe don'thearfrom you by the response due date shown above, we willassum e you no longer
w antus to consider your application forexem ption and willclose your case. As a result, the
InternalR evenue Service willtreatyou as a taxable entity. Ifwe receive the inform ation after
the response due date, we m ay ask you to send us a new application.
..**..**..
D ELETE IF NO T A 501 (c)(3)APPLIC ATIO N .....
In addition, ifyou don'trespond to the inform ation requestby the due date, we willconclude that
you have nottaken allreasonable steps to com plete your application forexem ption. Under
InternalRevenue C ode section 7428(b)(2), you m ustshow thatyou have taken allthe
reasonable steps to obtain yourexem ption letterunderIRS procedures in a tim ely m anner and
exhausted your adm inistrative rem edies before you can pursue a declaratory judgm ent.
Accordingly, ifyou failto tim ely prOVide the inform ation we need to enable us to acton your
application, you m ay lose your rights to a declaratory judgm ent under Code section 7428.
**O E LE T E IF NO PO W ER O F AT IO R N E Y *
W e have senta copy ofthis letterto yourrepresentative as indicated in Form 2848, Pow erof
Attorney and Declaration ofRepresentative.
.........*
****** ******
Ifyou have any questions, please contactthe person whose nam e and telephone num ber are
show n in the heading ofthis letter.
Sincerely yours,
Specialist Nam e
Exem pt O rganizations Specialist
Enclosure: Infonnation Request
Application Identification Sheet
Letter 1312 (Rev.05-2011)
AdditionalInform ation Requested:
JW1559-001202
N am e
EIN
PLEASE D IR EC T ALL C O R R ESPO N D EN C E R EG AR D IN G YO U R C ASE TO :

Selective:
(EDS C ases)
U S M ail:
Intem alR evenue Service

P. O . Box 2508
C incinnati. O H 45201
A IT: SpecialistN am e
Room XXXX
G roupXXXX

550 M ain St, FederalBldg.
Cincinnati, O H 45202
A IT:Specialist N am e
R oom XXXX
G roupX X X X
(TEDS C ases)
U S M ail:
P. O . Box 12192
C ovington, KY 41012-0192

201 R ivercenter Blvd
ATTN : Extracting Stop 312
CO Vington, KY 41011
JW1559-001203
D EPAR TM EN T O F THE TR EASU R Y

IN TE R N A L R EVEN U E S E R V IC E
W A S H IN G TO N , D .C . 20224
D IV IS iO N
C ontact Person: (Specialist N am e)
D ate:
Identification N um ber: (Specialist 10 #)

C ontact N um ber: (Specialist Phone #)
Form R equired To Be Filed:
Tax Years:
, Party C om m unication
D ate:
C ategory:
e:e.-w t(1111 061ate
eecU .on if you do
th is
Den;
have a
1:b:ird P arty C01IIID 1Il.1cation.
D ear Applicant:
This is ourfinal determ ination that you do notqualify for exem ption from Federal incom e tax as
an organization described in Internal R evenue C ode section 501 (c)(). R ecently, w e sentyou a
letter in response to your application that proposed an adverse determ ination. The letter
explained the facts, law and rationale, and gave you 30 days to file a protest. Since w e did not
receive a protest w ithin the requisite 30 days, the proposed adverse determ ination is now final.
You m ustfile Federal incom e tax returns on the form and forthe years listed above w ithin 30
days ofthis letter, unless you request an extension oftim e to file.
W e w ill m ake this letter and ourproposed adverse determ ination letter available for public
inspection under C ode section 6110, after deleting certain identifying inform ation. Please read
the enclosed N otice 437, N otice ofIntention to D isclose, and review the tw o attached letters that
show our proposed deletions. Ifyou disagree w ith our proposed deletions, you should follow
the instructions in N otice 437. Ifyou agree w ith ourdeletions, you do notneed to take any
further action.
Ifyou have any questions aboutthis letter, please contactthe person w hose nam e and
telephone num ber are show n in the heading ofthis letter. Ifyou have any questions about your
Federalincom e tax status and responsibilities, please contact IR S C ustom er Service at
L etter 4040 (CG) (11-2005)
C atalog N um ber 47635Z
JW1559-001204
2
1-800-829-1040 orthe IRS C ustom er Service num ber for businesses, 1-800-829-4933. The
IRS C ustom er Service num berfor people with hearing im pairm ents is 1-800-829-4059.
Sincerely,
Lois G. Lerner
Director, Exem ptO rganizations
Rulings & Agreem ents
Enclosure
N otice 437
Redacted Proposed Adverse Determ ination Letter
Redacted FinalAdverse Determ ination Letter
L e tte r 4040 (CG ) (1 1 -2 0 0 5 )
C atalog N um ber 476352
JW1559-001205
Table 24. Tax-Exem pt O rganization and O ther Entity A pplications or D isposals, by Type ofO rganization
and Internal Revenue Code Section, Fiscal Year 2007
Type 01 organization,
Intem al R evenue C ode section
Tolal
applications
or disposals
Approved
D isapproved
(1)
(2)
(3)
91,742
72,869
1,628
17,245
91,689
d
158
85,771
1,867
233
1,615
1,036
25
356
44
116"--
174
10
d
72,856
0
111
68,278
1.394
188
1,370
711
16
286
21
94
156
7
21
3
99
101
5
1,628
d
d
1.607
8
0
6
d
0
3
0
0
0
0
d
0
0
17,205
d
d
15,886
465
131
106
5
28
20
-=
O ther [1)
(4)
0
0
0
45
239
d
9
67
23
22
18
3
d
3
32
5
0
20
20
d -N o lshow n 10 avoid disclosure aboutspecific taxpayers, However, dala are included in the appropriate totals.
[1] Includes applications w ithdraw n by the organization; applications which failed to provide the required inform ation; incom plete applications; IRS refusals to rule
on applications; applications forw arded to other than the IRS NationalO ffice; IRS correction disposals; and others.
[2) N o applications w ere filed for teachers' retirem ent funds [section 501(c)(11)); corporations to finance crop operations [section 501 (c)(16)); em ployee-funded
pension trusts [section 501 (c)(18)]; black lung trusts [section 501 (c)(21)]; m ultiem ployer pension plans [section 501(c)(22)]; veterans'associations founded prior to
1880 [section 501 (c)(23)]; trusts described in section 4049 ofthe Em ployee Security Act of1974 (ER ISA) [section 501(c)(24)); State-sponsored high-risk health
insurance organizations [section 501 (c)(26)]; and Slate-sponsored w orkers'com pensation reinsurance organizations [section 501(c)(27)].
[3] Includes private foundations. N otall InternalR evenue C ode section 501 (c)(3) organizations are required to apply for recognition oftax exem ption, including
SO U R C E: Tax Exem pt and G ovem m ent Entities, Exem pt O rganizations, RUlings and Agreem ents, D eterm inations SE:T:EO :R A:D
JW1559-001206
Table 24. C losures of A pplications for Tax-Exem ptStatus, by O rganization Type and Internal R evenue
C ode Section, FiscalYear 2008 (R eVised M ClrcI!101j)
Applications for tax-exem pt status (1J
Type oforganizalion,
"f,!,,-...xem pt organizations and other entities, total13
Total
Approved
D isapproved
(1)
(2)
(3)
84,220
84,180
114
79,107
1,492
269
1,477
894
20
249
40
91
155
69,957
69,943
93
65,761
1,202
235
1,296
691
11
197
18
66
148
5
15
4
101
100
d
d
1,242
1,240
0
1,221
d
0
6
d
d
4
d
0
d
0
d
0

(2) Tille-holding corporalions
(3) R eligious, charitable, and sim ilar organizations [4J
(4) Social w elfare organizalions
(7) Social and recreation dubs
(10) D om eslic fratem al benefic;ary societies
(12) Benevolent life insurance associalions
8
(15) M uluat insurance com panies
26
(17) SUpplem ental unem ploym ent benefitin.Jsts
4
(19) W ar velerans'organizalions
128
106
Section 521 fanners' cooD eratives
26
N onexem ptcharitable trusta
14
d--N ot shoW T'lto a\iO id disclosure ofspecific taxpayer data. H ow ever, data are included in the appropriate totals,
O ther [2J
(4)
0
d
0
13,021
12,997
21
12,125
d
34
175
d
d
48
d
25
d
3
d
0
27
6
'!
d
[1 JReftecls allcase closures for the Exem ptO rganizations D eterm inations function. These include notonly initialapplications for tax-exem pt slatus, butalso other
determ inations, such as public charity and private foundation status determ inations, advance approval of scholarship grantprocedures, and group determ inalions of
lax-exem pt stetus.
[2J Indudes applications w ithdraw n by the organization; applications thatdid notprovide the required inform ation; incom plete applications; IR S refusals 10 rule on
applications; applications forw arded to other than the W ashington, DC office; IRS correction disposals; and others.
[3J No applications w ere filed for corporations organized under an actofCongress (section 501 (c)(1)); teachers' retirem ent funds (section 501 (c)(11)); corporations
10 finance crop operations (section 501(c)(16)); em ployee-funded pension trusts (section 501(C)(18)); black lung trusts (section 501 (c)(21)); m ultiem ployer pension
plans (section 501 (c)(22)); veterans'associalions founded priorto 1880 (section 501 (c)(23)); trusts described in section 4049 ofthe Em ployee Security Act of1974
(ER ISA) (section 501(c)(24)); Stat....sponsored high-risk health insurance organizations (section 501(c)(26)); Stale-sponsored wor1<ers'com pensation reinsurance
or9anizations (seclion 501 (c)(27)); and religious and apostolic associations (section 501 (d.Tax-exem pt status for legalservices organizations (section 501 (c)(20
w as revot<ed effective June 20, 1992,
(4] Indudes private foundations. N otallInternalR evenue Code section 501(c)(3) organizations are required 10 apply for recognition oftax exem ption, includin9
churches, integrated auxiliaries. subordinate units, and conventions or associations ofchurches.
NO TE: R evised M arch 2011 to correcterrors allribuled to a transition in reporting system s.
SO U R C E: Tax Exem pt and G overnm ent Entities, Exem ptO rganizations.
JW1559-001207
Table 24. Closures of Applications for Tax-Exem pt Status, by O rganization Type and Internal
Revenue Code Section, Fiscal Year 2009 (Revised M a r c h ~ 0 1 j )
Tax-<lxem pt organizations and other entities, total [3)
S ection 501 (c) by SU bsection, total
(1) C orporations organized under an actofC ongress
(2) TiU e-hoiding corporations
(3) R eligious, charitable, and sim ilar organizations (4)
(4) Social w elfare organizations
(7) Sooal and recreation clubs
(10) D om estic fraternal beneficiary societies
(12) Benevolent tife insurance associations
(14) State1:hartered credit unions
(17) Supplem entalunem ploym ent benefit tnusts
(19) W ar veterans' organizations
(27) State-sponsored w orkers' com pensation reinsurance organizations
501 (d) R eligious and apostolic associations
SeC1ion 521 Farm ers' cooperatives
d -N o tshow n to avoid disclosure ofspecific taxpayer data. H ow ever, data are included
Total
Approved
D isapproved
(1)
(2)
(3)
480
62,459
77,305
77,221
62,392
480
0
0
6
112
137
0
472
70,624
56,943
3
1,507
1,922
543
0
601
1,742
d
1,960
848
d
1,115
16
5
0
210
257
d
45
0
25
76
56
0
209
194
0
d
d
0
6
3
d
d
0
6
142
175
0
62
57
0
0
0
d
59
55
0
13
0
7
12
5
0
in the appropriate totals when possible.
O ther [2]
(4)
14,366
14,349
6
25
13,209
412
58
d
d
11
d
20
20
15
0
d
d
33
5
d
4
6
7
[1) R eflects all case closures for the Exem pt O rganizations D eterm inations function. These include not only initial applications for tax-exem pt status,
butalso other determ inations, such as public charity and private foundation status determ inations, advance approval ofscholarship grantprocedures,
and group determ inations oftax-exem pt status.
(2) Includes applications w ithdraw n by the organization; applications that did notprovide the required inform ation; incom plete applications; IRS refusals
to nule on applications; applications forw arded to other than the W ashington, DC office; IRS oorrection disposals; and others.
[3J N o applications w ere filed for teachers'retirem ent funds (section 501 (c)(11 i); corporations to finance crop operations (section 501 (c)(16);
em ployee-funded pension trusts (section 501 (c)(18)); black lung tnusts (section 501(c)(21; m ultiem ployer pension plans (section 501 (c)(22; veterans'
associations founded prier to 1880 (section 501(c)(23)); trusts described in section 4049 ofthe Em ployee Security Actof 1974 (ER ISA) (section
501 (c)(24; and State-sponsored high-risk health insurance organizations (section 501 (C)(26)). Tax-exem pt status for legal service organizations
(section501(c)(20)) w as revoked effective June 20, 1992.
[4] Includes private foundations. N otall Intem al R evenue Code section 501 (c)(3) organizations are required to apply for recognition oftax exem ption,
inclU ding churches, integrated auxiliaries, subordinate units, and conventions or associations ofchurches.
N O TE' R evised M arch 2011 to correct errors attributed to a transition in reporting system s.
SO U R C E: Tax Exem ptand G overnm ent Entities, Exem pt O rganizations.
JW1559-001208
Table 24. Closures ofApplications for Tax-Exem pt Status, by O rganization Type and Internal R evenue
Code Section, FiscalYear 2010
Internal R evenue Code section

Total
Approved
D isapproved
(1)
(2)
(3)
65.590
53.693
Tax-exem pt organizations and other entities, total[3)
Section 501 (clby subsection, total
65,548
53.668
6
d
155
117
(3) Religious, charitable, and sim ilarorganizations [4J
59,945
48,934
1,741
1,447
310
273
1,695
1,509
884
710
(8) Fraternalbeneficiary societies
16
11
162
133
37
18
66
77
155
148
d
d
16
8
5
d
(17) Supplem ental unem ploym ent benefi1tnusts
164
135
177
151
(25) Holding com panies for pensions and otherentities
d
0
(26) State-sponsored high risk health insurance organizatione
14
d
Section 521 Fanners' cooperatives
23
d
5
0
d-N ot shown to avoid disclosure ofspecific taxpayer data.However,data are included in the appropriate totals, when possible.
O ther [2]
(4)
517
11,380
511
11,363
d
38
10,511
291
37
180
d
500
6
d
d
d
o
o
o
4
o
o
o
o
o
o
o
d
d
11
7
4
d
29
26
d
d
d
[1] Reflects allcase closures for the Exem ptO rganizations Determ inations function. These include notonly initialapplications for tax-exem pt status,butalso
other determ inations, such as public charity and private foundation status determ inations, advance approvalofSCholarship grant procedures, and group
determ inations oftax-exem ptslatus.
[2] Includes applications withdrawn by the organization; applications thatdid notprovide the reqUired inform ation; incom plete applications; IRS refusats to rule
on applications; applications forwarded to other than the W ashington, DC office; IRS correction disposals; and others.
[3J No applications were filed for teachers'retirem ent funds (section 501 (c)(11 ;corporations to finance crop operations (section 501(c)(16; em ployee-funded
pension trusts (section 501(c)(18)); black lung trusts (section 501(c)(21; m ulliem ployer pension plans (section 501 (c)(22)); veterans' associations founded prior
to 1880 (section 501(c)(23; trusts described in section 4049 ofthe Em ployee Retirem ent Incom e Security Actof1974 (ERISA) (section 501 (c)(24; State
sponsored workers'com pensation reinsurance organizations (section 501(cj(27; and the NationalRailroad Retirem ent Investm ent Tnust (section 501 (c)(28)).
Tax-exem pt status for legalservices organizations (section 501 (c)(20)) was revoked effective June 20,1992.
[4J Includes private foundations. Notalliniernal Revenue Code section 501 (c)(3) organizations are required to apply for recognition oftax exem ption, including
SO URCE: Tax Exem pt and G overnm ent Entities, Exem ptO rganizations.
JW1559-001209
Table 24. C losures ofA pplications for Tax-Exem pt Status, by O rganization Type and Internal R evenue
C ode Section, FiscalYear 2011
Type of organization,
C losures ofapplications for tax-exem pt status
[1]
Total
A pproved [2]
D isapproved
O ther [2,3]
(1)
(2)
(3)
(4)
Tax-exem pt organizations and otherentities, total [4]

61,004
54,713
54,701
60,980
d
d
92
81
55,319
49,677
(3) Religious, charitable, and sim ilar organizations [5J
1,777
1,559
294
268
1,655
1,542
1,012
855
39
32
(8) Fratem al beneficiary societies
153
123
49
41
91
81
282
267
(14) State-{;hartered credit unions
5
d
13
d
d
d
(17) Supplem ental unem ploym ent benefittrusts
177
153
17
(25) Holding com panies for pensions and other entrties
14
d
(27) State-sponsored workers' com pensation reinsurance
13
6
5
Section 521 Farm ers'cooperatives
d
6
d
d -N o t shown to avoid disclosure ofspecific taxpayer data. However,data are included in the appropriate tolals, when possible.
217
217
0
0
205
6
0
4
0
0
0
0
0
0
0
d
0
0
d
0
6,074
6,062
0
11
5,437
212
26
109
157
7
30
8
10
15
d
d
0
24
d
d
7
d
d
[1J Reflects allcase closures for the Exem ptO rganizations Determ inations funelion.These include notonly initialapplications for tax-exem pt status, butalso other
determ inations, such as public charity and private foundation status determ inations, advance approvalofscholarship grantprocedures, and group determ inations oftax
exem ptstatus.
[2J Beginning with FiscalYear 2010, IRS initiated a revised application procedure thatallows additional tim e for application closures.Therefore, fewer applications are
reported in the "O ther" category and m ore applications are reported in the "Approved" category.
[3) Includes applications withdrawn by the organization; applications thatdid notprovide the required inform ation; incom plete applications; IRS refusals to rule on
applications; applications forwarded to other than the W ashington, DC, office; IRS correction disposals; and others.
[4] No applications were filed for teachers'retirem ent funds (section 501(c}(11; corporations to finance crop operations (section 501(c)(16); em ployee-funded pension
trusts (section 501 (c)(18)); black lung trusts (section 501(c)(21)); m ultiem ployer pension plans (section 501 (c)(22)); veterans'associations founded prior to 1880 (section
501 (c)(23); trusts described in section 4049 ofthe Em ployee Retirem ent Incom e Security Actof1974 (ERISA) (seelion 501 (c)(24)); State-sponsored high-risk health
insurance organizations (section 501(c)(26)); and the NationalRailroad Retirem ent Investm entTrust(section 501 (c}(28)).Tax-exem pt status for legalservices organizations
(seelion 501 (c)(20)) was revoked effective June 20, 1992.
[5J Indudes private foundations. Notallintem al Revenue Code section 501(c)(3) organizations are required to apply for recognition oftax exem ption, including churches,
integrated auxiliaries, subordinate units, and conventions orassociations ofchurches.
SO URCE: Tax Exem pt and G ovem m ent Entities, Exem pt O rganizations.
JW1559-001210
b(3)\6103
JW1559-001211
b(3)\6103
JW1559-001212
b(3)\6103
JW1559-001213
b(3)\6103
JW1559-001214
b(3)\6103
JW1559-001215
b(3)\6103
JW1559-001216
b(3)\6103
JW1559-001217
b(3)\6103
JW1559-001218
b(3)\6103
JW1559-001219
b(3)\6103
JW1559-001220
b(3)\6103
JW1559-001221
b(3)\6103
JW1559-001222
b(3)\6103
JW1559-001223
b(3)\6103
JW1559-001224
From:
Lerner Lois G
Sent:
To:
Sinno Suzanne
Cc:
RE: Levin 501(c)(4) letters - 4 of 6
Subject:
not a problem--ships passing in the night
Lois G. Lerner
From: Sinno Suzanne
To: Lerner Lois G
Cc:
sorry!
From: Lerner Lois G
To: Sinno Suzanne
Cc:
Never mind--I'll forward
Lois G. Lerner
From: Sinno Suzanne
JW1559-001225
From:
Sinno Suzanne
Sent:
To:
Lerner Lois G; Lowe Justin
Subject:
Attachments:
CRM (Raman) testimony for April 9, 2013 SJC sub hearing (3APR13).docx
Does TEGE have any comments?
From: Landes Scott S
Cc: Barre Catherine M; Sinno Suzanne; Lowe Justin
Subject: FW: JUSTICE Oversight Testi mony on Campaign Finance (FC -ALERTS:DOJ-0016-A)
Robert.Mahaffie@treasury.gov; Barbar a.Wiss@treasury.gov; Barre Catherine M; Rose Nancy L;
Kevin.Knopf@treasury.gov; cynthia.clark@fincen.gov; Patrick.Obrien@fincen.gov; Mike.Maher@do.treas.g ov;
Barbara.Hammerle@treasury.gov; Marshall.Kofler@fms.treas.gov; Marc.Seldin@fms.treas.gov;
Cc: Luke.Harman@treas ury.gov; Adewale.Adeyemo@treasury.gov; Alexander.Krulic@treasury.gov;
Brian.Peretti@treasury.gov; Brian.Sonfield@treasury.gov; Cara.Camacho@treasury.g ov;
Peter.Lee@treasury.gov; Priti.Agrawal@treasury.g ov; Counsel.Office@tigta.treas.gov; Paul.Ahern@treasury.gov;
Lisa.Abraham@treasury.gov; Kathleen.Mellody@treasury.gov; Colleen.McLoughlin@treasury.go v;
Cathy.Higginbotham@treasury.gov; Daniel.Ballard@treasury.gov; Darlene.Peterson@treasury.gov;
George.Bostick@treasury.gov; Bill.Bradley@fincen.gov; lindsay.orlin@fincen.gov; Melissa.Nasrah@treasury.gov;
Jennifer.Hershfang@treasury.gov; Matthew.Tuchband@treasury.gov; St ephanie.Petersen@treasury.gov;
From: LLR
To: Granat, Rochelle; Brown, Jason; Bailey, Ann; Farrell, Paula; Furey, Christian; Canning, Gordon; Mahaffie, Bob; Wiss,
JW1559-001226
Barbara; 'Catherine.M.Barre@ irs.gov'; Rose, Nancy L; Arterton, Cameron; Mackie, James III; Hauser, Jessica; Zarlenga,
Lisa; Knopf, Kevin; Clark, Cynthia; O'Brien, Patrick; 'Mike.Maher@do.treas.gov'; Warner, Jeffrey; Gacki, Andrea;
O'Connor, Kevin; Ballman, Luke; Hammerle, Barbara; Ko fler, Marshall P.; Seldin, Marc I.; Santaniello, Thomas E.
Cc: Harman, Luke; Adeyemo, Adewale (Wally); Krulic, Alexander; Woolf, Andrew; Bracy, Barb; Oliver, Brandon; Egan,
'Counsel.Office@tigta.treas.gov'; Ahern, Paul; 'Catherine.Ahn@treasury.gov'; Sutton, Gary; Townsend, Brian; Yoo, Julia;
Cathy; Ballard, Daniel; Peterson, Darlene; Melanson, Karen; Pena, Lisa; Cole, Lorraine; Harvey, Mariam; Lewis, Mike;
Dietz, Polly; East, Robyn; Can ty, Scott; Sharpe, Thomas Jr. (Disabled); TOC; Marco, Veronica; Corwin, Erik H; Goldstein,
Richard S; 'Scott.S.Landes@irs.gov'; McField, Terri L; Mujumdar, Namrata; Salstrom, Sandra; Bostick, George; Bradley,
Bill; Orlin, Lindsay; Nasrah, Melissa; Hershfan g, Jennifer; Tuchband, Matthew; Petersen, Stephanie; Hand, Tyler;
Terrorism.
PLEASE NOTE: Comments/edits must be approved by an official fro m your office at the Director level or
name of the policy official who approved the response. OMBs preference is specific edit s, not general
JW1559-001227
(b)(5) DP
JW1559-001228
(b)(5) DP
JW1559-001229
(b)(5) DP
JW1559-001230
(b)(5) DP
JW1559-001231
From:
Lerner Lois G
Sent:
To:
Cc:
Marx Dawn R
Subject:
Attachments:
30794_Incoming_Levin.pdf; 30794_Final.pdf
Importance:
High
Many Levin info emails to follow --I need all printed and put into a notebook in chronologic order.
Lois G. Lerner
-----Original Message ----From: Sinno Suzanne
JW1559-001232
W A S H IN G T O N , D .C . 2 0 2 2 4
June 4,2012

C hairm an
Iam responding to your letter to C om m issioner Shulm an dated M arch 30, 2012,
requesting inform ation aboutthe tax-exem pt sector. W e appreciate your interest and
supportofthe IR S efforts in the adm inistration ofthe tax law as itapplies to tax-exem pt
organizations. This response follow s the telephone conversation held w ith your staffon
M ay 4,2012.
Q uestion 1. A re entities seeking tax-exem pt status under Section 501 (c)(4)
required to subm it an application to the IR S for review and approval, or can they
hold them selves out as having tax-exem ptstatus w ithout filing an application or
undergoing IR S review ?
The law allow s section 501 (c)(4) organizations to hold them selves outas tax-exem pt.
O rganizations also can apply for IR S recognition as tax-exem pt. W hether an
organization is self-declared under section 501 (c)(4) or has been determ ined by the IR S
to m eetthe requirem ents ofsection 501 (c)(4), the organization m ustfile Form 990
annualinform ation returns.
Q uestion 2.
To assistin responding to your specific sub-questions, w e are providing background
inform ation about oursystem for processing applications for tax-exem pt status, as w ell
as the statutory disclosure rules thatgovern public inspection of IR S docum ents relating
to tax-exem pt organizations.
JW1559-001233
A pplication Process
Allapplications for tax-exem ptstatus, including applications forstatus undersection
501 (c)(4), are filed with a centralized IRS Subm ission Processing Center, which enters
the applications into the EP/EO Determ ination System and processes the attached user
fees. The application is then sentto the Exem ptO rganizations ("EO ") D eterm inations
office in Cincinnati, O hio for initialtechnicalscreening.
This technicalscreening is conducted by experienced revenue agents who review the
applications and, based on thatreview, separate the applications into the following four
categories:
Applications thatcan be approved im m ediately based on the com pleteness ofthe
application and the inform ation subm itted;
Applications thatneed only m inor additional required inform ation in the file in
orderto approve the application;
Applications thatdo notcontain the inform ation needed to be considered
substantially com plete; and
Applications that require further developm entby an agentin orderto determ ine
w hetherthe application m eets the requirem ents fortax-exem ptstatus.
O rganizations w hose applications fallinto the fourth category are sentletters inform ing
them thatm ore developm entoftheir application is needed, and thatthey willbe
contacted once their application has been assigned to a revenue agent. The
applications are sentto unassigned inventory, w here they are held untila revenue agent
with the appropriate levelofexperience forthe issues involved in the m atter is available
to further develop the case.1
O nce the case is assigned, the revenue agentnotifies the organization and reviews the
application. Based upon established precedentand the facts and circum stances set
forth in the application, the revenue agentrequests additionalinform ation and
docum entation to com plete the file pertaining to the exem ptstatus application m aterials2
(the so-called "adm inistrative record") and m akes a determ ination. W here an
application forexem ption presents issues that require further developm entto com plete
the application record the revenue agentengages in a back and forth dialogue with the
organization in orderto obtain the needed inform ation. This back and forth dialogue
helps applicants better understand the requirem ents for exem ption and w hatis needed
to m eetthem , and allows the IRS to obtain allthe inform ation relevantto the
determ ination.
I
Enclosure A describes the criteria used to determ ine the appropriate levelofexperience.
application for recognition oftax exem ptstatus, any papers subm itted in supportofthe
application, and any letter orother docum entissued by the IRS with respectto the application.
See IR e 61 04(a), (d)(5).
2 The
JW1559-001234
Tools are available to prom ote consistent handling offulldevelopm ent cases. For
exam ple, in situations where there are a num berofcases involving sim ilar issues (such
as creditcounseling organizations, down paym entassistance organizations,
organizations thatwere autom atically revoked and are seeking retroactive
reinstatem ent, and m ostrecently, advocacy organizations), the IRS willassign cases to
designated em ployees to prom ote consistency. Additionally, in these cases, EO
Technical (an office ofhighergraded specialists in Exem ptO rganizations), in
consultation with the IRS O ffice ofC hiefCounsel, m ay develop educationalm aterials to
assistthe revenue agents in issue spotting and crafting questions to develop cases
consistently.
It is im portantto develop a com plete adm inistrative record forthe application. Because
the adm inistrative record m usteithersupportexem ption ordenial, itis im portantforthe
record to be com plete. Ifthe application is approved, notonly is the adm inistrative
record m ade publicly available (with certain lim ited exceptions outlined below), but
organizations thatactas described in the adm inistrative record have reliance on the IRS
determ ination. Ifthe application is denied, the organization m ay seek review from the
O ffice ofAppeals. The Appeals O ffice, which is independentofExem ptO rganizations,
review s the com plete adm inistrative record and m akes its own independent
determ ination ofw hetherthe organization m eets the requirem ents for tax-exem pt
status. Itis to the organization's benefitto have allofits m aterials in the file in the event
EO D eterm inations denies exem ption and the organization seeks Appeals review . If,
based on the inform ation in the adm inistrative record, the Appeals O ffice decides the
organization m eets the requirem ents fortax-exem ptstatus, the application willbe
approved. Ifthe Appeals O ffice agrees thatthe application should be denied, the
organization m ay challenge its non-exem ptstatus by paying any tax owed as a taxable
entity, and seeking a refund in federal court.
In those cases where the application raises issues forwhich there is no established
published precedentorforwhich non-uniform ity m ay exist, EO D eterm inations m ay
referthe application to EO Technical. In EO Technical, the applications are reviewed by
tax law specialists w hose job is to interpret and provide guidance on the law and who
w ork closely with IRS ChiefCounselattorneys on the issues.
Sim ilarto the process in EO Determ inations, EO Technicaltax law specialists develop
cases based on the facts and circum stances ofthe issues in the specific application.
EO Technicalstaffengages in a back and forth dialogue with the organization in order
to obtain the inform ation needed to com plete the adm inistrative record. If, upon review
ofallofthe inform ation subm itted, itappears thatan organization does notm eetthe
requirem ents fortax-exem pt status, a proposed denialexplaining the reasons the
organization does notm eetthe requirem ents is issued. The organization is then
entitled to a "conference ofright" where itm ay provide additionalinform ation. Following
the conference ofright, a finaldeterm ination is issued. Ifthe application is approved,
the adm inistrative record is m ade publicly available, and ifthe organization acts as
described in the application record, ithas reliance on the IRS determ ination. Ifthe
application is denied, the applicantm ay challenge its non-exem ptstatus by paying any
tax owed as a taxable entity, and seeking a refund in federalcourt.
JW1559-001235
Statutory Disclosure Rules

Public disclosure regarding tax exem ptorganization filings is principally governed by
sections 6103, 6104 and 6110 ofthe InternalRevenue Code. G enerally, section 6103
ofthe Code prohibits the disclosure ofinform ation aboutspecific taxpayers unless the
disclosure is authorized by a provision ofthe Code. Section 6104 ofthe Code requires
the IRS to m ake certain m aterials available for public inspection, including an
organization's approved application for recognition oftax exem ption and Form 990
annualinform ation returns. Ifthe IRS approves an organization's application fortax
exem pt status, section 6104(a) requires thatthe application and supporting m aterials be
m ade available for public inspection. The only exception to that requirem ent is found in
section 61 04(a)(1 )(0), which exem pts from disclosure inform ation thatthe IRS
determ ines relates to any "trade secret, patent, process, style ofwork, orapparatus of
the organization" thatwould adversely affectthe organization or inform ation thatcould
adversely affect nationaldefense.
The long-standing statutory requirem ents regarding exem ption applications, including
Form 1024, are separate from those requiring public availability ofForm 990 annual
inform ation returns, which are contained in section 6104(b). U ndersection 6104(b),
Form 990 annualinform ation returns are also subjectto public inspection, with the sole
exception ofdonor inform ation contained in Schedule B ofthe Form 990. The
w ithholding ofnam es and addresses ofdonors from public disclosure applies only to
Form 990;this exception does notextend to inform ation obtained from Form 1024 and
supporting m aterials.4
In lightofthe statutory requirem entto m ake approved applications public, organizations
are notified thatinform ation they provide willbe available for public inspection on page
tw o ofthe Form 1024 instructions. This notice is reiterated in any developm ent letters
sentto the organizations. The adm inistrative record ofapproved applications, including
the application, supporting docum ents and correspondence between the applicant and
the IRS are available upon request.
recognition oftax-exem ptstatus, the denialletterand background inform ation willbe
open to public inspection, with certain identifying and other inform ation redacted.
n place since 1958, and the legislative history provided the

3 The disclosure rules have been i
following rationale for pUblic disclosure ofexem ption applications: "[the]com m ittee believes that
m aking these applications available to the public willprovide substantial additional aid to the
Internal Revenue Service in determ ining w hether organizations are actually operating in the
m anner in which they have stated in theirapplications for exem ption." H.R. Rep. No. 85-262, at
41-42 (1957). In 1987, C ongress added w hat is now section 6104(d) to the Code, thatrequires
organizations to m ake their returns available to the pUblic, and in 1996 extended this rule to
application m aterials.
4 The withholding exception does notapply to donor inform ation for organizations thatfile Form
990-PF orto those section 527 organizations thatare required to file Form 990 or 990-EZ.
JW1559-001236
For entities thatsubm itan application for tax-exem ptstatus under Section
501 (c)(4), please indicate:
(a) the approxim ate average num berofdays betw een the date on w hich an entity
subm its an application for 501 (c)(4) tax-exem ptstatus and the date on w hich
the application is approved ordenied;
The average case processing tim e for determ ination cases closed in FY2011 was
104 days. However, itis difficultto predicthow long itwilltake to fully process any
specific application. Case processing tim e can vary greatly depending on a num ber
offactors, including w hether the case can be closed through technicalscreening or
requires full developm ent, the availability ofan agentwith the appropriate
experience levelto fully develop the application, the particular issues and
individualized facts and circum stances presented in the application, the back and
forth dialogue between the revenue agentand the applicantto fully develop the
application, and w hether a case is transferred to EO Technical.
(b) ifitis notprovided on a routine basis, approxim ately w hatpercentage ofsuch

applicants receive an IRS questionnaire seeking inform ation aboutany
politicalactivities, and how the IRS determ ines w hether and w hen to send that
questionnaire;and
W e understand thatthe reference in your letterto "questionnaire" is intended to
relate to developm ent letters the IRS sends to organizations in the ordinary course
ofthe application process to obtain the inform ation as the IRS deem s necessary to
m ake a determ ination w hether the organization m eets the legalrequirem ents for
tax-exem ptstatus. There is no standard questionnaire used in the determ inations
process seeking inform ation about politicalactivities.
The IRS contacts the organization and solicits additional inform ation w hen the
organization does notprovide sufficient inform ation in response to the questions on
the Form 1024 to m ake a determ ination orifissues are raised by the application.
W hen an application needs further developm ent, the case is assigned to a revenue
agentwith the appropriate levelofexperience forthe issues involved in the
application.
The generalprocedures for requesting additional inform ation to develop an
application are included in section 7.20.2 ofthe Internal R evenue M anual.
Although there is a tem plate letterthatdescribes the generalinform ation on the
case developm entprocess,the letter does not, and could not, specify the
inform ation to be requested from any particular organization because ofthe broad
range ofpossible facts. Enclosure B is a copy ofthe tem plate letter.
JW1559-001237
The am ountand nature ofdevelopm ent necessary to process an application to

ensure thatthe legalrequirem ents oftax-exem ption are satisfied depends on
severalfactors, which include the com prehensiveness ofthe inform ation provided in
the application and the issues raised by the application. C onsequently, revenue
agents prepare individualized questions and requests for docum ents relevant to the
application, which are attached to the above described generaltem plate letter. W ith
certain types ofapplications where the issues are sim ilar or m ore com plex, EO
Technical, in coordination with C hiefCounsel, m ay develop educational m aterials to
assistthe revenue agents in issue spotting and crafting questions to develop those
cases consistently.
The revenue agentuses sound reasoning based on tax law training and his orher
experience to review the application and identify the additionalinform ation needed
to m ake a proper determ ination regarding the organization's exem ptstatus. The
revenue agentprepares individualized questions and requests for docum ents based
on the facts and circum stances setforth in the particular application.
The below chart provides the totalnum berofapplications closed for FY 2008-2011,5
as wellas prelim inary inform ation for partof2012.6 The below chart provides the
percentage ofallexem ption applications closed each yearthrough the technical
screening process (i.e., no developm ent letters sent).
Totalnum berofapplications closed

Percentage ofapplications closed through
technicalscreening
FiscalYear
2010
2011
77,305
65,590
61,004
28,570
57%
56%
60%
70%
2008
2009
84,220
59%
2012
Although we are able to produce the num berofcases closed during this tim e period
that received developm ent letters, oursystem s do nottrack the specific types of
questions asked in the developm entletters forthese cases. Therefore, m anual
review ofeach file would be necessary to determ ine the particular organization and
the developm ent letters sent.
Reports ofthe IRS data requested are created and published by Statistics ofIncom e (SO l)
Division. The IRS Data Book provides inform ation on IRS activities conducted during a fiscal year
period (O ctober 1 through Septem ber 30). Data Book inform ation is updated annually. This SO l
data is from IRS Data Book, Table 24, Closures ofApplications for Tax-Exem ptStatus, by
O rganization Type and Internal Revenue Code Section, FiscalYear 2008 (and subsequent fiscal
years 2009-2011) athttp://w w w .irs.gov/taxstats/index.htm I.This data reflects allcase closures
for the Exem ptO rganizations Determ inations function. These include notonly initial applications
for tax-exem ptstatus, butalso other determ inations, such as public charity and private foundation
status determ inations, advance approvalofscholarship grant procedures, and group
determ inations oftax-exem ptstatus.
6 The data for FY 2012 reflects the prelim inary inform ation available through the second quarter
from O ctober 1,2011 through M arch 30,2012. SO l Data Book inform ation is updated annually,
with the com plete FY 2012 inform ation expected in M arch 2013.
5
JW1559-001238
is typically sent.
As m entioned above, organizations whose applications fallinto the fourth category
are sent letters inform ing them thatm ore developm ent oftheir application is
needed, and thatthey willbe contacted once their application has been assigned to
a revenue agent. The applications are sentto unassigned inventory, where they are
held untila revenue agentwith the appropriate levelofexperience forthe issues
involved in the m atter is available to further develop the case. O nce the case is
assigned, the revenue agentnotifies the organization and reviews the application.
Based upon the established precedent and the facts and circum stances setforth in
the application, the revenue agentwillrequestadditional inform ation and
docum entation to com plete the file. Ifapplicable, the revenue agentwillcoordinate
with EO Technicaland C hiefCounselto develop requests for inform ation to be
issued to the organization. Forallofthese reasons, itis difficultto predictthe tim e
fram e between the filing ofan application fortax-exem ption and the issuance ofa
developm ent letter.
Q uestion 3. A 1997 letterfrom the IRS denying tax-exem ptstatus to the N ational
Policy Forum , copy attached, m ade public in connection w ith a Senate
investigation into federalelection cam paigns, indicates thatthe IRS based its
denialon the factthatthe organization w as engaged in partisan politicalactivity,
stating that"partisan politicalactivity does notprom ote socialw elfare as defined
in section 501 (c)(4)," and "benefit[s] selectindividuals orgroups, instead ofthe
com m unity as a w hole." Is itstillthe position ofthe IRS thata 501 (c)(4)
organization cannotengage in any partisan politicalactivity, even as a secondary
activity?
As noted above, section 6103 ofthe Internal Revenue Code prohibits the disclosure of
inform ation aboutspecific taxpayers unless the disclosure is authorized by som e
provision in the InternalRevenue Code. Section 6104(a) ofthe Code perm its public
disclosure ofan application for recognition oftax exem ptstatus and supporting
m aterials only afterthe organization has been recognized as exem pt. Under section
6110 ofthe Code, ifthe IRS ultim ately denies the application for recognition oftax
exem ptstatus, the denialletter is subjectto public inspection, with identifying and other
inform ation redacted, to assistthe public in understanding the IRS'reasoning while also
protecting the identity ofthe organization. Although you reference whatappears to be a
proposed denialletterthatm ay have been m ade available publicly by sources other
than the IRS, IRS Disclosure Counselhas advised thatsection 6103 continues to apply
and we are legally prohibited from discussing taxpayer inform ation.? However, we are
able to respond to your question generally.
To qualify forexem ption as a socialwelfare organization described in section 501 (c)(4),
7 Section 61 03(f) ofthe C ode sets forth the m eans by which congressionalcom m ittees m ay
obtain access to return and return inform ation (thatis nototherwise m ade publicly available under
sections 6104 and 6110). W e are available to discuss these rules in m ore detailwith your staff.
JW1559-001239
the organization m ustbe prim arily engaged in the prom otion ofsocialwelfare, not
organized oroperated for profit, and the netearnings ofwhich do notinure to the benefit
ofany private shareholder or individual.8 The prom otion ofsocialwelfare does not
include director indirectparticipation or intervention in politicalcam paigns on behalfof
or in opposition to any candidate for public office.9 Nevertheless, a section 501 (c)(4)
socialwelfare organization can engage in politicalactivities as long as itis prim arily
engaged in activities thatprom ote socialwelfare.1o The regulations do notim pose a
com plete ban on politicalactivity by section 501 (c)(4) organizations.11 W hether an
organization m eets the requirem ents ofsection 501 (c)(4) depends upon allofthe facts
and circum stances ofthe particular applicant, and no one factor is determ inative.
A revenue agentm ustfirstdeterm ine w hetheractivities undertaken by the organization
prim arily further an exem ptpurpose. Ifthe organization is engaged in som e activities
thatdo notprom ote socialwelfare, then the agentm ustreview the scope ofthe
activities to determ ine whether, based on allthe facts and circum stances, the
organization's exem ptactivities are the prim ary activities. Ifthe application is unclearor
notsufficiently detailed as to w hetherthe prim ary activity conducted by the organization
is exem ptsocialwelfare activity, the revenue agentwillneed to follow-up on this issue
in a developm entletter.
Itis also im portantto note thatsection 611 0(k)(3) provides thatdeterm ination letters
(including both proposed and final letters) m ay notbe used orcited as precedent.
Determ ination letters are based on the specific facts and circum stances ofthe applicant.
Q uestion 4. Is itthe position ofthe IRS thatan entity claim ing tax-exem ptstatus
undersection 501(c)(4) can engage in nonpartisan political activity as a
secondary activity, and thatpoliticalactivity can consum e up to 49% ofthe
entity's expenditures and resources.
To determ ine w hether an organization operates prim arily forthe prom otion ofsocial
welfare, the courts and the IRS consider allthe facts and circum stances, including but
notlim ited to the organization's stated purposes, expenditures, principalsource of
revenue, num berofem ployees and volunteers, and tim e and effort.12 The IRS has
taken no position on a fixed percentage oranyone factor in precedentialguidance.
501(c)(4); Treas. Reg. 1.501(c)(4)-1.

B IRC
9 Treas. Reg. 1.501 (c)(4)-1 (a)(2)(ii).
10 Rev. Rul
. 81-95,1981-1 C.B. 332.
11 Rev. Rul
. 81-95,1981-1 C.B. 332.
12 Treas. Reg. 1.501(c)(4)-1(a)(2) (No percentage testestablished). Rev. Rul. 68-45,1968-1

C.B. 259 (Principalsource ofincom e does notdeterm ine an organization's prim ary actiVity under
501 (c)(4); allthe facts and circum stances are considered). See, generally H asw ellv. U nited
States, 500 F.2d 1133,1142,1147 (CI. Ct. 1974) ("A percentage test... is notappropriate. Such
a testobscures the com plexity ofbalancing the organization's activities in relation to its objectives
and circum stances in the contextofthe totality ofthe organization."). See, Contracting Plum bers
v. United States, 488 F.2d 684, 686 (2d Cir. 1973) (m ultiple factors relevantin applying this
standard, including form ative history, stated purposes, and actualoperations). See generally
Seasongood V. Com m issioner, 227 F.2d 907, 909, 912 (6th Cir. 1955) (expenditures, em ployees,
and organization's tim e and effortconsidered).
JW1559-001240
Q uestion 5. A Treasury regulation applicable to 501 (c)(4) organizations states:

"The prom otion ofsocialw elfare does notinclude director indirectparticipation
or intervention in politicalcam paigns on behalfofor in opposition to any
candidate for public office." Treas. Reg. 1.501(c)(4)-1(a)(2)(ii). W ould the IRS
generally view itas a violation ofthatregulation ifa 501 (c)(4) organization:
(a) M ade a cash contribution to a politicalorganization w hich is tax-exem pt under
Section 527 and functions as a cam paign com m ittee to electa particular
candidate to public office?
(b)M ade a cash contribution to a politicalaction com m ittee w hich w as
established underthe FederalElection C am paign A ct(FEC Act) and w hich
routinely m akes cash contributions to cam paign com m ittees, each ofw hich
w as established to electa particularcandidate to public office?
(c) M ade a cash contribution to a politicalaction com m ittee orSection 527
politicalorganization w hich m akes independentexpenditures on behalfofor
in opposition to one orm ore candidates for public office?
(d) M ade a cash contribution to a national politicalparty w hich engages in
political party to public office?
(e) M ade a cash contribution to a politicalaction com m ittee orSection 527
politicalorganization w hich is engaged in partisan politicalactivity, butdoes
notcam paign on behalfofor in opposition to any particular candidate for
public office?
(f) M ade a cash contribution to a politicalaction com m ittee or Section 527
politicalorganization w hich is engaged in nonpartisan politicalactivity and
does notcam paign on behalfofor in opposition to any particular candidate
for public office?
As noted previously, a section 501 (c)(4) organization m ay directly or indirectly
participate or intervene in a politicalcam paign as long as itis prim arily engaged in
activities thatprom ote socialwelfare. Treasury regulations provide thatprom otion of
socialw elfare does notinclude certain activities, including political cam paign
intervention.13 This regulation does notprohibita section 501 (c)(4) organization from
engaging in such activity. Rather, the politicalcam paign intervention activity does not
counttow ards the organization's exem ptactivities thatprom ote socialwelfare.
Therefore, ifthe organization engages in such activity, ithas "violated" no rule underthe
regulations. As discussed, allfacts and circum stances are relevant in determ ining
w hetherthe requirem ents fortax exem ption are ultim ately satisfied.
The sam e legalrequirem ents apply in each ofthe facts patterns articulated in your
questions. W ith respectto each ofthe factpatterns thatyou specify, w hile depending
13
Treas. Reg. 1.501 (c)(4)-1(a)(2)(ii).
JW1559-001241
10
on the facts and circum stances, politicalactivity would notbe for a socialw elfare
purpose, the organization does notviolate any InternalR eview C ode rule applicable to
section 501 (c)(4) organizations ifitengages in such activity. Allthe facts and
circum stances need to be considered to determ ine w hetherthis activity affects the
section 501 (c)(4) organization's tax-exem ptstatus.14
Q uestion 6. W ould the IRS generally view itas a violation ofTreasury R egulation
1.501(c)(4)-1(a)(2)(ii), ifa 501(c)(4) organization w ere to coordinate its political

activities w ith a cam paign com m ittee, politicalaction com m ittee, or national
politicalparty? Please explain.
As stated, section 501 (c)(4) organizations m ay engage in som e politicalcam paign

activity provided thatsuch intervention, along with other activity thatdoes notprom ote
socialwelfare, does notconstitute the organization's prim ary activities. The tax law
does notexplicitly prohibita section 501 (c)(4) organization from coordinating political
activity.
H ow ever, such coordination could raise issues ofprim ary activity, inurem ent orprivate
benefit. Thus, for exam ple, ifan organization's activities are conducted prim arily forthe
benefitofa politicalparty orany other private group ofindividuals, rather than the
com m unity as a whole, the organization is notoperated prim arily to prom ote social
w elfare. Accordingly, conferring a sufficientam ountofprivate benefiton select
individuals willpreclude exem ption under section 501 (c)(4) ifthatprivate benefit is the
prim ary activity ofthe organization.15
Q uestion 7. Iunderstand thatsom e persons have petitioned the Treasury

D epartm entto clarify or revise Treasury R egulation 1.501(c)(4)-1 (a)(2)(ii).
Please indicate w hetherthe IRS plans to engage in such a rulem aking, w hether it
w ould firstsolicitcom m ents on w hatshould be included in thatrulem aking, and
w hether orw hen any such rulem aking efforthas been scheduled to begin.
The IRS, in collaboration with the Treasury Departm ent's O ffice ofTax Policy
("Treasury"), annually develops a listofthe guidance thatTreasury and the IRS intend
to w ork on during the upcom ing guidance plan year. Certain types ofguidance are
issued in proposed form to allow an opportunity for public com m ent.
The IRS is aware ofthe currentpublic interestin this issue and willseriously consider
any proposed changes. Treasury and the IRS have notyetestablished the listofthe
Rev. Rul. 68-45, 1968-1 C.B. 259. See also, e.g. Contracting Plum bers Coop. R estoration
Corp. v. U.S., 488 F.2d 684 (2d Cir. 1973)(There are m ultiple factors relevant in applying this
standard, including form ative history, stated purposes, and actualoperations). Note thattax m ay
apply in certain cases underInternalRevenue Code section 527(f).
1 IRC 501 (c)(4); Treas. Reg. 1.501(c)(4)-1. See Contracting Plum bers Coop. Restoration
Corp. V. U.S., 488 F.2d 684, 687 (2d Cir. 1973) (O rganization was notprim arily devoted to the
com m on good when itprovided substantial and different benefits to both the public and its private
m em bers). Am erican Cam paign Academ y V. Com m issioner, 92 T.C. 1053, 1078 (1989), a
section 501 (c)(3) case, held thatan organization was notoperated exclusively for exem pt
purposes when itconferred substantial private benefits on a politicalparty and its candidates.
14
JW1559-001242
11
guidance thatTreasury and the IRS intend to work on from July 1,2012, through June
30, 2013. The selection ofitem s forthe 2012-2013 G uidance Priority Listwillbe m ade
in collaboration with Treasury after review and evaluation ofcom m ents received.
Q uestion 8. Ifthe IRS w ere to deny an entity's requestto be treated as tax
exem ptunder Section 501 (c)(4),w ould the IRS autom atically apply corporate
incom e taxes to thatentity orw ould itallow the entity to apply for tax-exem pt
status on other grounds?
W hen a section 501 (c)(4) organization receives a finaldeterm ination letterdenying its
application fortax-exem ptstatus, the letteradvises the organization thatitm ustfile
Federal incom e tax returns forthe years listed in the letterwithin 30 days ofthe
issuance ofthe denialletter, unless the organization requests an extension oftim e to
file. Enclosure C is a copy ofthis standard finaldenialletter.
Ifthe revenue agentassigned to the case believes thatthe organization m ay notm eet
the requirem ents ofa section 501 (c)(4) organization, butm ay m eetthe requirem ents of
anothertax-exem pt provision, the issue ofw hetherthe organization w ants to be
considered for exem ption underthatotherprovision could be discussed with the
organization through developm entletters priorto the final resolution ofthe application.
Ifthe organization indicates thatitdoes notw antto proceed underthe other provision
and continues to pursue section 501 (c)(4) exem ption, the IRS would deny the
application and the organization would be treated as a taxable entity.
Please note thatsom e organizations w ithdraw their application for exem ption w hen they
failed attem pts to getthe inform ation from the applicant, those applications are closed
as "failure to establish."
Q uestion 9. Ifthe IRS w ere to determ ine thatan entity w as im perm issibly
participating in partisan politicalactivity, does the IRS have unilateralauthority to
reclassify itas a Section 527 political organization instead ofa Section 501(c)(4)
socialw elfare organization?
W hether an organization fails to qualify undersection 501 (c)(4) does notdeterm ine
w hether itis a politicalorganization undersection 527. Section 527 applies to a party,
com m ittee, orother organization thatis organized and operated prim arily for the
purpose ofaccepting contributions orm aking expenditures for an exem ptfunction (as
defined in section 527(e)(2)). Subjectto certain exceptions, to be tax-exem pt under
section 527, a politicalorganization is required to give notice electronically to the
Service.16
16 Section 527(i)(1); Rev. Rul. 2003-49, 2003-1 C.B. 903. Section 527 also provides for the
taxation ofcertain organizations thatdo notprovide notice to the IRS. IRC 527(f), (i)(4)
JW1559-001243
12
A s noted above, Ifthe revenue agentassigned to the case believes thatthe

organization m ay notm eetthe requirem ents ofa section 501 (c)(4) organization, but
m ay m eetthe requirem ents ofanothertax-exem pt provision, the issue ofw hether the
organization w ants to be considered for exem ption underthat other provision could be
discussed with the organization through developm ent letters priorto the final resolution
ofthe application. Ifthe organization indicates thatitdoes notw antto proceed under
the other provision and continues to pursue section 501 (c)(4) exem ption.the IRS would
deny the application and the organization would be treated as a taxable entity.
Q uestion 10. Ifan entity w ere denied tax-exem ptstatus by the IRS under Section
501(c)(4), how w ould pastcontributions and incom e earned on those funds
generally be treated underthe tax code?
Ifan organization is denied tax-exem pt status, the organization is a taxable entity as of
the date the organization originated. The finaladverse determ ination letterstates that
the organization is required to file Federalincom e tax returns, generally a Form 1120,
U .S. Corporation Incom e Tax. The tax treatm ent ofthe organization's contributions and
other incom e is determ ined undernorm alrules ofSubtitle A.
Q uestion 11. W hatconsiderations does the IRS use to determ ine w hen an entity
thatis denied tax-exem ptstatus underSection 501 (c)(4) should be subjectto a
penalty? W hatpenalties are available and how are they calculated?
There is no penalty specifically applicable to an organization as a resultofa denialof
tax-exem pt status. An organization thatis denied tax-exem ptstatus is advised in the
finaldenialletterthatithas 30 days from the 'finaldenialletterto eitherfile its incom e
tax returns or requestadditionaltim e to file the taxable returns. Ifthe organization
tim ely filed Form 990 annualreturns during the period oftim e thatthe application for
tax-exem pt status was pending and tim ely files its taxable returns once tax-exem ption is
denied, the organization willnotbe subjectto penalties. Ifthe organization does not
tim ely file taxable returns, the organization m ay be subjectto failure to file orfailure to
pay penalties undersection 6651 ofthe Code.
The failure to file penalty undersection 6651 (a)(1) ofthe Code, is calculated ata rate of
5 percentofthe am ountrequired to be shown as tax on the return ifthe failure to file is
for notm ore than 1 m onth, with an additional5 percentforeach additional m onth or
fraction thereofthatthe failure to file continues, notto exceed 25 percent in the
aggregate.
The failure to pay tax penalty undersection 6651 (a)(2) ofthe Code, is calculated ata
rate of0.5 percentofthe am ountofthe tax shown on the return ifthe failure to pay is for
notm ore than 1 m onth, with an additional0.5 percentforeach additional m onth or
fraction thereofthatthe failure to pay continues, notto exceed 25 percent in the
aggregate.
JW1559-001244
13
Penalties assessed m ay be abated ifthe organization can show thatthe failure to file or
failure to pay was due to reasonable cause and notdue to willfulneglect.17
Q uestion 12. Please provide a copy ofthe standard questionnaire thatthe IRS
sends to entities claim ing tax-exem ptstatus underSection 501(c)(4) to obtain
inform ation abouttheirpoliticalactivities. In addition, please provide any w ritten
guidance provided to IRS agents regarding the issue ofpoliticalactivity in
connection w ith Section 501 (c)(4).
There is no standard questionnaire used to obtain inform ation aboutpolitical activities.
Although there is a tem plate developm ent letterthatdescribes the generalinform ation
on the case developm entprocess, the letterdoes notspecify the inform ation to be
requested from any particular organization. Enclosure B is a copy ofthe tem plate letter.
The am ountand type ofdevelopm ent necessary to process a section 501 (c)(4)
application to ensure thatthe legalrequirem ents oftax-exem ption are satisfied depends
on severalfactors, which include the com prehensiveness ofthe inform ation provided in
the application and the issues raised by the application. Consequently, revenue agents
prepare individualized questions and requests for docum ents relevantto the application,
which are then attached to the above described generaltem plate letter.
In connection with recentcases, EO Technicalprepared a drafteducationalguide sheet
on the issue ofpoliticalactivity for section 501 (c)(4) applications thatwas shared for
com m entwith som e em ployees in EO Determ inations. Thatguide sheetw as neither
m andated norfinalized.
Q uestion 13. Please indicate how m any letter rulings have been issued by the
IRS since January 1,2007,to deny or revoke the tax-exem ptstatus ofan
organization underSection 501 (c)(4) due to involvem entw ith partisan or
nonpartisan politicalactivity. Ifthe IRS has issued 10 or less such letterrulings,
please provide copies ofallsuch letters. Ifthe IRS has issued m ore than 10 such
letterrulings, please provide a sam ple containing discussions ofthe w idest
variety ofissues related to the denialoftax-exem ptstatus underSection 501(c)(4)
due to partisan or nonpartisan politicalactivity.
Prelim inarily, as previously stated, section 6103 ofthe InternalRevenue Code prohibits
the disclosure ofinform ation aboutspecific taxpayers unless the disclosure is
authorized by som e provision ofthe InternalRevenue Code. Section 6104(a) ofthe
C ode perm its public disclosure ofan application for recognition oftax-exem ptstatus
and supporting m aterials only after the organization has been recognized as exem pt.
recognition oftax-exem ptstatus, the denial letterand background inform ation is subject
to public inspection, with identifying and otherinform ation redacted, to assistthe public
understand the IRS reasoning while also protecting the identity ofthe organization.
17
IR e 6651 (a).
JW1559-001245
14
The application process for tax-exem pt status does notinvolve the revocation oftax
exem ption; rather, itonly concerns the denialofapplications. IRS data on the denialof
applications is kept in reports published by the IRS Statistics ofIncom e (SO l) Division.
The Data Book provides inform ation on IRS activities conducted during a fiscalyear
period (O ctober 1 through Septem ber 30). W e have attached these reports as
Enclosures 0-1 through 0-5. Foryour convenience, however,we are replicating the
totalnum ber ofdeterm ination denials for section 501 (c)(4) organizations for FY 2007
2012 in the chartbelow.

N ote thatthe num ber ofdenials does notreflecta fullpicture ofapplications not
approved. Som e organizations withdraw their application for exem ption when they
failed attem pts to getthe inform ation, those applications are closed as "failure to
establish."
FiscalYear
The Num ber ofSocialW elfare O rganization

Applications thatwere Denied
2007
2008
2009
2010
2011
2012111
* Few erthan 3
Please note thatalthough IRS autom ated system s track the num bers ofapplications
closed as denied, they do nottrack the nam es ofthe applicantorganizations or the
reasons forthe denials. Absentm anualreview ofthe files, we are unable to state
w hether any ofthese denials were issued due to involvem entwith partisan or
nonpartisan politicalactivity.
18 The data for FY 2012 reflects the prelim inary inform ation available for O ctober 1, 2011 through
April 11 ,2012. SO l Data Book inform ation is updated annually, with the com plete FY 2012
inform ation expected in M arch 2013.
JW1559-001246
15
Ihope this inform ation is helpful. Ifyou have questions, please contact m e or have your
Sincerely,
Steven T. M iller
D eputy C om m issioner for Services and
Enforcem ent
Enclosures
JW1559-001247
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The H onorable D ouglasH.Shulm an
Com m issioner
RECEIVED
MAR 30 2012
CONG.CORR.BR
CL:LA
Som e entities claim ing tax-exem ptstatus as socialw elfare organizations under26 U .S.C.
501(c)(4)appearto be engaged in political activities m ore appropriate forpolitical
organizationsclaim ing tax-exem ptstatus under26 U .S.C.527. Because oftheurgency ofthe
issues involved in this m atter,please provide the follow ing infonnation by April20,2012.
(I) Are entities seeking tax-exem ptstatus underSection 501 (c)(4)required to subm itan
application to the IRS for review and approval,orcan they hold them selves outas
having thattax-exem ptstatus w ithoutfiling 811 application orundergoing IRS
review ?
(2) Forentities thatsubm itan application for tax-exem ptstatus underSection 501(c)(4),
. please indicate: .
(a) the approxim ate average num berofdays betw een the date on which an
entity subm itsan application for 501(c)(4) taJ(-exem ptstatus and the date on
w hich thatapplication is approved ordenied;
(b) ifitis notprovided on a routine basis,approxim ately w hatpercentage of
such applicants receive an IRS questionnaire seeking inform ation aboutany
politicala c t i v i t i e s ~ and how the IRS determ ines w hetherand w hen to send
thatquestionnaire;and
istypically sent.
(3) A 1997 letter from the IRS denying tax-exem ptstatus to the N ationalPolicy Forum ,
copy attached,m ade public in connection w ith a Senate investigation into federal
election cam paigns,indicates thatthe IRS based its denialon the factthatthe
organization w as engaged in partisan politicalactivity,stating that"partisan
politicalactivity does notprom ote social w elfare as defined in section 50 I(c)(4)."
and "benefit[s] selectindividuals orgroups,instead ofthe com m unity as a w hole."
JW1559-001248
2
Is itstillthe position ofthe IRS thata 501(c)(4)organization cannotengage in any
partisan politicalactivity,even as a secondary activity?
(4) Is itthe position ofthe IRS thatan entity claim ing tax-exem ptstatus W IderSection
501(c)(4)can engage in nonpartisan politicalactivity as a secondary activity,and
thatpoliticalactivity can consum e up to 49% ofthe entity's expenditures and
resources?
(5) A Treasury regulation applicable to 501(c)(4)organizations states: "The prom otion
ofsocialwelfare does notinclude directorindirectparticipation orintervention in
politicalcam paigns on behalfoforin opposition to any candidate forpublic office."
Treas.Reg.1.50l(c)(4)-1(a)(2)(ii). W ould the IRS generally view itas aviolation
ofthatregulation ifa 501(c)(4)organization:
(a) m ade a cash contribution to apoliticalorganization which is tax-exem ptunder
Section 527 and functions asa cam paign com m itteeto electa particular
candidate to public office'?
(b) m ade a cash contribution to a politicalaction com m ittee which was
established underthe FederalElection Cam paign Act(FEC Act)and which
routinely m akescash contributions to cam paign com m ittees,each ofwhich
wasestablished toelecta particularcandidate to public office?
(c) m ade a cash contribution to a politicalaction com m ittee orSection 527
politicalorganization which m akes independentexpenditures on behalfofor
in opposition to one orm ore candidates forpublic office?
(d) m ade a cash contribution to a nationalpoliticalparty which engages in
politicalparty to public office?
(e) m ade a cash contribution to apoliticalaction com m ittee orSection 527
politicalorganization which isengaged in partisan politicalactivity,but
forpublic office?
(t) m ade a cash contribution to a politicalaction com m ittee orSection 527
politicalorganization which isengaged in nonpartisan politicalactivity and

forpublic office?
(6) W ould the IRS generally view itasa violation ofTreasury Regulation 1.501(c)(4)
1(a)(2)(ii),ifa 501(c)(4)organization were to coordinate itspoliticalactivities with

a cam paign com m ittee,politicalaction com m ittee,ornationalpoliticalparty?
Please explain.
JW1559-001249
3
(7) Junderstand thatsom e personshave petitioned theTreasury Departm entto clarify
orrevise Treasury Regulation I.S01(c)(4)-1(aX2)(ii). Please indicate whetherthe
IRS plansto engage in such a rulem aking,whetheritwould fIrstsolicitcom m ents
on whatshould be included inthatrulem aking,and whetherorwhen any such
rolem aking efforthas been scheduled to begin.
(8) Ifthe IRS wereto deny an entity's requestto be.treated as tax exem ptunderSection
501(c)(4),would the IRS autom atically apply corporate incom e taxes to thatentity
orwould itallow the entity to apply fortax-exem ptstatus on othergrounds?
(9) Ifthe IRS were to detennine thatan entity wasim perm issibly participating in
partisan politicalac,tivity,doesthe IRS have unilateralauthority to reclassify itas.a

Section 527 politicalorgtm izationinstead ofa Section 501(c)(4)socialwelfare
organization?
.(10) Ifan entity were deniedtax..exem ptstatusby theiRS underSection 50I(c)(4),how

w ould pasteontributi()DS a11dincom e earned on those funds generally be treated
.underthe tax code?
(11) W hatconsiderations doesthe IRS use to determ ine when an entity thatisdenied
tax-exem ptstatus underSection 501(c)(4)should be subjectto a penalty? W hat
penaltiesare available and how are they calculated?
(12) Please provide a copy ofthe standard questionnaire thatthe IRS sends to entities
claim ing tax-exem ptstatus underSection 501(c)(4)to obtain infonnation about
theirpoliticalactivities. In addition,please provide any written guidance provided

tQ IB-S ~ t s r e ~ d i n g the issue ofpoliticalactivity in c o ~ e c t i o n with Section
..
..
. .
SOl(F}(,f}.' ...' .
(13) Please indicate how m any letterrulings.have been issued by the IRS since January
1,2007,to deny orrevoke the tax-exem ptstatus ofan organization under Section
SO I(cX 4) due to involvem entwith partisan ornonpartisan political activity. Ifthe
IR S hasissued 10 orless such letterrulings,please provide copies ofallsuch
letters.. Ifthe IRS has issued m ore than 10 such letterrulings,please provide a
sam ple coritaining discussionS ofthe widestvariety ofissues related to the denialof
tax-exem ptstatus underSection 50l(c)(4)due to partisan ornonpartisan political

actiVity.
Thank you for yourassistance on this m atter. Ifyou have any questions,please contact
m e.orhave yourstaffcontactKayeM eierofm y staffatkaye_m eier@ levin.senate.gov or
2021224-9110.
CarlLevin
Chairm an
PennanentSubcom m ittee on Investigations
JW1559-001250
From:
Sinno Suzanne
Sent:
To:
Lerner Lois G; Lowe Justin
Subject:
It is fine to get back to me by tomorrow morning!
From: Lerner Lois G
To: Sinno Suzanne; Lowe Justin
(-: I will not go home until I've read th is!
Lois G. Lerner
From: Sinno Suzanne
To: Lerner Lois G; Lowe Justin
I know :) You don't have to apologize to me. Just checking in because I am getting harassed. nothing out of the
ordinary.
From: Lerner Lois G
Am looking right now! It's been a bad day!
Lois G. Lerner
From: Sinno Suzanne
JW1559-001251
Here is the revi sed testimony provided by DOJ. The new deadline is 11:00 A.M., Thursday, April 4 .
Cameron.Arterton@treasury.gov; James.Mackie@treasury.gov; Jessica.Hauser@treasury.gov; Zarlenga Lisa ;
Barbara.Hammerle@treasury.gov; Marshall.K ofler@fms.treas.gov; Marc.Seldin@fms.treas.gov;
Andrew.Woolf@treasury.gov; Barb.Bracy@treasury.gov; Brandon.Oliver@treasury.gov; Bri an.Egan@treasury.gov;
Catherine.Ahn@treasury.gov; Gary.Sutton@treasury.gov; Brian.Townsend@treasury.gov; Julia.Yoo@ treasury.gov;
Cathy.Higginbotham@treasury.gov; Daniel.Ballard@treasury.gov; Darlene.P eterson@treasury.gov;
George.Bostick@treasury.gov; Bill.Bradley@fincen.gov; lindsay.orlin@fince n.gov; Melissa.Nasrah@treasury.gov;
From: LLR
Lisa; Knopf, Kevin; C lark, Cynthia; O'Brien, Patrick; 'Mike.Maher@do.treas.gov'; Warner, Jeffrey; Gacki, Andrea;
O'Connor, Kevin; Ballman, Luke; Hammerle, Barbara; Kofler, Marshall P.; Seldin, Marc I.; Santaniello, Thomas E.
McRaith, Michael; Ayers, Michelle; Delmar, Richard K; Maloney, Patrick; Lee, Pe ter; Agrawal, Priti;
'Counsel.Office@tigta.treas.gov'; Ahern, Paul; 'Catherine.Ahn@treasury.gov'; Sutton, Gary; Townsend, Brian; Yoo, Julia;
Bill; Orlin, Lindsay; Nasrah, Melissa; Hershfang, Jennifer; Tuchband, Matthew; Petersen, Stephanie; Hand, Tyler;
JW1559-001252
for an April 9th hearing bef ore the Senate Judiciary Committees Subcommittee on Crime and
Terrorism.
LLR@do.treas.gov . In responding to this email, please use th e exact subject line of this e -mail and provide the
JW1559-001253
From:
Lerner Lois G
Sent:
To:
Lowe Justin
Subject:
I have lots of comments
Lois G. Lerner
From: Lowe Justin
To: Lerner Lois G
Hey, Im still here as well, am reading now too.
From: Lerner Lois G
(-: I will not go home until I've read this!
Lois G. Lerner
Director of Exempt Orga nizations
From: Sinno Suzanne
Subject: RE: JUSTICE Oversight Testimony on Campaign Finance (FC-ALERTS:DOJ-0016-A)
I know :) You don't have to apologize to me. Just checking in because I am getting harassed. nothing out of the
ordinary.
From: Lerner Lois G
Am looking right now! It's been a bad day!
Lois G. Lerner
JW1559-001254
From: Sinno Suzanne
To: LLR@treasury.gov; Roc helle.Granat@treasury.gov; Jason.Brown@treasury.gov; Margaret.Bailey@treasury.gov;
Jeffrey.Warner@treasury.gov; Andrea.Gacki@trea sury.gov; Kevin.OConnor@fincen.gov; Luke.Ballman@treasury.gov;
Barbara.Hammerle@treasury.gov; Marshall.Kofler@fms.treas.gov; Marc.Seldin@fms.treas.gov;
Cc: Luke.Harman@treasury.gov; Adewale.Adeyemo@treasury.gov; Alexander.K rulic@treasury.gov;
ExecSecProcessUnit@treasury.gov; Kathryn.Alvar ez@treasury.gov; leigh.williams@treasury.gov;
Peter.Lee@treasury.gov; Priti.Agrawal@treasury.gov; Counsel.Office@tigta.treas.gov; Paul.Ahern@tre asury.gov;
Karen.Weber@treasury.gov; Anita.Blair@treasury. gov; Benjamin.Mann@treasury.gov;
Cathy.Higginbotham@treasury.gov; Daniel.Ballard@treasury.gov; Darlene.Peterson@treasury.gov;
George.Bostick@treasury.gov; Bill.Bradley@fincen.gov; lindsay.orlin@fincen.gov; Melissa.Nasrah@treasury.gov;
Please find revised testimony provided by DOJ. The new deadline is 11:00 A.M., THURSDAY, APRI L 4.
From: LLR
Lisa; Knopf, Kevin; Clark, Cynthia; O'Brien, Patrick; 'Mike.Maher@do.treas.gov'; Warner, Jeffrey; Gacki, Andrea;
O'Connor, Kevin; Ballman, Luke; Ha mmerle, Barbara; Kofler, Marshall P.; Seldin, Marc I.; Santaniello, Thomas E.
JW1559-001255
Brian; Peretti, Brian; Sonfield, Brian; Camacho, Cara; ExecSecPr ocessUnit; Alvarez, Kathryn; Williams, Leigh; LLR;
'Counsel.Office@tigta.treas.gov'; Ahern, Paul; 'Catherine.Ahn@treasury.gov'; Sutton, Gary; Townsend, Bria n; Yoo, Julia;
Bill; Orlin, Lindsay; Nasrah , Melissa; Hershfang, Jennifer; Tuchband, Matthew; Petersen, Stephanie; Hand, Tyler;
DEADLINE: 1:00 P.M. Wednesday, April 3, 20 13
Terrorism.
PLEASE NOTE: Comments/edits must be approved by a n official from your office at the Director level or
JW1559-001256
From:
Lerner Lois G
Sent:
To:
Flax Nikole C; Barre Catherine M
Subject:
RE: Witness list
great witness list --Larry Noble, who truly thinks we should be putting signers of 990s in prison
for tax fraud, Greg Colvin, who wrote the letter asking us to confirm the 2 rev.rules apply to
c4s--so he will say we are do nothings and Brad Smith --former FEC Commissioner who has
stated publicly that he doesn't believe in campaign finance laws --should be interesting
Lois G. Lerner
From: Flax Nikole C
To: Haynes Patricia J; Sinno Suzanne; Lunger Richard; Barre Catherine M; Amato Amy; Lerner Lois G
Subject: Re: Witness list
This is actually ok, bc for many of the questions, you can refer to the second panel which you should not stay for.
From: Haynes Patricia J [ mailto:Patricia.Haynes@ci.irs.gov ]
Sent: Wednesday, April 03, 2013 06:08 PM Eastern Standard Time
To: Sinno Suzanne; Lunger Richard; Barre Cathe rine M; Amato Amy; Flax Nikole C; Lerner Lois G
Subject: Re: Witness list
Yes that is how I should be listed.
From: Sinno Suzanne [ mailto:Suzanne.R.Sinno@irs.gov ]
To: Haynes Patricia J; Lunger Richard; Bar re Catherine M; Amato Amy; Flax Nikole C; Lerner Lois G
Subject: Witness list
I confirmed that Patty will be on the first panel with the DOJ witness. The entire witness list is below.
They wanted me to confirm - is this how you should be listed on the witness list:
Patricia Haynes
Deputy Chief, Criminal Investigation
Washington, DC
Panel 1
Mythili Raman, Acting Assistant Attorney General for the Criminal Division, Department of Justice. They expect
AAG Raman to speak about FECA violations relating to coordination, conduit transfers, and foreign donors.
Patricia Haynes, Deputy Chief, Criminal Investigation, Internal Revenue Service
Panel 2
Larry Noble, President, Americans For Campaign Reform. Mr. Noble worked at the FEC for twenty years,
including as FEC General Counsel from 1987 -2000.
JW1559-001257
Gregory Colvin, Principal, Adler & Colvin. Mr. Colvin is a tax lawyer specializing in political and lobbying activities
of nonprofit organizations.
Bradley Smith, Professor of Law, Capital University Law School (Invited by Ranking Member Graham ). Prof.
Smith is a former commissioner and chairman of the FEC.
Legislative Counsel
202-927-6922
202-622-5247 (fax)
JW1559-001258
From:
Marks Nancy J
Sent:
To:
Judson Victoria A; Brown Susan D
Cc:
Lerner Lois G
Subject:
RE: meeting with Senator Levin
Much appreciated, Ill double check with Nikole on whether she has any numbers sensitivities I know they try to keep
these small and not over senior them.
From: Judson Victoria A [mailto:Victoria.A.Judson@irscounsel.treas.gov]
To: Marks Nancy J; Brown Susan D
Cc: Lerner Lois G
Subject: RE: meeting with Senator Levin
Susan will attend with either me or Janine.
Victoria A. Judson
Division Counsel/Associate Chief Counsel (TEGE)
Phone: 202-622-6000
Fax:
202-622-3865
From: Marks Nancy J [mailto:Nancy.J.Marks@irs.gov]
To: Judson Victoria A; Brown Susan D
Cc: Lerner Lois G
Subject: FW: meeting with Senator Levin
Senator Levin has requested a mee ting on the letters exchanged between the hill and IRS on 501(c)(4) orgs in
particular. A meeting has been scheduled for Wednesday from 2 to 4 and a van will be transporting the team.
Nikole
Flax and Lois Lerner are planning to go (and both are fairly fa miliar with the letters). Nikole would like a lawyer there
(Id translate that as a nonenforcement impartial legal role person where Nikole and Lois both wear that
enforcement hat). She and I both think Susan would be splendid if she can do it.
If not Nikole is ok with my going
since I at least in the not so distant past was one and am still at least not on the front lines.
Vicki while either you or
Janine would also be good I suggested to Nikole that both of you have been far too overtasked and
we should try to
avoid layering one more thing on your plates right now. Let me know about Susan I have all the letters for bedside
reading if she can ; -).
From: Lerner Lois G
To: Flax Nikole C; Barre Catherine M
Cc: Sinno Suzanne; Marks Nancy J
Subject: RE: Sen. Levin Plans to Grill The IRS - Mother Jones
As we describe the process --why it takes so long, do we want

(b)(5) DP
Lois G. Lerner
JW1559-001259
From: Sinno Suzanne
Subject: FW: Sen. Levin Plans to Grill The IRS - Mother Jones
Importance: Low
FYI - for the meeting with Senator Levin's staff on their letters to us on 501(c)(4)s.
I have scheduled the meeting next W ednesday, April 10th from 2 -4. A van will pick up/drop off.
I am working on pulling all the incoming/outgoing letters and will email them to you once I get them.
If you have any questions about the meeting, just let me know.
Thanks,
Suzie
To: Sinno Suzanne
Importance: Low
(Mother Jones Magazine)... from NY Times column
Sen. Carl Levin Plans to Grill The IRS Over Dark Money
By Andy Kroll - | Tue Mar. 19, 2013 8:44 AM PDT
Sen. Carl Levin, right, in the Detroit Re d Wings jersey. People for
Cherry/Flickr
In his Tuesday column , the New York Times ' Joe Nocera hails Democrat Carl Levin, the tough, irascible senior senator
from Michigan who will retire at the end of his sixth term in December 2014. Nocera calls Levin "the Senate's muckraker,"
and he's right: As t he top Democrat on the Permanent Subcommittee on Investigations, Levin has probed shady mortgage
JW1559-001260
dealings, the dark world of derivatives, feckless ratings agencies, and more. He famously said "shitty deal" a dozen times
during a hearing with Goldman Sachs executives on, well, Goldman's shitty mortgage deals.
At the end of his column, Nocera drops in this juicy detail:
Toward the end of my interview with Levin, he let slip a tantalizing tidbit. Sometime in the next few
months, the permanent subcommittee plans to call the Internal Revenue Service to task for allowing the
political super PACs to be classified as tax -exempt 501(c)(4)s. "Tax -exempt 501(c)(4)s are not s upposed
to be engaged in politics," he said. "It is against the law to do so." Then he added, with a certain
undeniable relish, "We're going to go after them."
Oh, boy!
Oh, boy, indeed! Finally, someone in power plans to grill the IRS on why it is allowing hundreds of millions of dollars in
secret money to flow through supposedly nonpartisan "social welfare organizations" and into our elections. Levin's
comments aren't a complete surprise. In his retirement announcement , Levin said his investigative subcommittee will
"look into the failure of the IRS to enforce our tax laws and stem the flood of hundreds of millio ns of secret dollars flowing
into our elections, eroding public confidence in our democracy."
We're keenly interested in dark money here at Mother Jones , and as Mother Jones ' own dark money reporter yep, it's
there in my bioI can't wait to see what Levin digs up. Levin and his staff declined multiple interview requests, so you'll
just have to keep an eye on this space as the story develops.
JW1559-001261
JW1559-001262
From:
Judson Victoria A <Victoria.A.Judson@irscounsel.treas.gov>
Sent:
To:
Marks Nancy J
Cc:
Lerner Lois G; Brown Susan D
Subject:
RE: meeting with Senator Levin
4 of 6 did not come through
Victoria A. Judson
Phone: 202-622-6000
Fax:
202-622-3865
From: Marks Nancy J [mailto:Nancy.J.Marks@irs.gov]
To: Judson Victoria A
Cc: Lerner Lois G; Brown Susan D
You should have six emails with all the attachments
From: Judson Victoria A [ mailto:Victoria.A.Judso n@irscounsel.treas.gov]
To: Marks Nancy J
Cc: Lerner Lois G; Brown Susan D
Could you please send us copies of all the letters?
Victoria A. Judson
Division Counsel/Associat e Chief Counsel (TEGE)
Phone:
202-622-6000
Fax:
202-622-3865
From: Judson Victoria A
To: Marks Nancy J; Brown Susan D
Cc: Lerner Lois G
Susan will attend with eit her me or Janine.
Victoria A. Judson
Phone: 202-622-6000
202-622-3865
Fax:
From: Marks Nancy J [mailto:Nancy.J.Marks@irs.gov ]
To: Judson Victoria A; Brown Susan D
Cc: Lerner Lois G
Subject: FW: meeting with Senator Levin
JW1559-001263
Senator Levin has requested a meeting on the letters exchanged between the hill and IRS on 501(c)(4) orgs in
particular. A meeting has been scheduled for Wednesday from 2 to 4 and a van will be transporting the team.
Flax and Lois Lerner are planning to go (and both are fairly familiar with the letters).
Nikole
Nikole would like a lawyer there
(Id translate that as a none nforcement impartial legal role person where Nikole and Lois both wear that
enforcement hat). She and I both think Susan would be splendid if she can do it.
If not Nikole is ok with my going
since I at least in the not so distant past was one and am still at least not on the front lines. Vicki while either you or
Janine would also be good I suggested to Nikole that both of you have been far too overtasked and we should try to
avoid layering one more thing on your plates right now. Let me know about Susan I have all the letters for bedside
reading if she can ; -).
From: Lerner Lois G
To: Flax Nikole C; Barre Catherine M
Cc: Sinno Suzanne; Marks Nancy J
Subject: RE: Sen. Levin Plans to Grill The IRS - Mother Jones
As we describe the process --why it takes so long, do we want

(b)(5) DP
Lois G. Lerner
From: Sinno Suzanne
Importance: Low
FYI - for the meeting with Senator Levin's staff on their letters to us on 501(c)(4)s.
I have scheduled the meeting next W ednesday, April 10th from 2 -4. A van will pick up/drop off.
I am working on pulling all the incoming/outgoing letters and will email them to you once I get them.
If you have any questions about the meeting, just let me know.
Thanks,
Suzie
To: Sinno Suzanne
Importance: Low
(Mother Jones Magazine)... from NY Times column
JW1559-001264
Sen. Carl Levin Plans to Grill The IRS Over Dark Money
By Andy Kroll - | Tue Mar. 19, 2013 8:44 AM PDT
Sen. Carl Levin, right, in the Detroit Re d Wings jersey. People for
Cherry/Flickr
In his Tuesday column , the New York Times ' Joe Nocera hails Democrat Carl Levin, the tough, irascible senior senator
from Michigan who will retire at the end of his sixth term in December 2014. Nocera calls Levin "the Senate's muckraker,"
and he's right: As t he top Democrat on the Permanent Subcommittee on Investigations, Levin has probed shady mortgage
dealings, the dark world of derivatives, feckless ratings agencies, and more. He famously said "shitty deal" a dozen times
during a hearing with Goldman Sachs executives on, well, Goldman's shitty mortgage deals.
At the end of his column, Nocera drops in this juicy detail:
Toward the end of my interview with Levin, he let slip a tantalizing tidbit. Sometime in the next few
months, the permanent subcommittee plans to call the Internal Revenue Service to task for allowing the
political super PACs to be classified as tax -exempt 501(c)(4)s. "Tax -exempt 501(c)(4)s are not s upposed
to be engaged in politics," he said. "It is against the law to do so." Then he added, with a certain
undeniable relish, "We're going to go after them."
Oh, boy!
Oh, boy, indeed! Finally, someone in power plans to grill the IRS on why it is allowing hundreds of millions of dollars in
secret money to flow through supposedly nonpartisan "social welfare organizations" and into our elections. Levin's
comments aren't a complete surprise. In his retirement announcement , Levin said his investigative subcommittee will
"look into the failure of the IRS to enforce our tax laws and stem the flood of hundreds of millio ns of secret dollars flowing
into our elections, eroding public confidence in our democracy."
We're keenly interested in dark money here at Mother Jones , and as Mother Jones ' own dark money reporter yep, it's
there in my bioI can't wait to see what Levin digs up. Levin and his staff declined multiple interview requests, so you'll
just have to keep an eye on this space as the story develops.
JW1559-001265
JW1559-001266
From:
Kindell Judith E
Sent:
To:
Lerner Lois G
Cc:
Sinno Suzanne
Subject:
RE: Draft Testimony 4-3-13.docx
Attachments:
From: Lerner Lois G
Cc: Sinno Suzanne
Subject: Draft Testimony 4 -3-13.docx
Importance: High
See my questions on page 11 and fn7 We need the info ASAP so Suzie can work on getting
this through the process. Otherwise I agree with your suggested edits Thanks!
JW1559-001267
(b)(5)/DP
JW1559-001268
(b)(5)/DP
JW1559-001269
(b)(5)/DP
JW1559-001270
(b)(5)/DP
JW1559-001271
(b)(5)/DP
JW1559-001272
(b)(5)/DP
JW1559-001273
(b)(5)/DP
JW1559-001274
(b)(5)/DP
JW1559-001275
(b)(5)/DP
JW1559-001276
(b)(5)/DP
JW1559-001277
(b)(5)/DP
JW1559-001278
(b)(5)/DP
JW1559-001279
From:
Lerner Lois G
Sent:
Thursday, April 04, 2013 9:49 AM
To:
Cook Janine
Cc:
Paz Holly O
Subject:
RE: EO Enforcement Guidance Priority
They know my thoughts--you can leave it. We need guidance on c4, we need guidance on c4,
we need guidance on c4 IRS is getting hammered!
Lois G. Lerner
_____________________________________________
Cook Janine [ mailto:Janine.Cook@irscounsel.treas.gov ]
From:
Sent:
To:
Subject:
Lerner Lois G
RE: EO Enforcement Guidance Priority
ok. or we can move if youd like. If I don t hear back from you, Ill assume we stick as planned.
-----Original Appointment ----From: Lerner Lois G [mailto:Lois.G.Lerner@irs.gov]
Sent: Thursday, April 04, 2013 10:45 AM
To: Cook Janine
Subject: Declined: EO Enforcement Guidance Priority
When: Monday, April 08, 2013 2:00 PM -3:00 PM (GMT-05:00) Eastern Time (US & Canada).
Where: 4308 or 888-331-8226(access#
b(6) and b(...
I have to meet with CI about their testimony re c4 --Holly and David can take the lead on this-thanks
JW1559-001280
From:
Lerner Lois G
Sent:
To:
Sterner Christopher B; Sinno Suzanne; Flax Nikole C; Barre Catherine M; Vozne Jennifer L
Cc:
Sterner Christopher B
Subject:
RE: Senate hearing
(b)(5) DP
Lois G. Lerner
From: Sterner Christopher B [ mailto:Christopher.B.Sterner@irscounsel.treas.gov ]
Sent: Thursday, April 04, 2013 12:17 PM
To: Sinno Suzanne; Flax Nikole C; Barre Catherine M; Vozne Je nnifer L; Lerner Lois G
Cc: Sterner Christopher B
Subject: RE: Senate hearing
I think
(b)(5) DP
To: Flax Nikole C; Lemons Terry L; Barre Catherine M; Weber Richard; Haynes Patricia J; Lunger Richard; Sterner
I don't mind taking the lead. Please send me all your edits/comments.
Thanks,
Suzie
From: Flax Nikole C
work - as noted (and some formatting needs to be changed). W e need to get the document in shape soon so that we can
JW1559-001281
Susie/Terry/CI - can you decide who will take the lead in getting this ready to go and recirculate d for all to take a close
Thanks
JW1559-001282
From:
Kindell Judith E
Sent:
To:
Lerner Lois G; Biss Meghan R
Subject:
FW: Senate hearing
Attachments:
Draft Testimony 4-3-13 CCTEGE 4-4.docx
Here is Counsels input
From: Brown Susan D [mailto:Susan.D.Brown@irscounsel.treas.gov ]
Judy, FYI, here's what we forwarded on to CC:PA. Thanks.
From: Kindell Judith E [ mailto:Judith.E.Kindell@irs.gov ]
To: Brown Susan D
I think the language comes from responses to congressional inquiries, but Im not positive.
We made some suggested
changes.
Subject: FW: Senate hearing
Hi Judy, quick question. We just got forwarded this testimony and I see you're on the distribution.
Appendix A comes from?
Do you know where
Thanks! Susan
From: Flax Nikole C
We are going to proceed with CI testifying for IRS a t the hearing. Attached is a early version of the written testimony
It needs some
look? Adding Chris who supplied the 7206 material . We'll also need a shorter oral testimony and a prep with Steve on
Thanks
JW1559-001283
(b)(5)/DP
JW1559-001284
(b)(5)/DP
JW1559-001285
(b)(5)/DP
JW1559-001286
(b)(5)/DP
JW1559-001287
(b)(5)/DP
JW1559-001288
(b)(5)/DP
JW1559-001289
(b)(5)/DP
JW1559-001290
(b)(5)/DP
JW1559-001291
(b)(5)/DP
JW1559-001292
(b)(5)/DP
JW1559-001293
(b)(5)/DP
JW1559-001294
(b)(5)/DP
JW1559-001295
From:
Sinno Suzanne
Sent:
To:
Flax Nikole C; Sterner Christopher B; Barre Catherine M; Vozne Jennifer L; Lerner Lois G
Cc:
Sterner Christopher B; Haynes Patricia J; Lunger Richard
Subject:
RE: Senate hearing
Attachments:
Draft Testimony 4-4-13 - CI clean copy.docx
Attached is the latest version of the testimony.
Please send me all comments/edits as soon as possible so we can start
the clearance process.
Thank you,
Suzie
From: Flax Nikole C
To: Sinno Suzanne; Sterner Christopher B; Barre Catherine M; Vozne Jennifer L; Lerner Lois G
Cc: Sterner Christopher B; Haynes Patricia J; Lunger Richard
Thanks - please circulate after the comments are worked in and we will take a look.
I assume we need to put in clearance
today, right?
From: Sinno Suzanne
Sent: Thursday, April 04, 2013 12:3 3 PM
To: Flax Nikole C; Sterner Christopher B; Barre Catherine M; Vozne Jennifer L; Lerner Lois G
Attached is the copy CI and I have been working on. TEGE made edits to the appendix. I just got comments from
Counsel that I can add to the most current version of the testimony.
From: Flax Nikole C
To: Sterner Christopher B; Sinno Suzanne; B arre Catherine M; Vozne Jennifer L; Lerner Lois G
Is there a new version that we should be looking at.
From: Sterner Christopher B [ mailto:Christopher.B.Sterne r@irscounsel.treas.gov]
To: Sinno Suzanne; Flax Nikole C; Barre Catherine M; Vozne Jennifer L; Lerner Lois G
I think
(b)(5) DP
JW1559-001296
Thanks,
Suzie
From: Flax Nikole C
We are going to proceed with CI testifying for IRS at the hearing. Attached is a early version of the written testimony
work - as noted (and some formatting needs to be changed). We need to get the document in shape soon so that we can
look? Adding Chris who supplied the 7206 materi al. We'll also need a shorter oral testimony and a prep with Steve on
Thanks
JW1559-001297
(b)(5)/DP
JW1559-001298
(b)(5)/DP
JW1559-001299
(b)(5)/DP
JW1559-001300
(b)(5)/DP
JW1559-001301
(b)(5)/DP
JW1559-001302
(b)(5)/DP
JW1559-001303
From:
Lerner Lois G
Sent:
Thursday, April 04, 2013 12:12 PM
To:
Daly Richard M; Paz Holly O; Marx Dawn R
Subject:
RE: TIGTA report
Lois knows--I have been reviewing testimony --they are asking about criminal prosecutions and DOJ will be talking about
how since Citizens United c4s are part of the overall concerns. CI will talk about our criminal process --nothing specific to
the TIGTA issues. Thanks for thinking of me though --it takes a village!
Lois G. Lerner
To: Lerner Lois G; Paz Holly O; Marx Dawn R
Just to be positively sure you do know about this. I'm reacting cautiously since I didn't know.
-----Original Message ----From: Rutstein Joel S
To: Daly Richard M
CI is testifying before a subcommittee of the Sen. Judiciary Committee next Tuesday, April 9. Lois definitely knows about
it.
To: Rutstein Joel S
Just to make sure, and so I can be sure Lois et al aren't unaware, what is the hearing you are referring to? Thanks, Joel.
Mike
-----Original Message ----From: Rutstein Joel S
To: Daly Richard M
JW1559-001304
Mike, we're just tracking this particular subject in general due to its high visibility on the Hill right now. I think there 's an
upcoming hearing that will touch on the subject, and I assume Lois knows about it. I don't think TIGTA will play a role at
this point, but TIGTA is my beat here. Thanks, Joel
To: Rutstein Joel S
Importance: High
Hello, Joel,
This shows our proposed changes. There is also a narrative email that I will send you separately.
The version Lois sent may vary in very minor detail from this version.
Is someone in particular asking about the changes we are proposing?
Mike
-----Original Messag e----From: Lerner Lois G
Cc: Paz Holly O
Importance: High
Lois G. Lerner
To: Lerner Lois G
Attached is a version of the discussion draft that contains our comments as discuss ed yesterday.
JW1559-001305
From:
Lerner Lois G
Sent:
To:
Sinno Suzanne
Subject:
RE: Senate hearing
(-:
Lois G. Lerner
From: Sinno Suzanne
To: Lerner Lois G
yay! glad you approve.
From: Lerner Lois G
Sent: Thursday, April 04, 2 013 1:13 PM
To: Sinno Suzanne
I think they did a really nice job of laying out a complicated scheme in an understandable way.
Lois G. Lerner
From: Sinno Suzanne
To: Lerner Lois G
speedy! thank you!
From: Lerner Lois G
To: Sinno Suzanne
Cc: Flax Nikole C; Sterner Christopher B; Barre Catherine M; Vozne Jennifer L; Haynes Patricia J; Lunger Richard
Looks good to me --a couple edits--mostly spacing, but one comment and suggested
clarification.
Lois G. Lerner
JW1559-001306
Director of Exempt O rganizations
From: Sinno Suzanne
Thank you,
Suzie
From: Flax Nikole C
Thanks - please circulate after the comme nts are worked in and we will take a look. I assume we need to put in clearance
today, right?
From: Sinno Suzanne
Counsel that I can ad d to the most current version of the testimony.
From: Flax Nikole C
To: Sterner Christopher B; Sinno Suzanne; Barre Catherine M; Vozne Jennifer L; Lerner Lois G
I think
(b)(5) DP
JW1559-001307
Christopher B; Vozn e Jennifer L; Lerner Lois G; Kindell Judith E
Thanks,
Suzie
From: Flax Nikole C
Christopher B; Vozne Jennifer L; Lerner Lois G; Ki ndell Judith E
Susie/Terry/CI - can you decide who will take the lead in gett ing this ready to go and recirculated for all to take a close
Thanks
JW1559-001308
From:
Brown Susan D <Susan.D.Brown@irscounsel.treas.gov>
Sent:
To:
Lerner Lois G
Cc:
Kindell Judith E; Cook Janine
Subject:
RE: Senate hearing
Thank you, Lois.
To: Brown Susan D
Cc: Kindell Judith E
Just trying to keep you updated on all we know
Lois G. Lerner
From: Lerner Lois G
To: Kindell Judith E; Biss Meghan R
fyi--I don't think they will be including the append ix with the testimony, but we want a back
--thanks
pocket copy--hence me asking you to

(b)(5)/DP
Lois G. Lerner
Sent: Thursday, April 04, 2013 12: 45 PM
To: Lerner Lois G; Biss Meghan R
Here is Counsels input
Judy, FYI, here's what we forwarded on to CC:PA. Thanks.
JW1559-001309
To: Brown Susan D
I think the language comes from responses to congressional inquiries, but Im not positive.
We made some suggested
changes.
Hi Judy, quick question. We just got forwarded this testimony and I see you're on the distribution.
Appendix A comes from?
Do you know where
Thanks! Susan
From: Flax Nikole C
We are going to proceed with CI testifying for IRS a t the hearing. Attached is a early version of the written testimony
look? Adding Chris who supplied the 7206 material . We'll also need a shorter oral testimony and a prep with Steve on
Thanks
JW1559-001310
From:
Flax Nikole C
Sent:
To:
Sinno Suzanne; Lerner Lois G
Cc:
Sterner Christopher B; Barre Catherine M; Vozne Jennifer L; Haynes Patricia J; Lunger
Subject:
RE: Senate hearing
Richard
I wonder if we need to revise the 2nd para
(b)(5) DP
. I don't care
strongly. I am fine putting into clearance when everyone is good. Would like to see the c4 piece before we do anything
with it.
From: Sinno Suzanne
To: Lerner Lois G
Added all of your comments - approved by CI. Here is an update if others haven't started proofing.
From: Lerner Lois G
To: Sinno Suzanne
Looks good to me --a couple edits--mostly spacing, but one comment and suggested
clarification.
Lois G. Lerner
From: Sinno Suzanne
Thank you,
Suzie
From: Flax Nikole C
JW1559-001311
Thanks - please circulate after the co mments are worked in and we will take a look.
I assume we need to put in clearance
today, right?
From: Sinno Suzanne
To: Flax Nikole C; Sterner Christopher B; Barre Catherine M ; Vozne Jennifer L; Lerner Lois G
From: Flax Nikole C
I think
(b)(5) DP
Thanks,
Suzie
From: Flax Nikole C
We are going to proceed with CI testifying for IRS at the hearing. Attached is a early version of the written testimony
It needs some
JW1559-001312
We need to get the document in shape soon so that we can
look? Adding Chris who supplied the 7206 materi al. We'll also need a shorter oral testimony and a prep with Steve on
Thanks
JW1559-001313
From:
Kindell Judith E
Sent:
To:
Cook Janine
Cc:
Brown Susan D; Munroe David; Lerner Lois G; Biss Meghan R; Sinno Suzanne
Subject:
RE: Senate hearing
Attachments:
Draft Testimony 4-3-13 CCTEGE 4-4.docx
Oops
To: Cook Janine
Cc: Brown Susan D; Munroe David; Lerner Lois G; Biss Meghan R; Sinno Suzanne
Attached is a draft that incorporates the 527/PF along with some of Meghans changes.
Also, I deleted some of the
content that Susan had suggested deleting in her comments.
Cc: Brown Susan D; Munroe David
Judy, are you handling any follow -up on the 527/PF piece? I was fine with the minimal references, but also fine if you
want to restructure the sentence to pull out. Just watned to make sure it wasnt waiting for us. Also, I think Meghans
comments are good but as these things go, we may want to limit our edits to only what we think we need for
precision. Again, leave that up to you.
I dont think were sending anything further (unless we get another round to look at).
Thanks!
From: Kindell Judith E [mailto:Judith.E.Kindell@irs.gov]
To: Brown Susan D; Lerner Lois G
Cc: Sinno Suzanne; Biss Meghan R
Id make that
Also, Meghan had a couple
(b)(5)/DP
comments. I dont think we need to get into
(b)(5)/DP
but otherwise Im fine with her comments.
From: Brown Susan D [mailto:Susan.D.Brown@irscounsel.treas.gov]
To: Kindell Judith E; Lerner Lois G
Cc: Sinno Suzanne
JW1559-001314
I agree with Judy about
But this sentence (describing 6104) is not limited to c4s.
(b)(5)/DP
Would it work if we said:
(b)(5) DP
Cc: Sinno Suzanne
I had sent Susan a copy of what we sent Suzy , so she was working from that. Since the appendix deals only with section
501(c)(4) organizations, I suggest
(b)(5)/DP
From: Lerner Lois G
Cc: Sinno Suzanne
Hope you are there--please look at both --I was good with Counsel comments, but don't know if
we added stuff so we need a combined version. I also need you to put

(b)(5)/DP
--maybe a fn. Thanks!
Lois G. Lerner
From: Sinno Suzanne
To: Lerner Lois G
yes - they don't want it part of the testimony now. So here is the version o f the appendix that you guys sent me
earlier. Here is CCs comments too which you will notice only are to the Appendix.
I didn't know what would be easiest at
this point on how to work editing the appendix. thoughts?
From: Lerner Lois G
To: Sinno Suzanne
You do know the appendix isn't attached to the testimony you sent?
Lois G. Lerner
JW1559-001315
From: Sinno Suzanne
From: Flax Nikole C
From: Sterner Christopher B [mailto:Christopher.B.Sterner@irscounsel.treas.gov]
To: Sinno Suzanne; Flax Nikole C; Barre Catherine M; Vozne Jenn ifer L; Lerner Lois G
I think
(b)(5) DP
Thanks,
Suzie
From: Flax Nikole C
Christopher B; Vozne Jennifer L; Lerner Lois G ; Kindell Judith E

JW1559-001316
Thanks
JW1559-001317
(b)(5)/DP
JW1559-001318
(b)(5)/DP
JW1559-001319
(b)(5)/DP
JW1559-001320
(b)(5)/DP
JW1559-001321
(b)(5)/DP
JW1559-001322
(b)(5)/DP
JW1559-001323
(b)(5)/DP
JW1559-001324
(b)(5)/DP
JW1559-001325
(b)(5)/DP
JW1559-001326
(b)(5)/DP
JW1559-001327
(b)(5)/DP
JW1559-001328
(b)(5)/DP
JW1559-001329
From:
Sent:
To:
Kindell Judith E
Cc:
Brown Susan D; Munroe David; Lerner Lois G; Biss Meghan R; Sinno Suzanne
Subject:
RE: Senate hearing
Attachments:
Draft Testimony 4-3-13 CCTEGE 4-4 5pm.docx
Thanks. I cleaned it up a bit by taking out most of the comments. (The only additional edit is to remove the language
(b)(5)/DP
All of our collective edits are geared toward precision and removing detail that doesnt seem necessary for this
document.
To: Cook Janine
Thanks!
Id make that
(b)(5)/DP
(b)(5)/DP
JW1559-001330
Cc: Sinno Suzanne
(b)(5)/DP
. But this sentence (describing 6104) is not limited to c4s.
(b)(5)/DP
(b)(5)/DP
(b)(5)/DP
(b)(5) DP
Cc: Sinno Suzanne
I had sent Susan a copy of what we sent Suzy , so she was working from that. Since the appendix deals only with section
(b)(5)/DP
From: Lerner Lois G
Cc: Sinno Suzanne
(b)(5)/DP
Lois G. Lerner
From: Sinno Suzanne
To: Lerner Lois G
From: Lerner Lois G
To: Sinno Suzanne
JW1559-001331
Lois G. Lerner
From: Sinno Suzanne
From: Flax Nikole C
To: Sinno Suzanne; Flax Nikole C; Barre Catherine M; Vozne Jenn ifer L; Lerner Lois G
I think
(b)(5) DP
From: Sinno Suzanne [mailto:Suzanne.R .Sinno@irs.gov]
Thanks,
Suzie
From: Flax Nikole C
JW1559-001332
where I tried to separate the issues and make it clear that CI will n ot be discussing substantive c4 rules. It needs some
Susie/Terry/CI - can you decide who will take the lead i n getting this ready to go and recirculated for all to take a close
Thanks
JW1559-001333
(b)(5)/DP
JW1559-001334
(b)(5)/DP
JW1559-001335
(b)(5)/DP
JW1559-001336
(b)(5)/DP
JW1559-001337
(b)(5)/DP
JW1559-001338
(b)(5)/DP
JW1559-001339
(b)(5)/DP
JW1559-001340
(b)(5)/DP
JW1559-001341
(b)(5)/DP
JW1559-001342
(b)(5)/DP
JW1559-001343
(b)(5)/DP
JW1559-001344
From:
Sinno Suzanne
Sent:
To:
Lerner Lois G; Brown Susan D; Kindell Judith E
Subject:
RE: Senate hearing
I am fine with whatever you guys decide! The only instruction I was giving was to let Nikole look at it before it leaves our
building. W e can honestly send this to the Subcommittee on Monday.
The Senators won't look at it over the weekend ...
not everyone enjoys reading about tax stuff as much as us.
From: Lerner Lois G
To: Brown Susan D; Kindell Judith E
Cc: Sinno Suzanne
Suzie--I think they are right --if the appendix is going to be used by IRS --even informally--we
should make their suggested changes. Judy--can you send me a copy with the change
made? for my notebook--thanks
Lois G. Lerner
From: Brown Susan D [mailto:Susan. D.Brown@irscounsel.treas.gov]
Cc: Sinno Suzanne
But this sentence (describing 6104) is not li mited to c4s.
(b)(5)/DP
(b)(5) DP
Cc: Sinno Suzanne
I had sent Susan a copy of what we sent Su zy, so she was working from that. Since the appendix deals only with section
(b)(5)/DP
JW1559-001345
From: Lerner Lois G
Sent: Thursday, April 04, 2 013 1:17 PM
Cc: Sinno Suzanne

(b)(5)/DP
Lois G. Lerner
From: Sinno Suzanne
To: Lerner Lois G
yes - they don't want it part of the testimony now. So here is the version of the appendix that you guys sent me
From: Lerner Lois G
To: Sinno Suzanne
Lois G. Lerner
From: Sinno Suzanne
From: Flax Nikole C
To: Sterner Christopher B; Sinno Suzanne; Barre Catherine M; Vozn e Jennifer L; Lerner Lois G
JW1559-001346
I think
(b)(5) DP
Thanks,
Suzie
From: Flax Nikole C
where I tried to separate the issues an d make it clear that CI will not be discussing substantive c4 rules. It needs some
Thanks
JW1559-001347
From:
Lerner Lois G
Sent:
To:
Sinno Suzanne; Cook Janine; Brown Susan D; Kindell Judith E
Cc:
Munroe David; Biss Meghan R
Subject:
FW: Senate hearing
Attachments:
Draft Testimony 4-3-13 CCTEGE 4-4 5pm.docx
Lois G. Lerner
(b)(5)/DP
document.
To: Cook Janine
comments are good but as th ese things go, we may want to limit our edits to only what we think we need for
JW1559-001348
Thanks!
From: Kindell Judith E [mailto:Judith.E. Kindell@irs.gov]
Id make that
Also, Meghan ha d a couple
(b)(5)/DP
(b)(5)/DP
Cc: Sinno Suzanne
(b)(5)/DP
(b)(5)/DP
(b)(5) DP
Cc: Sinno Suzanne
I had sent Susan a copy of what we sent Suzy, so she was working from that.
Since the appendix deals only with section
(b)(5)/DP
From: Lerner Lois G
Cc: Sinno Suzanne

(b)(5)/DP
Lois G. Lerner
JW1559-001349
From: Sinno Suzanne
To: Lerner Lois G
From: Lerner Lois G
To: Sinno Suzanne
Lois G. Lerner
From: Sinno Suzanne
From: Flax Nikole C
I think
(b)(5) DP
JW1559-001350
Thanks,
Suzie
From: Flax Nikole C
It needs some
Thanks
JW1559-001351
(b)(5)/DP
JW1559-001352
(b)(5)/DP
JW1559-001353
(b)(5)/DP
JW1559-001354
(b)(5)/DP
JW1559-001355
(b)(5)/DP
JW1559-001356
(b)(5)/DP
JW1559-001357
(b)(5)/DP
JW1559-001358
(b)(5)/DP
JW1559-001359
(b)(5)/DP
JW1559-001360
(b)(5)/DP
JW1559-001361
(b)(5)/DP
JW1559-001362
From:
Sinno Suzanne
Sent:
To:
Cook Janine; Lerner Lois G; Kindell Judith E
Cc:
Brown Susan D; Munroe David; Biss Meghan R
Subject:
RE: Senate hearing
Attachments:
IRS Testimony for Senate Judiciary Hearing - clearance.docx
Yes it was. Here is what we sent to Treasury.
To: Lerner Lois G; Sinno Suzanne; Kindell Judith E
Cc: Brown Susan D; Munroe David; Biss Meghan R
And I expect the beginning of the testimony needs revised to
(b)(5)/DP
We did not make those edits.
To: Sinno Suzanne; Cook Janine; Kindell Judith E
Yes--the appendix not part of the testimony
Lois G. Lerner
From: Sinno Suzanne
To: Cook Janine; Kindell Judith E
Cc: Brown Susan D; Munroe David; Lerner Lois G; Biss Meghan R
Just to be clear - I can delete the testimony part right? That part has already gone to Treasury for clearance.
sending the appendix to the hill informally.
We are only
yes. Thanks Suzy.
JW1559-001363
Cc: Brown Susan D; Munroe David; Lerner Lois G; Biss Meg han R
Is this copy ready to go to Nikole for her review?
(b)(5)/DP
document.
To: Cook Janine
comments are good but as these things go, we may want to li mit our edits to only what we think we need for
Thanks!
JW1559-001364
Id make that
(b)(5)/DP
(b)(5)/DP
To: Kindell Judith E; L erner Lois G
Cc: Sinno Suzanne
(b)(5)/DP
(b)(5)/DP
(b)(5)/DP
(b)(5) DP
Cc: Sinno Suzanne
(b)(5)/DP
From: Lerner Lois G
Cc: Sinno Suzanne

(b)(5)/DP
Lois G. Lerner
From: Sinno Suzanne
To: Lerner Lois G
JW1559-001365
From: Lerner Lois G
To: Sinno Suzanne
Lois G. Lerner
From: Sinno Suzanne
From: Flax Nikole C
I think
(b)(5) DP
To: Flax Nikole C; Lemons Terry L; Barre Catherine M; Weber Richard; Haynes Patricia J ; Lunger Richard; Sterner
Thanks,
Suzie
JW1559-001366
From: Flax Nikole C
Thanks
JW1559-001367
(b)(5)/DP
JW1559-001368
(b)(5)/DP
JW1559-001369
(b)(5)/DP
JW1559-001370
(b)(5)/DP
JW1559-001371
(b)(5)/DP
JW1559-001372
(b)(5)/DP
JW1559-001373
From:
Lerner Lois G
Sent:
To:
Sinno Suzanne; Cook Janine
Subject:
Appendix draft - TEGE and CC 4 3 2013.doc
Attachments:
Appendix draft - TEGE and CC 4 3 2013.doc
Just took "appendix" off
JW1559-001374
(b)(5)/DP
JW1559-001375
(b)(5)/DP
JW1559-001376
(b)(5)/DP
JW1559-001377
(b)(5)/DP
JW1559-001378
From:
Lerner Lois G
Sent:
To:
Cook Janine
Subject:
RE: Senate hearing
it's been a long, drawn out discussion --(-:
Lois G. Lerner
I didnt know if they were going to say anything in the intro at all.
But suzy just sent what the testimony looks like and it
is consistent with what you have below. thanks.
To: Cook Janine; Sinno Suzanne; Kindell Judith E
No--that was the decision made. CI is asked to testify about criminal prosecution under the
false statement provisions --we've already told them, CI won't be testifying about how that
applies to c4 or the c4 rules
Lois G. Lerner
I figured they can do that as they decide how they want to handle the two pieces.
Does CI testimony want to say
anything at all??
To: Cook Janine; Sinno Suzanne; Kindell Judith E
JW1559-001379
it does--we can send for Nikole's OK while we look at how to adjust that
Lois G. Lerner
And I expect the beginning of the testimony needs revised to
(b)(5)/DP
We did not make those edits.
To: Sinno Suzanne; Cook Janine; Kindell Judith E
Yes--the appendix not part of the testimony
Lois G. Lerner
From: Sinno Suzanne
Just to be clear - I can delete the testimony part right? That part has already gone to Treasury for clearance.
We are only
sending the appendix to the hill informally.
yes. Thanks Suzy.
JW1559-001380
Is this copy ready to go to Nikole for her review?
(b)(5)/DP
document.
To: Cook Janine
want to restructure the sentence to pull out. Just watned to make sure it wasn t waiting for us. Also, I think Meghans
I dont think were sending anything further (unless we get an other round to look at). Thanks!
Id make that
(b)(5)/DP
(b)(5)/DP
(b)(5)/DP
JW1559-001381
Cc: Sinno Suzanne
But this sentence (describing 6104) is not limited to c4s.
(b)(5)/DP
(b)(5)/DP
(b)(5) DP
Cc: Sinno Suzanne
(b)(5)/DP
(b)(5)/DP
(b)(5)/DP
From: Lerner Lois G
Cc: Sinno Suzanne
(b)(5)/DP
(b)(5)/DP
we added stuff so we need a combined vers ion. I also need you to put
(b)(5)/DP
(b)(5)/DP
(b)(5)/DP
-maybe a fn. Thanks!
Lois G. Lerner
From: Sinno Suzanne
To: Lerner Lois G
earlier. Here is CCs comments too which you will notice only are to the Appendix. I didn't know what would be easiest at
From: Lerner Lois G
To: Sinno Suzanne
JW1559-001382
Lois G. Lerner
From: Sinno Suzanne
From: Flax Nikole C
I think
(b)(5) DP
To: Flax Nikole C; Lemons Terry L; Barre Catherine M; Weber Richard; Haynes Patricia J ; Lunger Richard; Sterner
Thanks,
Suzie
From: Flax Nikole C
It needs some
JW1559-001383
Thanks
JW1559-001384
From:
Sinno Suzanne
Sent:
Friday, April 05, 2013 9:45 AM
To:
Lerner Lois G
Subject:
FW: Draft of oral testimony for Judiciary hearing
Attachments:
Draft Haynes Judiciary oral statement 040413.doc
From: Pryde Joan A
Sent: Friday, April 05, 2013 7:54 AM
To: Haynes Patricia J
Cc: Sinno Suzanne; Barre Catherine M; Lunger Richard
Subject: Draft of oral testimony for Judiciary hearing
Hi, Patricia. Attached is a draft of your oral statement for the April 9 hearing. Take a look and let me know if it's OK -- I
tried to be as conversational as possible but want to make sure I didn't mischaracterize anything in the process. Thanks!
Joan A. Pryde
Public Affairs Specialist/Speechwriter
Communications & Liaison
202-927-0107 (office)
202-641-6425 (mobile)
JW1559-001385
(b)(5) DP
JW1559-001386
(b)(5) DP
JW1559-001387
(b)(5) DP
JW1559-001388
(b)(5) DP
JW1559-001389
From:
Lerner Lois G
Sent:
To:
Paz Holly O
Subject:
TIGTA - Report on c 4s - April 18 2015.doc
Attachments:
TIGTA - Report on c 4s - April 18 2015.doc
JW1559-001595
(b)(5) DP
(b)(5)
JW1559-001596
(b)(5)
(b)(5)
JW1559-001597
(b)(5)
(b)(5)
JW1559-001598
(b)(5)
(b)(5)
(b)(5)
JW1559-001599
(b)(5)
(b)(5)
(b)(5)
(b)(5)
JW1559-001600
(b)(5)
(b)(5)
(b)(5)
JW1559-001601
From:
Paz Holly O
Sent:
To:
Lerner Lois G
Subject:
Latest version
Attachments:
TIGTA - Report on c 4s - April 18 2015 130 pm HOP.doc
Tried to address a few of the issue we discussed this morning. My changes are tracked.
JW1559-001602
(b)(5) DP
(b)(5)
JW1559-001603
(b)(5)
(b)(5)
JW1559-001604
(b)(5)
(b)(5)
JW1559-001605
(b)(5)
(b)(5)
(b)(5)
JW1559-001606
(b)(5)
(b)(5)
(b)(5)
(b)(5)
JW1559-001607
(b)(5)
(b)(5)
JW1559-001608
From:
Lerner Lois G
Sent:
To:
Cc:
Grant Joseph H
Subject:
Attachments:
I think this is about as good as we can do. Absent major objections, I think we should get this
off to Nikole, who will have her own ideas. Thanks to both of you for all the time and effort put
into the response.
JW1559-001609
(b)(5) DP
(b)(5)
JW1559-001610
(b)(5)
(b)(5)
JW1559-001611
(b)(5)
(b)(5)
JW1559-001612
(b)(5)
(b)(5)
(b)(5)
JW1559-001613
(b)(5)
(b)(5)
(b)(5)
(b)(5)
JW1559-001614
(b)(5)
(b)(5)
JW1559-001615
From:
Grant Joseph H
Sent:
To:
Flax Nikole C; Daly Richard M
Cc:
Lerner Lois G; Marks Nancy J; Paz Holly O
Subject:
Re: TIGTA - Report on c 4s - April 18 2015 130 pm HOP - x
Nikole,
Yes. We wanted to give you adequate time to review since TIGTA gave us less than the usual 30 days to respond.
Joseph
-------------------------Sent from my BlackBerry Wireless Handheld
From: Flax Nikole C
Sent: Thursday, April 18, 2013 08:15 PM Eastern Standard Time
To: Daly Richard M
Cc: Grant Joseph H; Lerner Lois G; Marks Nancy J; Paz Holly O
Subject: Re: TIGTA - Report on c 4s - April 18 2015 130 pm HOP - x
Thanks. For a number of reasons, we don't wa nt to respond early. Don't we have until the 30th?
From: Daly Richard M
Sent: Thursday, April 18, 2013 08:12 PM Eastern Standard Time
To: Flax Nikole C
Cc: Grant Joseph H; Lerner Lois G; Marks Nancy J; Paz Holly O
Subject: TIGTA - Report on c 4s - April 18 2015 130 pm HOP - x
Hello, Nicole,
Attached is our proposed response to the TIGTA report on EOs review of (c)(4)s etc.
We would like to provide our signed response to TIGTA by next Thursday, April 25.
needed, we can get it.
But if additional time is
Joseph will sign the memo. I am sending the response to Joel Rutstein in Leg Affairs and anticipate no
concerns from his office.
There was no need to coordinate this response with any other part of the Service, and we did not do so.
Please note that in the second paragraph on page 1 we refer to a
(b)(5) DP
I did not want to delay sending this to you while we address that relatively
minor point.
I will send a copy of the report by separate email, since I am still feeling my way on attaching multiple
documents in Windows 7.
JW1559-001616
We will be happy to hear of an y concerns or suggestions.
Mike
202.283.9964
JW1559-001617
From:
Lerner Lois G
Sent:
To:
Kindell Judith E
Subject:
lobbying speech.docx
Attachments:
This looks good--a couple questions and make sure I didn't change meaning with the edits. I
will probably turn into an outline just so I can follow easier and not have to "read read." Let
me know--Also, there will be a Q &A after the remarks. Do you want to come in the event I get
stuck on a technical question? You don't have to--I could refer them to later panels --up to
you.
JW1559-001618
(b)(5) DP
(b)(5)/DP
JW1559-001619
(b)(5) DP
(b)(5)/DP
JW1559-001620
(b)(5) DP
(b)(5)/DP
JW1559-001621
(b)(5) DP
(b)(5)/DP
JW1559-001622
(b)(5) DP
(b)(5) DP
(b)(5)/DP
JW1559-001623
From:
Lerner Lois G
Sent:
To:
Lerner Lois G
Subject:
Attachments:
JW1559-001624
(b)(5) DP
JW1559-001625
(b)(5) DP
JW1559-001626
(b)(5) DP
JW1559-001627
(b)(5) DP
JW1559-001628
(b)(5) DP
JW1559-001629
From:
Lerner Lois G
Sent:
To:
Lerner Lois G
Subject:
Attachments:
JW1559-001630
(b)(5) DP
JW1559-001631
(b)(5) DP
JW1559-001632
(b)(5) DP
JW1559-001633
(b)(5) DP
JW1559-001634
(b)(5) DP
JW1559-001635
From:
Lerner Lois G
Sent:
Friday, April 19, 2013 1:00 PM
To:
Lerner Lois G
Subject:
FW: lobbying speech
Attachments:
Lois G. Lerner
To: Lerner Lois G
Subject: lobbying speech
I added page numbers when I printed. Also, the draft mentions
(b)(5) DP
JW1559-001636
(b)(5) DP
(b)(5)/DP
JW1559-001637
(b)(5)/DP
(b)(5)
DP
JW1559-001638
(b)(5)/DP
(b)(5)
DP
JW1559-001639
(b)(5)/DP
(b)(5)
DP
JW1559-001640
(b)(5) DP
(b)(5) DP
(b)(5)/DP
JW1559-001641
From:
Paz Holly O
Sent:
To:
Lerner Lois G
Subject:
RE: Another Topic
Are you OK with
being added to the BOLO by name or would you want something more general like?:
b(3)\6103
(b)(5) DP
That would capture anything re:
(b)(5) DP
Sent: Friday, April 19, 2013 2:08 PM
To: Paz Holly O
Subject: Another Topic
Importance: High
By the way--please tell Cindy if they see that application for the
b(3)\6103
should be sent here right away --it needs to be worked here. Meghan and Judy can oversee --they suggested Liz Ardoin
might be a good person to develop it.
Lois G. Lerner
To: Lerner Lois G
Subject: RE: Request
OK. It's really more of a Mike thing than a David thing. I invited Mike already.
To: Paz Holly O
The dates don't work for me, but I'm OK with you doing it without me so long as Counsel and Judy are there. Do you
want David there too?
Lois G. Lerner
-----Original Message ----1
JW1559-001642
From: Paz Holly O
To: Lerner Lois G
Subject: FW: Request
Below are the dates that work for TP and most of the IRS folks (me, Judy, Counsel). Would you like to attend? Are you
available? Thanks.
-----Original Messa ge----From: Amato Amy
To: Paz Holly O
The Hill staff is no longer involved and I'm working directly with the constituents. Here's what they propose. What are
your thoughts? I have no idea what "early in the morning" means. If you want to meet here at 1111, I can make
arrangements.
Thanks
Our first choice would be to meet early on the morning of 5/10. The second choice would be to meet late in the
morning or early in the afternoon on
5/8. We would come in to town the night before the 10th or early in the
morning on the 8th and could meet at either 999 North Capitol or 1111
Constitution, whichever would be more convenient for your people. When we
have a specific time and location we will make travel and any necessary
hotel arrangements and confirm the plan with you. It might be helpful if
you could give us a time window of availability on the days in question.
Sent: Wednesday, April 17 , 2013 4:32 PM
To: Amato Amy
Amy,
5/8 and 5/10 look the best for us. Morning would be better but afternoon is OK too. We agree with you that a call
would be best, but, if the meeting will be in -person, we'd prefer it be at 1111 or 999 N. Capitol rather than the Hill.
-----Original Message ----From: Amato Amy
To: Paz Holly O
Sorry Holly--the staff came back and asked if we could get this on the calendar. Were you able to connect with Lois?
Thanks
-----Original Message ----2
JW1559-001643
From: Paz Holly O
To: Amato Amy
Amy,
I am checking with Lois on dates, logistics and who should participate from our end. I will get back to you as soon as
possible.
Holly
To: Paz Holly O
Sorry to pester, but have you had a chance look at those dates and see if we can proceed? I would rather offer a
conference call, but if they want to sit down with us, can we do it here? I think that would be better than going to the
Congressional offi ce.
Thanks
Sent: Monday, April 15, 2013 11:05 AM
To: Paz Holly O
Importance: High
Holly,
The Senator's office just came back with the request below, after I told her we cannot provide advi ce, but we could talk
about the process and applicable laws, generally, and the required forms. How would you like me to proceed?
Amy
My constituent would like to move forward with the meeting. Below and attached is some information about the
constituent (
b(3)\6103
) and a list of attendees expected to attend. They'd like to have an in -
person meeting here in Washington (if possible). They are generally available during the weeks of 4/22, 4/29 and 5/6,
although not on
4/22-4/23 or 5/6.
6103
is a
b(3)\6103
organization which we believe is a social welfare organization exempt from
taxation under Section 501(c)(4) of the Internal Revenue Code. It would be most helpful to speak with someone at the
IRS with experience in applications for exemption recognition by
b(3)\6103
JW1559-001644
The following individuals are expected to attend:
6103
b(3)\6103
6103
6103
Sent: Thursday, April 11, 2013 10:53 A M
To: Amato Amy
Subject: FW: Request
Amy,
We are willing to meet with this taxpayer. However, please emphasize to the Congressional staff that we cannot advise
the organization on how to fill out the application form and the conversation is no guarante e about how we'd look at
the application because we need to look at all the facts and circumstances. We can speak generally about the process
and law that may apply. You can say that in the past there have been misunderstandings on that front. Sometimes folks
think they have made things clear in the discussion with us but things look different when the application is filed.
So, we are happy to meet, but those are the caveats.
Thanks,
Holly
To: Paz Holly O
Subject: Request
Importance: High
Holly, we got this question from the Hill. Would we ever agree to this type of meeting? Have we ever done anything like
it in the past? Thanks
One of our constitu ents
) may be filing an application
b(3)\6103
Before filing their application, they'd to do a pre -meeting with the IRS. And we'd like to
help them facilitate that me eting.
JW1559-001645
From:
Lerner Lois G
Sent:
To:
Park Nalee
Cc:
Marx Dawn R
Subject:
FW: RESCHEDULING FOR Meeting with Senator Levin/McCain's staff (PSI) to discuss
501(c)(4) letters
We're off the hook for Tuesday --stay tuned.
Lois G. Lerner
______________________________________________
Flax Nikole C
From:
Sent:
To:
Subject:
Barre Catherine M; Sinno Suzanne; Lerner Lois G; Marks Nancy J; Brown Susan D; Cook Janine
RE: RESCHEDULING FOR Meeting with Senator Levin/McCain's staff (PSI) to discuss 501(c)(4) letters
Great - thanks very much
_______________________________ ______________
From:
Sent:
Barre Catherine M
To:
Subject:
Sinno Suzanne; Lerner Lois G; Marks Nancy J; Flax Nikole C; Brown Susan D; Cook Janine
RESCHEDULING FOR Meeting with Senator Levin/McCain's staff (PSI) to discuss 501(c)(4) letters
Senator McCains staff has a late breaking conflict for most of our scheduled time on Tuesday. The Levin staff apologizes
for the inconvenience but has asked if there is an alternative 5 hour block of time in the next few weeks that w e could
meet with them. Ive gone back to ask if there are days that definitely dont work for them. Once I hear back I will
circulate and we can work the calendars.
Suzie is the organizer on the calendar invite and is out of the office today and does n ot have a blackberry. SO, I cant
send a meeting cancellation to you. You will need to delete the meeting on your calendars on your own or wait for Suzie
on Monday. Either way, you just got a 5 hour block free on Tuesday (lets focus on the good news to day).
Have a great weekend.
Cathy
-----Original Appointment ----From: Sinno Suzanne
To: Sinno Suzanne; Lerner Lois G; Marks Nancy J; Flax Nikole C; Brown Susan D; Cook Janine; Barre Catherine M
Subject: Meeting with Senator Levin/McCain's staff (PSI) to discuss 501(c)(4) letters
When: Tuesday, April 23, 2013 12:00 PM -5:00 PM (GMT-05:00) Eastern Time (US & Canada).
Where:
*~*~*~*~*~*~*~*~*~*
JW1559-001646
From:
Sent:
To:
Lerner Lois G; Barre Catherine M; Flax Nikole C; Sinno Suzanne; Marks Nancy J; Brown
Subject:
Re: RESCHEDULING FOR Meeting with Senator Levin/McCain's staff (PSI) to discuss
Susan D
501(c)(4) letters
That works for me
From: Lerner Lois G [ mailto:Lois.G.Lerner@irs.gov]
To: Barre Catherine M; Flax Nikole C; Sinno Suzanne; Marks Nancy J; Brown Susan D; Cook Janine
Subject: RE: RESCHEDULING FOR Meeting with Senator Levin/McCain's staff (PSI) to discuss 501(c)(4) letters
We'll make sure we do it on a day you're here --you've worked so hard--wouldn't want you to
miss it. (-: I say shoot for May 1 in the afternoon if that works for others
Lois G. Lerner
To: Lerner Lois G; Flax Nikole C; Sinno Suzanne; Marks Nancy J; Brown Susan D; Cook Ja nine
Subject: Re: RESCHEDULING FOR Meeting with Senator Levin/McCain's staff (PSI) to discuss 501(c)(4) letters
This is what I got from the staff (side note I will be out 5 -3 but you can have the fun without me):
May 6-10 does not work. So the following works:
April 30th
available all day
May 1st
available after 12:30
May 3rd
available all day
From: Lerner Lois G
Sent: Friday, April 19, 2013 05:38 PM Eastern Stand ard Time
To: Flax Nikole C; Barre Catherine M; Sinno Suzanne; Marks Nancy J; Brown Susan D; Cook Janine
Thanks--next week is a bear, so this wil l work better for me.
JW1559-001647
Lois G. Lerner
_____________________________________________
From: Flax Nikole C
To:
Subject:
_______________________ ______________________
To:
Subject:
Senator McCains staff has a late breaking conflict for most of our scheduled time on Tuesday.
The Levin staff apologizes
for the inconvenience but has asked if there is an alternative 5 hour block of time in th e next few weeks that we could
Suzie is the organizer on the calendar invite and is out of the office today and does not have a blackberry. SO, I cant
on Monday. Either way, you just got a 5 hour block free on Tuesday (lets fo cus on the good news today).
Cathy
To: Sinno Suzanne; Lerner Lois G; Marks Nancy J; Flax Nikole C; Brown Susan D; Cook Janine; Barre Catherine
Where:
*~*~*~*~*~*~*~*~*~*
JW1559-001648
From:
Lerner Lois G
Sent:
To:
Lois Home
Subject:
FW: lobbying speech.docx
Attachments:
b(6) and b(7)(C)\personal information
Lois G. Lerner
From: Lerner Lois G
Subject: lobbying speech.docx
This looks good--a couple questions and make sure I didn't change meaning with the edits. I
will probably turn into an outline just so I can follow easier and not have to "read read." Let
me know--Also, there will be a Q &A after the remarks. Do you want to come in the event I get
stuck on a technical question? You don't have to--I could refer them to later panels--up to
you.
JW1559-001649
(b)(5) DP
(b)(5)/DP
JW1559-001650
(b)(5)
DP
(b)(5)/DP
JW1559-001651
(b)(5) DP
(b)(5)/DP
JW1559-001652
(b)(5) DP
(b)(5)/DP
JW1559-001653
(b)(5) DP
(b)(5) DP
(b)(5)/DP
JW1559-001654
From:
Lerner Lois G
Sent:
Sunday, April 21, 2013 10:31 AM
To:
Barre Catherine M
Subject:
Re: RESCHEDULING FOR Meeting with Senator Levin/McCain's staff (PSI) to discuss
501(c)(4) letters
I can do the 30th
Sent: Friday, April 19, 2013 08:36 PM Eastern Standard Time
To: Cook Janine; Flax Nikole C; Lerner Lois G; Sinno Suzanne; Marks Nancy J; Brown Susan D
Any other takers for afternoon of the 30th?
From: Cook Janine [ mailto:Janine.Cook@irscounsel.treas.gov ]
To: Flax Nikole C; Barre Catherine M; Lerner Lois G; Sinno Suzanne; Marks Nancy J; Brown S usan D
I can do the 30th afternoon
From: Flax Nikole C [ mailto:Nikole.C.Flax@irs.gov ]
To: Barre Catherine M; Lerner Lois G; Sinno Suzanne; Marks Nancy J; Brown Susan D; Cook Janine
1st and 3rd don't work for me. we may have to push back the date if looking for 5 hours.
To: Lerner Lois G; Flax Nikole C; Sinno Suzanne; Marks Nancy J; Brown Susan D; Cook Janine
Subject: Re: RESCHEDULING FOR Meeting w ith Senator Levin/McCain's staff (PSI) to discuss 501(c)(4) letters
April 30th
available all day
May 1st
JW1559-001655
May 3rd
available all day
From: Lerner Lois G
Thanks--next week is a bear, so this will work better for me.
Lois G. Lerner
_____________________________________________
From: Flax Nikole C
To:
Subject:
_____________________________________________
To:
Subject:
Senator McCains staff has a late breaking conflict for most of our scheduled time on Tuesday. The Levin staff apologizes
for the inconvenience but has asked if there is an alternative 5 hour block of time in the next few weeks that we could
meet with them. Ive gone back to ask if there are days that definitely d ont work for them. Once I hear back I will
Suzie is the organizer on the calendar invite and is out of the office today and does not have a blackberry.
SO, I cant
on Monday. Either way, you just got a 5 hour block free on Tuesday (lets focus on the good news today).
Cathy
To: Sinno Suzanne; Lerner Lois G; Marks Nancy J; Flax Nikole C; Brown Susan D; Cook Janine; Barre Catherine M
Where:
JW1559-001656
*~*~*~*~*~*~*~*~*~*
JW1559-001657
Subject:
Canceled: Meeting with Senator Levin/McCain's staff (PSI) to discuss 501(c)(4) letters
Location:
199 Senate Russell Building
Start:
Tue 4/23/2013 11:00 AM
End:
Tue 4/23/2013 4:00 PM
Show Time As:
Free
Recurrence:
(none)
Meeting Status:
Not yet responded
Organizer:
Sinno Suzanne
Required Attendees:
Lerner Lois G; Marks Nancy J; Flax Nikole C; Brown Susan D; Cook Janine; Barre
Catherine M
Importance:
High
Where: 199 Senate Russell Building
*~*~*~*~*~*~*~*~*~*
Meeting with:
Laura Stuber (Majority Senior Counsel)
Elise Bean (Majority Staff Director and Majority Chief Counsel)
Kaye Meier (Senior Counsel for Senator Levin)
Henry Kerner (Minority Staff Director and Minority Chief Counsel)
Stephanie Hall (Minority Counsel)
Scott Wittmann (Minority Research Assistant)
JW1559-001658
From:
Sinno Suzanne
Sent:
To:
Barre Catherine M; Cook Janine; Flax Nikole C; Lerner Lois G; Marks Nancy J; Brown
Subject:
RE: RESCHEDULING FOR Meeting with Senator Levin/McCain's staff (PSI) to discuss
Susan D
501(c)(4) letters
I am back in the office so I will look into everyone's availability and try and get something scheduled!
To: Cook Janine; Flax Nikole C; Lerner Lois G; Sinno Suzanne; Marks Nancy J; Brown Susan D
Subject: Re: RESCHEDULING FOR Meeting with Senator Levin/McCain's s taff (PSI) to discuss 501(c)(4) letters
Any other takers for afternoon of the 30th?
From: Cook Janine [ mailto:Janine.Cook@irscounsel.treas.gov ]
Sent: Friday, April 19, 2013 06:53 PM Eastern Standar d Time
To: Flax Nikole C; Barre Catherine M; Lerner Lois G; Sinno Suzanne; Marks Nancy J; Brown Susan D
I can do the 30th afternoon
From: Flax Nikole C [mailto:Nikole.C.Flax@irs.gov ]
To: Barre Catherine M; Lerner Lois G; Sinno Suzanne; Marks Nancy J; Brown Susan D; Cook Janine
Subject: RE: RESCHEDULING FOR Meeting with Senator Levin/McCain's staff (PSI) t o discuss 501(c)(4) letters
1st and 3rd don't work for me. we may have to push back the date if looking for 5 hours.
To: Lerner Lois G; Flax Nikole C ; Sinno Suzanne; Marks Nancy J; Brown Susan D; Cook Janine
April 30th
available all day
May 1st
May 3rd
available all day
JW1559-001659
From: Lerner Lois G
Subject: RE: RESCHEDULING FOR Meeting with Senator Levin/McCain's staff (PSI) to discuss 501(c)(4 ) letters
Thanks--next week is a bear, so this will work better for me.
Lois G. Lerner
_____________________________________________
From: Flax Nikole C
To:
Subject:
_______________________ ______________________
To:
Subject:
Senator McCains staff has a late breaking conflict for most of our scheduled time on Tuesday.
The Levin staff apologizes
for the inconvenience but has asked if there is an alternative 5 hour block of time in th e next few weeks that we could
Suzie is the organizer on the calendar invite and is out of the office today and does not have a blackberry. SO, I cant
on Monday. Either way, you just got a 5 hour block free on Tuesday (lets fo cus on the good news today).
Cathy
To: Sinno Suzanne; Lerner Lois G; Marks Nancy J; Flax Nikole C; Brown Susan D; Cook Janine; Barre Catherine
Where:
JW1559-001660
*~*~*~*~*~*~*~*~*~*
JW1559-001661
From:
Flax Nikole C
Sent:
To:
Lerner Lois G
Subject:
FW: Draft remarks
Attachments:
draft c4 comments 4-22-13.doc
see what you think.
JW1559-001662
(b)(5) DP
JW1559-001663
(b)(5) DP
JW1559-001664
(b)(5) DP
JW1559-001665
From:
Barre Catherine M
Sent:
To:
Miller Steven T; Flax Nikole C; Lerner Lois G; Grant Joseph H; Wilkins William J; Judson
Subject:
Senator Whitehouse Opening Statement
Attachments:
Opening Statement Final.docx
Victoria A
You might find this interesting
JW1559-001666
Sen. Sheldon Whitehouse

Opening Statement for Hearing
Current Issues in Campaign Finance Law Enforcement
April 9, 2013
In a country of laws, when the laws are made a mockery, it is a serious matter. This hearing will
explore the mockery our campaign finance laws have become, with particular emphasis on what
appear to be flagrantly false statements made with impunity in official documents.

The main laws that we look at in this hearing are Section 1001 of the U.S. criminal code, which
makes it a criminal offense to make any materially false, fictitious or fraudulent statement or
representation in official business with the government ; and Section 7206 of the Internal
Revenue Code, which makes it a crime to willfully make a false material statement on a tax
document filed under penalty of perjury. The false statements we look at relate to Section
501(c)(4) of the Tax Code, which gives non -profit status to entities that are operated exclusively
to promote social welfare. Such promotion of social welf are is specifically forbidden to include
direct or indirect participation or intervention in political campaigns on behalf of or in
opposition to any candidate for public office.

Seems clear enough, but after the Supreme Court opened the floodgates to big money in
elections in its disgraceful Citizens United decision, big donors like to use these non -profit
entities to launder campaign spending and hide their identities. As the head of one such non profit admitted, for big donors, the anonymity . . . was appealing. So the tax filings begin to get
creative. There are several areas of mischief:
Discrepancies in reporting to the IRS and to the FEC;

Discrepancies between reported and actual political activity;
Characterizing political TV ads as educational activities or legislative activities ;
Characterizing as non -political donations made to other groups that spend it on political
advertising; and
Disbanding and reforming under other names before the reporting is due for the
disbanded organization .
Unfortunately , the responsible federal agencies, primarily the IRS and DOJ, are complicit in the
mockery that is made of these tax laws. The DOJ maintains a policy of deference to the IRS and
does not investigate or prosecute false statements in campai gn finance tax reporting without a
case having been brought to it by the IRS. It maintains this policy despite 18 U .S.C. 1001, the
well-known law against false statements that spans all federal agencies, in addition to a false
statements law specific to tax filings.

The IRS, on its part, is an organization as to which, according to press reports quoting its own
previous director of non-profit organizations and I quote, chasing political nonprofits isn't the
organization's primary function, nor one for which it is staffed. Thus, DOJ is deferring for
enforcement to an effectively toothless organization with the predictable result that zero cases
have been brought. Indeed, as far as I know not one person has been put before an investigative
grand jury.
JW1559-001667
To make matters worse, the IRS has taken one of the clearer statutes passed by Congress, and
through its regulations has so defanged and confused the law as to make it virtually
unenforceable by the agency. The IRS did this by saying that exclusively meant primarily,
by accepting that primarily meant 51%, and by pursuing a policy of conspicuous non enforcement even of that watered -down standard. If the IRS affirmatively wanted to defeat this
law and permit rampant false statements to go unpun ished, it could hardly have done a better job.
As a Notre Dame law professor who specializes in this area has said, [t]he IRS seems to blink if
you push them . . . And yet DOJ defers to the IRS.

The result is that statements that are plainly false by any common lay definition of the term go
unpunished; a clear Congressional statute goes unenforced; an industry that launders immense
amounts of anonymous money into our elections grows like a weed; a nd in politics only the big
donors and the candidates and their intermediaries know who's beholden to whom and for how
much. As Senator McCain and I pointed out in a brief to the Supreme Court recently, this latter
condition is a prescription for corrupti on. As even the Supreme Court pointed out in Citizens
United , it is disclosure of donors identities that allows citizens . . . to hold corporations and
elected officials accountable for their positions and supporters, so citizens can see whether
elected officials are in the pocket of so-called moneyed interests.

And of course under this regime nothing prevents foreign interests from influencing American
elections, if there's no investigation and no enforcement of whose money is really hiding behi nd
the non-disclosure provisions that give Section 501(c)(4) its appeal to big donors.
The relevant federal IRS form includes Question 15, which asks under penalty of perjury, [h]as
the organization spent or does it plan to spend any money attempting to influence the selection,
nomination, election, or appointment of any person to any Federal, state or local public office or
to an office in any political organization? In one investigation, ProPublica found 32
organizations that answered no to this question and then went out and spent money in political
races. And that was out of 72 IRS filings reviewed nearly half were false. Some organizations
had ads running on the day they mailed their filings in, some before. Many spent millions on
political ads.
Looked at the other way, in the ProPublica investigation they found 104 organizations that told
state or federal elections officials they'd spent money on candidate -specific political ads, what
the FEC calls electioneering communications . Thirty-two of them had told the IRS they had
spent no money to influence elections.

Even when information is provided it may be false. One organization said it would spend 50%
of its effort on a website and 30% on conferences. Investigation showed its website consisted of
one photograph and one paragraph, and no sign of any conferences. The same group declared it
would take contributions from individuals only and then took $2 million from PhRMA, the
pharmaceutical lobby. Another declared to the IRS it had spent $5 million on political activities,
but told the FEC it had spent $19 million on political ads. Another pledged its political spending
would be limited in amount and will not constitute the organization's primary purpose, and
then went out and spent $70 million on ads and robocalls in one election season.
2
JW1559-001668
And some never even apply. They just start spending, and file a tax return after the fact,
potentially as their last act before they disband so they're gone before the mail brings their filing
to the IRS. One never filed at all, even after the fact. No enforcement action has been taken, as
far as I know. As Melanie Sloan, executive director of CREW has said, [y]ou can go into
business and violate the law and then go out of business. And what' s ever going to happen about
that? There's no consequence.

Let me close on this issue by reading from an article describing the reaction of a state election
official: When ProPublica read the group's description of its activities on its IRS application to
Ann Ravel, the chairwoman of the California Fair Elections Commission, she laughed. Wow,
she said, upon hearing that the group said it would not try to influence election, 'That's simply
false.
So this hearing is directed to the mechanisms and machinations by which such false statements
are allowed to go unpunished by the officials responsible for enforcement.

During this hearing, we will also examine enforcement issues pertain ing to coordination between
candidates and outside groups , where the FEC has so weakened the limitations as to make
independent expenditures functionally equivalent to campaign contributions; the use of shell
corporations to hide donor identities; and th e risk of foreign money influencing our elections that
comes with secret fundraising and spending by 501(c)(4) s and other groups.
I look forward to hearing from the witnesses on these and other issues.
JW1559-001669
From:
Landes Scott S
Sent:
To:
Abbott Carolyn C; Aten David Michael; Barre Catherine M; Bass JoAnn N; Beard Lisa J
(Wash DC); Benoit Preston B; Best Jennifer L; Bogadi Peggy A; Bouton Bradley J;
Burger Michelle L; Campbell Carol A; Canady Robin; Castro Jorge E; Chiaramida
Rebecca A; Cook Janine; Cooper Jeffrey I; Corwin Erik H; Cromling Candice V; Danilack
Michael; DeNard Paul D; Deneroff Jan S; Drexler Kenneth J; Eldridge Michelle L;
Emmons MaryBeth; Enstrom Kathy A; Fink Faris R; Flax Nikole C; Franchina Cathy M;
Freeman Curtis L; Gannett Clifford J; Goldstein Richard S; Grant David A; Grant Dianne;
Grant Joseph H; Gray Carolyn H; Hansberry Donna C; Hawkins Karen L; Haynes Patricia
J; Ingram Sarah H; Jacobs Christie J; Johnson Rebecca Mack; Judson Victoria A; Kane
Greg; Kane Thomas J; Kelly Martin J; Khoury Mireille; Koopman Jarod J; Kroening
Linda M; LaRue Pamela J; Lemons Terry L; Lerner Lois G; Lindenmuth Philip J; Loomis
Edward S (CI); Maloy Heather C; Mamo Paul J; Marks Nancy J; McCarthy Kevin F;
McClanahan Patricia; McField Terri; Medina Moises C; Milholland Terence V; Miller
Steven T; Morehead Kevin M; Munroe David; Murray Stuart D; Olson Nina E; Oursler
Leonard T; Patterson Jodi L; Paul Verlinda F; Perez Ruth; Pursley Mark E; Reisher Scott
D; Ronk Alice L; Rose Peter; Ross Jeanne; Rushin Julie A; Schindler Frederick W; Smith
Amber (Washington DC); Smith Belinda (MITS); Sparkman Rebecca; Sterner
Christopher B; Tackney Stephen B; Tavenner Carolyn A; Tombul Bridget E; Tucker Beth;
Vozne Jennifer L; Walters Kathleen E; Weber Richard; Whitlock Stephen A; Wilkins
William J; Wilson Joseph L
Subject:
FW: 4-9-2013 Senate Judiciary Subcommittee on Crime and Terrorism - Current
Issues in Campaign Finance Law Enforcement
Summary of today's Senate Judiciary Subcommittee hearing on Campaign Finance Law
Enforcement, at which Patricia Haynes testified.
Senate Committee on the Judiciary
April 9, 2013
On April 9, 2013, the Senate Judiciary Subcommittee on Crime and Terrorism held a hearing entitled,
Current Issues in Campaign Finance Law Enforcement . The following witnesses testified before the
Subcommittee:
Panel I
Mythili Raman , Acting Assistant Attorney General, Criminal Division, United States Department of
Justice
Patricia Haynes , Deputy Chief, Criminal Investigation, Internal Revenue Service
Panel II
Lawrence M. Noble , President, Americans for Campaign Reform, Washington, DC
JW1559-001670
Gregory L. Colvin , Principal, Adler & Colvin, San Francisco , CA
Bradley A. Smith, Chairman, Center for Competitive Politics, Josiah H. Blackmore II/Shirley M. Nault
Professor of Law, Capital University Law School, Columbus, OH
In his opening statement, Chairman Sheldon Whitehouse said todays hearing would explore the mo ckery that
our campaign finance laws have become. He specifically noted the high number of false misrepresentations as
defined under Code section 7206 which are made by 501(c)(4) social welfare organizations when they report
zero political activity. Chairman Whitehouse said the IRS says exclusively operating for the promotion of
social welfare as stated in the statute, means primarily engaged in activities promoting in some way the
common good and general welfare of the community. He said the amount of political activity which is
allowed by the IRS for social welfare organizations is unclear.
Ranking Member Lindsey Graham was not present at the hearing and no Republican members gave an
opening statement.
Testimony Panel I
Mythili Raman asserted that the Department of Justice (DOJ) is committed to investigating and prosecuting
those who willfully violate the disclosure requirements and contribution limits established by the campaign
finance laws. She said since 2010, DOJ has successfully prose cuted more than a dozen cases involving
campaign finance law and she highlighted a few cases. Ms. Raman discussed Citizens United vs. FEC (which
held corporations and unions are allowed to make unlimited independent expenditures) and explained that
following the decision, the manner in which individuals and entities raise and spend money in elections has
changed dramatically. She noted that the two most important developments are the rise of Super PACs and the
growing political ac tivity of certain types of 501(c) organizations, such as 501(c)(4) entities. Ms. Raman
stressed that these developments are having a profound effect on DOJs ability to effectively enforce the
campaign finance laws.
Patricia Haynes explained how the IRS, Criminal Investigation, helps to enforce the tax laws of the U.S., and
specifically under Code section 7206. She said the mission of Criminal Investigation is to foster confidence in
our tax system and compliance with the tax laws by investigating po tential criminal violations of the Code and
related financial crimes. Ms. Haynes testified that under Code section 7206, it is a felony to make false or
fraudulent statements to the IRS, or to file false or fraudulent returns or other documents with the I RS. She
asserted that the government must prove four key elements in order for a return statement to be deemed in
violation of Code section 7206: (1) the individual or organization making the statement declared it to be true,
(2) the statement is material ly false, (3) the statement was made willfully and with the knowledge that it was
false, and (4) the statement was accompanied by a written declaration that it was made under penalty of perjury.
Ms. Hayes noted that in general, IRS, Criminal Investigation conducts two types of investigations, namely
administrative investigations and grand jury investigations. She explained that at the conclusion of an
administrative or a grand jury investigation, IRS Criminal Tax Counsel evaluates the evidence and provide s
advice on whether to recommend prosecution by DOJ. Ms. Haynes said IRS, Criminal Investigation works
with other law enforcement agencies which investigate campaign finance related offenses and in the past, such
cases have involved allegations of public corruption, improper use of campaign contributions and the
concealment of conduit or straw contributions.
Q&As Panel I
Chairman Whitehouse pointed to IRS form 1024, question 15 which states, Has the organization spent or
does it plan to spend any money attempting to influence the selection, nomination, election, or appointment of
any person to any Federal, state, or local public office or to an office in a political organization? He said he
was concerned with 501(c)(4) organizations that report th ey have no political activity but later spend money on
political campaigns.
JW1559-001671
Chairman Whitehouse said he realizes DOJ defers to IRS on tax matters but he thought false statements made
to the government are prosecuted by DOJ all the time. He asked if DOJ is rethinking their policy of deferring to
IRS on these matters and if they are satisfied with the lack of prosecution in this area. Ms. Raman assured the
Subcommittee that DOJ was focused on these types of cases.
st
Senator Cruz said whenever Congress a cts on political speech, the 1 Amendment is threatened and the public
st
should be skeptical. He commented that the 1 Amendment was created for people to be able to speak without
Congress limiting their speech and that few areas of the law are more dange rous to restrict, especially political
speech. Senator Cruz stressed the importance of individuals being able to speak up and voice their concerns
on the direction of their government and said we should be concerned with anyone who is elected to office an d
wants to later restrict political speech.
st
Chairman Whitehouse said there is nothing in the 1 Amendment to protect false statements made to the
government or to protect the use of shell corporations to defraud the government.
Chairman Whitehouse asked if the IRS was well suited for doing this particular work and if it makes sense for
DOJ to get deference from the IRS on these cases. Ms. Haynes responded that IRS, Criminal Investigation has
been involved in investigations of violations of campaign finance law. She explained that special agents will
gather evidence and IRS Criminal Tax Counsel will review the evidence and recommend prosecution to DOJ.
Chairman Whitehouse urged the IRS and DOJ to reevaluate the policy of whether IRS deference of n on tax
violations is truly necessary.
Senator Cruz asked if the IRS has any position on whether additional laws should be passed by Congress in
this area. Ms. Haynes said no and that regarding any regulatory guidance, she would point to IRS Chief
Counsel and the Treasury Department for any comment.
Senator Cruz said political corruption is important to combat but there is a difference between political
corruption and the constitutional right to political speech. Ms. Raman said that DOJ seeks two thi ngs to help
with the prosecution of political corruption: (1) greater transparency and (2) a more commonsense definition of
coordination.
Testimony Panel II
Lawrence M. Noble testified that there is no doubt that a major portion of the respo nsibility for the lack of
enforcement of the campaign finance laws lies with the Federal Election Commission (FEC), which has the
primary jurisdiction over civil enforcement of the Federal Election Campaign Act (FECA). He noted that
DOJ can prosecute a criminal violation of the law even where the FEC may not have the necessary votes to
move forward, but unfortunately DOJ seems to rely on the inaction of the FEC as justification for not moving
forward on egregious casings involving Super PACs and 501(c) (4) organizations. Mr. Noble said while the
IRS has no direct responsibility for enforcement of FECA, the Code and FECA both deal with regulation of
political activity and the IRS cannot ignore its responsibility to ensure that organizations seeking to ta ke
advantage of being classified as a 501(c)(4) organization are complying with the Codes restrictions on their
political activity.
Gregory L. Colvin asserted that there is a fundamental problem affecting enforcement of the political tax rules
on 501(c)(4) nonprofits. He said the tax rules are vague, unpredictable, and unevenly applied. Mr. Covlin
criticized the IRS facts and circumstances approach instead of drawing bright lines between partisan politics
and truly nonpartisan voter education. He s uggested that IRS and Treasury undertake an intensive regulatory
project to establish bright lines defining political intervention that wouldnt tolerate the disguise of targeted
JW1559-001672
issue ads that refer to and reflect a view on candidates, and that would pro vide safe harbors for genuine
lobbying and voter education. He also urged the IRS to reconsider its position on the less than primary
ceiling for 501(c)(4), (5), and (6) political spending, such as 10% or a dollar level as safely insubstantial.
Bradley A. Smith cautioned that for many reasons, enforcing campaign finance law is a highly complex issue,
st
most importantly campaign finance law must be carefully crafted in order to avoid infringing on 1 Amendment
rights. He urged against other agencies, such as the IRS, FCC, and SEC, regulating enforcement of campaign
finance laws. Mr. Smith noted that the FEC, the agency charged by Congress with exclusive civil
enforcement of campaign finance laws, has an important bip artisan make-up and its enforcement process
reflects the understanding that most violations are inadvertent or unintentional. He was against new disclosure
rules and favored consolidating enforcement responsibility within the FEC.
Q&As Panel II
Chairman Whitehouse said he believes the FEC is log jammed with cases and asked if it would be useful or
even recommended to have a private right of action available in a court of law. Mr. Noble said there is already
a private right of action available bu t that too much reliance on this is not good. He said the FEC is not
enforcing the law enough. He accused the FEC of being broken and said something must be done. Mr. Noble
claimed that if there was an effective FEC, a lot of problems would go away.
Senator Whitehouse asked Mr. Colvin to discuss the Vision Service Plan standard. Mr. Colvin explained that
in Vision Service Plan , which did not involve political activity, the IRS and DOJ took the stance that any non exempt activity, if substantial (more than 5-15%), violates 501(c)(4). Mr. Colvin urged the IRS to take this
same stance on political activity.
Senator Cruz said Organizing for America is a 501(c)(4) entity for President Obama which is currently
criticizing him and asked the witnesses if they agree that this type of speech is important. Mr. Smith said while
he thinks it is horrible that anyone would criticize Senator Cruz, he does believe this speech is protected and is
st
important. Senator Cruz noted that one of the precise reasons fo r the 1 Amendment is to prohibit retribution
by those in power.
Senator Cruz said it is important to have a structural check by the bipartisan FEC to keep the executive branch
in line. He echoed Mr. Smiths testimony which illustrated that there was considerable history from the 1930s
through the 1970s of presidents of both parties attempting to use the IRS to attack political enemies.
Chairman Whitehouse ended the hearing by asking why there was no enforcement in this area. He said DOJ
will say they do not get referrals by the IRS but they ultimately work for the same person and they should not be
ok with the status quo. Mr. Noble said he has great respect for the employees at the IRS and DOJ. He said he
thinks there is a fear of getting involve d in political campaigns and there is a power issue.
Chairman Whitehouse said he sees one major flaw and that is DOJ allowing its own policy of deference to the
IRS on non-tax issues to continue.
Legislative Counsel
202-927-6922
202-622-5247 (fax)
JW1559-001673
From:
Paz Holly O
Sent:
Monday, November 19, 2012 3:39 PM
To:
Cc:
Seidell Thomas F TIGTA; Medina Cheryl J TIGTA; Lerner Lois G
Subject:
RE: Responses
Troy,
Your reading of our response to question #1 is correct.
(b)(5) DP
Holly
To: Paz Holly O
Holly,
Thank you again for the follow -up responses. In response to question #1, you mention
(b)(5) DP
Troy
Troy,
Please see answers to your follow -up questions below. Please let me know if you have any further questions or if you
Holly
1.
(b)(5) DP
(b)(5) DP
1
JW1559-001674
(b)(5) DP
2.
(b)(5) DP
3.
On the May 2012 entry on the timeline, the EO function deleted our wording that the
(b)(5) DP
(b)(5) DP
To: Paz Holly O
JW1559-001675
Holly,
1.
(b)(5) DP
Does this mean

2.
(b)(5) DP
3.
(b)(5) DP
As always, we appreciate the assistance an d we look forward to your response.
Troy
Cc: Paz Holly O
Subject: Responses
Lois G. Lerner
Director of Exem pt Organizations
JW1559-001676
From:
Paz Holly O
Sent:
To:
Lerner Lois G
Cc:
Marks Nancy J
Subject:
TIGTA report - draft email
Attachments:
FW TIGTA DOCUMENT REQUEST1.htm; Heightened Awareness Issues.ppt; CPE Room
Locations.htm; FW Spreadsheet.htm; FW TIGTA DOCUMENT REQUEST3.txt; FW TIGTA
DOCUMENT REQUEST2.htm
Importance:
High
b(6) and b(7)(C)...
b(6) and b(7)(C)...
b(6) and b(7)(C...
(b)(5) DP; (b)(6)/(b)(7)(C)
b(6) and b(7)(C)\per...
b(6) and b(7)(C)\per...
JW1559-001677
JW1559-001678
From: Kowalczyk Chadwick A

Sent: Tuesday, May 18, 2010 11:12 AM
To: Abner Donna J; Camarillo Sharon L; Melahn Brenda; Brinkley Lynn A
Cc: Thomas Cindy M; Berry Daniel W
Subject: CPE Room Locations
Please disseminate to your staff accordingly.
Below is a chart that provides attendees with the classroom locations for the upcoming CPE:
Week of:
June 7 th
Cincinnati
Room
Number
5519
Instructors
Donna Abner
Jon Waddell
Faye Ng
Peggy Combs
th
June 14
4519
June 21 st
5519
Faye Ng
Peggy Combs
June 28th
5519
July 12 th
5519
Donna Abner
Jon Waddell
Faye Ng
Steve
Bowling
July 19 th
Outside
POD's
El Monte
Laguna Nigel
Baltimore
POD
Room
Number
Instructors
2nd Floor
Mike Tierney
Conference
Jon Waddell
Room B
Classroom
Mike Tierney
2402C
Steve
Bowling
Classroom
Donna Abner
Charles
Peggy Combs
South
As a reminder: Monday and Friday will be travel days. The actual CPE instruction will take place
on Tuesday, Wednesday and Thursday.
Chad A. Kowalczyk
Acting Training Coordinator
EO Determinations
vms: 513-263-4778
fax: 513-263-4554
JW1559-001679
From: Combs Peggy L [Peggy.L.Combs@irs.gov]

To: Combs Peggy L
Attachments: Combined Spreadsheet TAG Final Draftmay6.xls
From: Herr Joseph R

Sent: Monday, May 07, 2012 10:53 AM
To: Combs Peggy L
Peggy,
The email below is a draft of the BOLO/Emerging Issue spreadsheet dated May 6, 2010. This
draft is populated with a sample named tea parties. A sample was incorporated into the draft
spreadsheet to help illustrate what information would be contained in the spreadsheet.

Joseph R. Herr
(513) 263-3725
(513) 263-4488 fax
From: b(6) and b(7)(C)\personal infor...

To: Herr Joseph R
Importance: Low
JW1559-001680
From: Paz Holly O

Sent: Monday, July 23, 2012 3:04 PM
To: Seidell Thomas F TIGTA; Medina Cheryl J TIGTA
Subject: FW: TIGTA DOCUMENT REQUEST
From: Thomas Cindy M

Sent: Thursday, July 19, 2012 3:51 PM
To: Paz Holly O
Subject: TIGTA DOCUMENT REQUEST

To: Shafer John H
Cc: Camarillo Sharon L
Subject: RE: High Profile Case --- EO Technical Would Like It
Sounds good. Thanks John.
From: Shafer John H

To: Thomas Cindy M
Importance: Low
I will sent 2 of these cases to EO Technical , one 501(c)(4) & one 501(c)(3). I can hold
the remaining cases in my group "75" number unless you want them held some ot her
place.
John Shafer
Group Manager
SE:T:EO:RA:D:2:7838
Telephone: (513)263-3406
FAX: (513)263-5200

To: Shafer John H
Subject: FW: High Profile Case --- EO Technical Would Like It
JW1559-001681
John,
Per Holly's e-mail directly below, EOT does not want all of the tea party cases. They only want 2 of them
and want us to hold the remainder. We can discuss who should hold them if you would l ike. Let me
know. Thanks.
From: Paz Holly O

To: Thomas Cindy M
Cc: Grodnitzky Steven
Cindy,
Thanks for the heads up. We have one Tea Party case up here - that was sent up from Determs just a
few weeks ago - but had not yet heard that there were more. I think we should take a few more cases (I'd
say 2) and would ask that you hold the rest until we get a sense of what the issues may be. Then when
we will work with Determs in working the other cases.

FYI - I will be on
. Steve will be acting as head of EO Tech.
Holly

Sent: Wednesday, March 17, 2010 12:10 AM
To: Paz Holly O
Importance: High
Holly,
Did you know about these additional 10 tea party ca ses? Do you want all of them or do you only want a
few and then give us advice as to what to do with the remaining?
From: Shafer John H

Sent: Tuesday, March 16, 2010 9:35 AM
To: Thomas Cindy M
Importance: Low
Cindy,
We have identified a total of 10 Tea Party cases. Three case have been approved, two
501(c)(4) and one 501(c)(3). I have collected the other cases and will forward them to
EO Technical.
JW1559-001682
John Shafer
Group Manager
SE:T:EO:RA:D:2:7838
Telephone: (513)263-3406
FAX: (513)263-5200

Sent: Friday, February 26, 2010 8:36 AM
To: Shafer John H
EO Technical would like the case. Please thank Jack for identifying the issue and elevating it. Thanks.
From: Paz Holly O

To: Thomas Cindy M
Subject: RE: High Profile Case --- Does EO Technical Want It?
I think sending it up here is a good idea given the potential for media interest. Thanks.

Sent: Thursday, February 25, 2010 10:00 PM
To: Paz Holly O
Subject: High Profile Case --- Does EO Technical Want It?
Holly,
We have a Form 1024 for:
b(3)\6103
We're wondering whether EO Technical wants this case because of recent media attention. More
specifics about activities is in the original e -mail below. Let me know your thoughts. Thanks.
From: Camarillo Sharon L

To: Thomas Cindy M
Subject: FW: Case #
Importance: Low
b(3)\6103
Cindy: Please let 'Washington' know about this potentially
politically embarassing case involving a 'Tea Party'
organization. Recent media attention to this type of
organization indicates to me that this is a "high profile"
case. In addition to 501(c)(4) typical legisslative activities,
JW1559-001683
the applicant, in answer to Part II, item 15 of the of the
1024 application indicates possible future political candidate
support. Shown below are excerpts from the application
describing its legislative and possible future political
activities.
The case is currently being held in the Screening group, pending
a response from EOT.
Sharon L. Camarillo
EO Determinations Manager, Area 1
9350 E. Flair Drive
El Monte, CA 91731-2885
Telephone: 626-312-3608 ext 5026
Fax:
626-312-2928
From: Shafer John H

Sent: Thursday, February 25, 2010 10:14 AM
To: Camarillo Sharon L
Cc: Koester John J
Subject: FW: Case #
b(3)\6103
Importance: Low
Sharon, this case will be sent to inventory for further development. Political campaigns
on behalf or or in opposition to any political candidat e do not promote social welfare, but
an exempt 501(c)(4) may intervene in political campaigns as long as its primary activity
is the promotion of social welfare and would be subject to the tax imposed by IRC
527. I will hold this case for a decision conce rning this type of organization may be
considered a "High Profile Case".

Thanks,
John Shafer
Group Manager
SE:T:EO:RA:D:2:7838
Telephone: (513)263-3406
FAX: (513)263-5200
JW1559-001684
From: b(6) and b(7)(C)\person...

To: Shafer John H
b(3)\6103
Subject: Case #
Importance: Low
John
Here is the case number for the "Tea Party" application for 501(c)(4) exemption that we discussed this
morning. Recent media attention to this type of organization indicates to me that this is a "high profile"
case. In addition to 501(c)(4) typical legisslative activities, the applicant, in answer to Part II, item 15 of
the of the 1024 application indicates possible future political candidate support. Shown below are
excerpts from the application describing its legislative and possible future political activities.
Thanks
Jack
Part II. Activities and Operational Information (Must be completed by all applicants)
Provide a detailed narrative description of all the activities of the organization past, present, and
planned. Do not merely refer to or repeat the language in the organizational document. List each activity
separately in the order of importance based on t he relative time and other resources devoted to the
activity. Indicate the percentage of time for each activity. Each description should include, as a minimum,
the following: (a) a detailed description of the activity including its purpose and how each act ivity furthers
your exempt purpose; (b) when the activity was or will be initiated; and (C) where and by whom the
activity will be conducted.
b(3)\6103
JW1559-001685
b(3)\6103
JW1559-001686
From: Paz Holly O


To: Paz Holly O
From: Grodnitzky Steven

To: Thomas Cindy M
Cc: Camarillo Sharon L; Melahn Brenda; Brinkley Lynn A; Craig Karen K; Berry Daniel W; Shafer
John H; Shoemaker Ronald J; Hull Carter C

Subject: RE: Tea Party Cases
Please have her contact Ron Shoemaker. Thanks.

Sent: Sunday, April 25, 2010 1:00 PM
To: Grodnitzky Steven
John H
Subject: FW: Tea Party Cases
Steve,
We are going to have the se cases assigned to b(6) and b(7)(C)\personal i... eports to Joseph Herr in Brenda
Melahns area. After she gets the cases, who in EOT should she contact to coordinate
development?

Sent: Saturday, April 24, 2010 6:21 PM
Cc: Shoemaker Ronald J
Subject: RE: SCR
Steve,
None of these cases have been assigned. They have been sitting in our Screening Group
waiting for guidance from EOT. I will discuss with Area Managers to find out who we will have
work these cases and will get back with you. Thanks.
JW1559-001687

To: Thomas Cindy M
Cc: Grodnitzky Steven; Shoemaker Ronald J
Subject: FW: SCR
We are working on the 2 Tea Party cases her e in EOT. One development letter has already been
issued to the (c)(3) applicant and a development letter is being prepared for the (c)(4) applicant. I
understand that you have a number of these cases in Cincy. It may not be a bad idea to
coordinate with the individual(s) who have the cases in Cincy so that you can start developing
them.
If you have the names of the agents and manager with these cases, please let me know. We
should at least have a call and see how we can work together.
From: Shoemaker Ronald J

Subject: RE: SCR
Sorry, I forgot about this one. See the attached document.

To: Shoemaker Ronald J
Subject: SCR
What about the SCR for the Tea Party cases? I believe that Chip has the cases. Can you or
Chip make up the SCR, and confer with Cincy to include their information in the SCR? They
have a few cases, and I believe that some have even bee n granted exemption. Thanks.
Steven Grodnitzky
Acting Manager, EO Technical
Rulings and Agreements, TEGE
phone: (202) 283-8941
fax: (202) 283-8937
JW1559-001688
From:
Sent:
To:
Subject:
Paz Holly O
Monday, July 23, 2012 3:05 PM
Seidell Thomas F TIGTA; Medina Cheryl J TIGTA
FW: TIGTA DOCUMENT REQUEST
-----Original Message----From: Thomas Cindy M
To: Paz Holly O
-----Original Message----From: Grodnitzky Steven
Sent: Tuesday, July 06, 2010 9:40 AM
To: Thomas Cindy M; Camarillo Sharon L
Cc: Hull Carter C
Subject: FW: Form 1023 Application
EOT is working the Tea party applications in coordination with Cincy. We are developing a few
applications here in DC and providing copies of our development letters with the agent to use as
examples in the development of their cases. Chip Hull is working these cases in EOT and working with
the agent in Cincy, so any communication should include him as well. Because the Tea party applications
are the subject of an SCR, we cannot resolve any of the cases without coordinating with Rob.
-----Original Message----From: Paz Holly O
To: Grodnitzky Steven; Thomas Cindy M; Camarillo Sharon L
Steve,
Can you please let Cindy and Sharon know how we have been handling Tea Party applications the last
few months?
Thanks,
Holly
Sent: Saturday, July 03, 2010 9:46 AM
Cc: Paz Holly O
Subject: Re: Form 1023 Application
Sharon,
We transferred a few tea party cases to EOT, but I believe we are working others in coordination with
EOT. If I remember correctly, b(6) and b(7)(C)\... is coordinating these and working with EOT.
JW1559-001689
You may want to check with Steve Bowling and John Shafer.
------Original Message-----From: Sharon Camarillo
To: Holly Paz
Cc: Cindy M Westcott
Sent: Jul 2, 2010 1:28 PM
b(3)\6103
non-responsive; (b)(3)\6103; (b)(6)/(b)(7)(C)
b(3)\6103
JW1559-001690
b(3)\6103
non-responsive; (b)(3)\6103; (b)(6)/(b)(7)(C)
JW1559-001691
Heightened Awareness Issues
JW1559-001692
OBJECTIVES
What Are The Heightened Awareness
Issues
Definition and Examples of Each
Issue Tracking and Notification
What Happens When You See One?
JW1559-001693
What are Heightened Awareness
Issues?
TAG
Emerging Issues
Coordinated Issues
Watch For Issues
JW1559-001694
Your Role
Per IRM 1.54.1.6.1, a Front Line Employee Should
Elevate the Following Matters Concerning Their Work:

1. Unusual Issues that Prevent them from Completing
Their Work.
2. Issues Beyond Their Current Level of Training.

3. Issues that Require Elevation in Accordance with
Statute, Revenue Procedure, or Field Directive.
JW1559-001695
What are TAG Issues ?:

Involves Abusive Tax Avoidance Transactions:
1. Abusive Promoters
2. Fake Determination Letters
Activities are Fraudulent In Nature:
1. Materially Misrepresented Operations or Finances.
2. Conducting Activities Contrary to Tax Law (e.g. Foreign
Conduits).
Issues Involving Applicants with Potential Terrorist Connections:
1. Cases with Direct Hits on OFAC
2. Substantial Foreign Operations in Sanctioned Countries
Processing is Governed by IRM 7.20.6
JW1559-001696
What Are Emerging Issues?

Groups of Cases where No Established
Tax Law or Precedent has been
Established.
Issues Arising from Significant Current
Events (Doesnt Include Disaster Relief)

Issues Arising from Changes to Tax Law
Other Significant World Events
JW1559-001697
Emerging Issue Examples

Tea Party Cases:
1. High Profile Applicants
2. Relevant Subject in Todays Media
3. Inconsistent Requests for 501(c)(3) and
501(c)(4).
4. Potential for Political/Legislative Activity
5. Rulings Could be Impactful
JW1559-001698
Continued:
Pension Trust 501(c )(2):
1. Cases Involved the Same Law Firm
2. High Dollar Amounts
3. Presence of an Unusual Note
Receivable
JW1559-001699
Emerging Issues Examples
Continued
Historical Examples:
1. Foreclosure Assistance
2. Carbon Credits
3. Pension Protection Act
4. Credit Counseling
5. Partnership/Tax Credits
6. Hedge Funds
JW1559-001700
What Are Coordinated Processing
Issues?
Cases with Issues Organized for Uniform
Handling
Involves Multiple Cases
Existing Precedent or Guidance Does
Exist
JW1559-001701
Coordinated Examples
Break-up of a Large Group Ruling Where
Subordinates are Seeking Individual
Exemption.
Multiple Entities Related Through a
Complex Business Structure (e.g. Housing
and Management Companies)

Current Specialized Inventories
JW1559-001702
What is a Watch For Issue?
JW1559-001703
Watch For Issues:

Typically Applications Not Yet Received
Issues are the Result of Significant
Changes in Tax Law

Issues are the Result of Significant World
Events
Special Handling is Required when
Applications are Received
JW1559-001704
Watch For Examples
JW1559-001705
Watch For Examples Continued

Successors to Acorn
Electronic Medical Records
Regional Health Information Organizations
Organizations Formed as a Result of
Controversy---- Arizona Immigration Law

Other World Events that Could Result in
an Influx of Applications
JW1559-001706
Tracking and Notification
JW1559-001707
Combined Excel Workbook

Will Include Tabs for TAG, TAG Historical,
Emerging Issues, Coordinated, and Watch For

Tabs Will Include the Various Issues,
Descriptions, and Guidance.

A Designated Coordinator Will Maintain the
Workbook and Disseminate Alerts in One
Standard E-Mail.
Mailbox: *TE/GE-EO-Determinations Questions
JW1559-001708
When You Spot Heightened
Awareness Issues
If a TAG Issue, follow IRM 7.20.6.
If an Emerging Issue or Coordinated
Processing Case, Complete the Required
Referral Form and Submit to your
Manager
Watch For Issue Cases are Referred to
your Manager
JW1559-001709
From:
Lerner Lois G
Sent:
To:
Paz Holly O; Marks Nancy J
Cc:
Lerner Lois G
Subject:
Document1
Attachments:
Document1.doc
Made some changes trying to make it clearer. But, I may have misunderstood, so take a look
and let me know--thanks
JW1559-001710
(b)(6)
(b)(6)
(b)(6)
(b)(5) DP; (b)(6)/(b)(7)(C)
b(6) and b(7)(C)\personal ...
JW1559-001711
b(6) and b(7)(C)\personal ...
(b)(5) DP; (b)(6)/(b)(7)(C)
JW1559-001712
From:
Lerner Lois G
Sent:
To:
Kutz Gregory D TIGTA; Paterson Troy D TIGTA
Cc:
Paz Holly O; Grant Joseph H; Daly Richard M
Subject:
FW: TIGTA report - draft email
Attachments:
FW TIGTA DOCUMENT REQUEST1.htm; Heightened Awareness Issues.ppt; CPE Room
Locations.htm; FW Spreadsheet.htm; FW TIGTA DOCUMENT REQUEST3.txt; FW TIGTA
DOCUMENT REQUEST2.htm
Importance:
High
We are looking at the latest draft and hope to have comments on the draft to you COB today or tomorrow morning. We
appreciate you taking many of our discussed concerns into account with the new draft. As you know, we are a bit
concerned about the 2 refer rals for investigation in the draft report, and want to do all we can to clear up your concerns.
So, following our conversation last week, we again searched our records and spoke to EO Rulings & Agreements
employees about the May 2010 e -mail regarding the pre -BOLO criteria, and the issue of who approved the criteria. We
now believe that there was not a May 2010 e-mail sent to all Determinations personnel directing them to coordinate
these cases with group 7825. Rather,
b(6) and b(7)(C)...
, a Determinations specialist, and her group manager, Joseph Herr,
were developing the concept and a sample for sharing em erging issues, which what would be called the BOLO. They
exchanged drafts with each other via e -mail during this time period (see attached email dated May 6, 2010). The
concept was then introduced to Determinations specialists at their CPE sessions held i n June/July 2010 (see attached
CPE schedule and materials from a session on heightened awareness issues - slide 7 discusses these cases). As reflected
in the attached e -mails (which we provided to TIGTA in July 2012), these cases were initially held in th e screening group
until the cases were assigned to
b(6) and b(7)(C)\...
. The screeners had been alerted to lookout for these applications (see
7/2/10 email from Sharon Camarillo included in the attached e -mail chain) so there was no need to alert all of EO
Determinations through an email.
In regard to who developed the criteria used to identify cases sent to the advocacy group, EO made 10 individuals from
EO Determinations available for interview by TIGTA.
(b)(5) DP
and Joseph Herr both indicated that they were involved
in the initial development of the BOLO criteria. Ron Bell indicated that he, Steve Bowling, and Stephen Seok were
involved in the January 2012 revision to the BOLO. Cindy Thomas, the manager of EO Determinations, indicated in her
interview with TIGTA that she was not involved in the development or revision of the BOLO criteria. All individuals
interviewed indicated that the process of developing and revising items on the BOLO was very informal. In regard to the
criteria described in the June 2 011 briefing memo, as we explained in our Nov. 2012 comments on TIGTA's timeline and
emails with TIGTA regarding those comments, and as reflected in the emails previously provided to TIGTA and TIGTA's
interview of
b(6) and b(7)(C)\per...
(a specialist in the screenin g group), the Acting Director, EO Rulings & Agreements asked the
EO Determinations manager in June 2011 what criteria Determinations was using to determine whether a case was a
"tea party" case. Because the BOLO only contained a brief reference to "Organi zations involved with the Tea Party
movement applying for exemption under 501(c)(3) and 501(c)(4)" in June 2011, the EO Determinations manager asked
the manager of the screening group, John Shafer, what criteria were being used to label cases as "tea party " cases.
("Do the applications specify/state ' tea party'? If not, how do we know applicant is involved with the tea party
movement?") The screening group manager asked his employees how they were applying the BOLO's short -hand
reference to "tea party." His employees responded that they were including organizations meeting any of the following
criteria as falling within the BOLO's reference to "tea party" organizations: "1. 'Tea Party', 'Patriots' or
'9/12 Project' is referenced in the case file. 2. Iss ues include government spending, government debt and taxes. 3.
Educate the public through advocacy/legislative activities to make America a better place to live. 4.
JW1559-001713
Statements in the case file that are critical of the how the country is being run."
b(6) and b(7)(C)\per...
indicated in his interview
with TIGTA that he believed he provided some of this information to John Shafer, his manager.
So, we believe we have provided information that shows that no one in EO "developed" the criteria. Rather, staff used
their own interpretations of the brief reference to "organizations involved with the Tea Party movement," which was
what was on the BOLO list. The list is a compilation of the various staff responses to John Schafer's inquiry to staff.
Please let us know if t here is any additional information you need regarding clearing up these issues.
Lois G. Lerner
JW1559-001714
From: Kowalczyk Chadwick A

Sent: Tuesday, May 18, 2010 11:12 AM
To: Abner Donna J; Camarillo Sharon L; Melahn Brenda; Brinkley Lynn A
Cc: Thomas Cindy M; Berry Daniel W
Subject: CPE Room Locations
Please disseminate to your staff accordingly.
Below is a chart that provides attendees with the classroom locations for the upcoming CPE:
Week of:
June 7 th
Cincinnati
Room
Number
5519
Instructors
Donna Abner
Jon Waddell
Faye Ng
Peggy Combs
th
June 14
4519
June 21 st
5519
Faye Ng
Peggy Combs
June 28th
5519
July 12 th
5519
Donna Abner
Jon Waddell
Faye Ng
Steve
Bowling
July 19 th
Outside
POD's
El Monte
Laguna Nigel
Baltimore
POD
Room
Number
Instructors
2nd Floor
Mike Tierney
Conference
Jon Waddell
Room B
Classroom
Mike Tierney
2402C
Steve
Bowling
Classroom
Donna Abner
Charles
Peggy Combs
South
As a reminder: Monday and Friday will be travel days. The actual CPE instruction will take place
on Tuesday, Wednesday and Thursday.
Chad A. Kowalczyk
Acting Training Coordinator
EO Determinations
vms: 513-263-4778
fax: 513-263-4554
JW1559-001715

To: Combs Peggy L
From: Herr Joseph R

To: Combs Peggy L
Peggy,

Joseph R. Herr
(513) 263-3725
(513) 263-4488 fax
From: b(6) and b(7)(C)\personal info...

To: Herr Joseph R
Importance: Low
JW1559-001716
From: Paz Holly O


To: Paz Holly O

To: Shafer John H
Sounds good. Thanks John.
From: Shafer John H

To: Thomas Cindy M
Importance: Low
I will sent 2 of these cases to EO Technical , one 501(c)(4) & one 501(c)(3). I can hold
the remaining cases in my group "75" number unless you want them held some ot her
place.
John Shafer
Group Manager
SE:T:EO:RA:D:2:7838
Telephone: (513)263-3406
FAX: (513)263-5200

To: Shafer John H
JW1559-001717
John,
Per Holly's e-mail directly below, EOT does not want all of the tea party cases. They only want 2 of them
and want us to hold the remainder. We can discuss who should hold them if you would l ike. Let me
know. Thanks.
From: Paz Holly O

To: Thomas Cindy M
Cc: Grodnitzky Steven
Cindy,
Thanks for the heads up. We have one Tea Party case up here - that was sent up from Determs just a
few weeks ago - but had not yet heard that there were more. I think we should take a few more cases (I'd
say 2) and would ask that you hold the rest until we get a sense of what the issues may be. Then when
we will work with Determs in working the other cases.

FYI -
b(6) and b(7)(C)\personal inform...
leave starting tomorrow. Steve will be acting as head of EO Tech.
Holly

Sent: Wednesday, March 17, 2010 12:10 AM
To: Paz Holly O
Importance: High
Holly,
Did you know about these additional 10 tea party ca ses? Do you want all of them or do you only want a
few and then give us advice as to what to do with the remaining?
From: Shafer John H

Sent: Tuesday, March 16, 2010 9:35 AM
To: Thomas Cindy M
Importance: Low
Cindy,
We have identified a total of 10 Tea Party cases. Three case have been approved, two
501(c)(4) and one 501(c)(3). I have collected the other cases and will forward them to
EO Technical.
JW1559-001718
John Shafer
Group Manager
SE:T:EO:RA:D:2:7838
Telephone: (513)263-3406
FAX: (513)263-5200

To: Shafer John H
EO Technical would like the case. Please thank
b(6) ...
for identifying the issue and elevating it. Thanks.
From: Paz Holly O

To: Thomas Cindy M
Subject: RE: High Profile Case --- Does EO Technical Want It?
I think sending it up here is a good idea given the potential for media interest. Thanks.

To: Paz Holly O
Subject: High Profile Case --- Does EO Technical Want It?
Holly,
We have a Form 1024 for:
b(3)\6103
We're wondering whether EO Technical wants this case because of recent media attention. More
specifics about activities is in the original e -mail below. Let me know your thoughts. Thanks.
From: Camarillo Sharon L

To: Thomas Cindy M
Subject: FW: Case #
Importance: Low
b(3)\6103
Cindy: Please let 'Washington' know about this potentially
politically embarassing case involving a 'Tea Party'
organization. Recent media attention to this type of
organization indicates to me that this is a "high profile"
case. In addition to 501(c)(4) typical legisslative activities,
JW1559-001719
the applicant, in answer to Part II, item 15 of the of the
1024 application indicates possible future political candidate
support. Shown below are excerpts from the application
describing its legislative and possible future political
activities.
The case is currently being held in the Screening group, pending
a response from EOT.
Sharon L. Camarillo
EO Determinations Manager, Area 1
9350 E. Flair Drive
El Monte, CA 91731-2885
Telephone: 626-312-3608 ext 5026
Fax:
626-312-2928
From: Shafer John H

Sent: Thursday, February 25, 2010 10:14 AM
Cc: b(6) and b(7)(C)\pers...
(b)(3); 6103
Subject: FW: Case
Importance: Low
Sharon, this case will be sent to inventory for further development. Political campaigns
on behalf or or in opposition to any political candidat e do not promote social welfare, but
an exempt 501(c)(4) may intervene in political campaigns as long as its primary activity
is the promotion of social welfare and would be subject to the tax imposed by IRC
527. I will hold this case for a decision conce rning this type of organization may be
considered a "High Profile Case".

Thanks,
John Shafer
Group Manager
SE:T:EO:RA:D:2:7838
Telephone: (513)263-3406
FAX: (513)263-5200
JW1559-001720
From: b(6) and b(7)(C)\pers...

To: Shafer John H
(b)(3); 6103
Subject: Case #
Importance: Low
John
Here is the case number for the "Tea Party" application for 501(c)(4) exemption that we discussed this
morning. Recent media attention to this type of organization indicates to me that this is a "high profile"
case. In addition to 501(c)(4) typical legisslative activities, the applicant, in answer to Part II, item 15 of
the of the 1024 application indicates possible future political candidate support. Shown below are
excerpts from the application describing its legislative and possible future political activities.
Thanks
b(6) and b(7)(C)\per...
Part II. Activities and Operational Information (Must be completed by all applicants)
Provide a detailed narrative description of all the activities of the organization past, present, and
planned. Do not merely refer to or repeat the language in the organizational document. List each activity
separately in the order of importance based on t he relative time and other resources devoted to the
activity. Indicate the percentage of time for each activity. Each description should include, as a minimum,
the following: (a) a detailed description of the activity including its purpose and how each act ivity furthers
your exempt purpose; (b) when the activity was or will be initiated; and (C) where and by whom the
activity will be conducted.
b(3)\6103
JW1559-001721
b(3)\6103
JW1559-001722
From: Paz Holly O


To: Paz Holly O

To: Thomas Cindy M
John H; Shoemaker Ronald J; Hull Carter C

Subject: RE: Tea Party Cases
Please have her contact Ron Shoemaker. Thanks.

Sent: Sunday, April 25, 2010 1:00 PM
John H
Subject: FW: Tea Party Cases
Steve,
b(7)(C)\personal
(b...
... reports to Joseph Herr in Brenda
(b...and
We are going to have the se cases assigned to b(6)
(b)(6)
Melahns area. After she gets the cases, who in EOT should she contact to coordinate
development?

Sent: Saturday, April 24, 2010 6:21 PM
Cc: Shoemaker Ronald J
Subject: RE: SCR
Steve,
None of these cases have been assigned. They have been sitting in our Screening Group
waiting for guidance from EOT. I will discuss with Area Managers to find out who we will have
work these cases and will get back with you. Thanks.
JW1559-001723

To: Thomas Cindy M
Cc: Grodnitzky Steven; Shoemaker Ronald J
Subject: FW: SCR
We are working on the 2 Tea Party cases her e in EOT. One development letter has already been
issued to the (c)(3) applicant and a development letter is being prepared for the (c)(4) applicant. I
understand that you have a number of these cases in Cincy. It may not be a bad idea to
coordinate with the individual(s) who have the cases in Cincy so that you can start developing
them.
If you have the names of the agents and manager with these cases, please let me know. We
should at least have a call and see how we can work together.
From: Shoemaker Ronald J

Subject: RE: SCR
Sorry, I forgot about this one. See the attached document.

To: Shoemaker Ronald J
Subject: SCR
What about the SCR for the Tea Party cases? I believe that Chip has the cases. Can you or
Chip make up the SCR, and confer with Cincy to include their information in the SCR? They
have a few cases, and I believe that some have even bee n granted exemption. Thanks.
Steven Grodnitzky
Acting Manager, EO Technical
Rulings and Agreements, TEGE
phone: (202) 283-8941
fax: (202) 283-8937
JW1559-001724
From:
Sent:
To:
Subject:
Paz Holly O
Monday, July 23, 2012 3:05 PM
Seidell Thomas F TIGTA; Medina Cheryl J TIGTA
FW: TIGTA DOCUMENT REQUEST
To: Paz Holly O
-----Original Message----From: Grodnitzky Steven
To: Thomas Cindy M; Camarillo Sharon L
Cc: Hull Carter C
EOT is working the Tea party applications in coordination with Cincy. We are developing a few
applications here in DC and providing copies of our development letters with the agent to use as
examples in the development of their cases. Chip Hull is working these cases in EOT and working with
the agent in Cincy, so any communication should include him as well. Because the Tea party applications
are the subject of an SCR, we cannot resolve any of the cases without coordinating with Rob.
-----Original Message----From: Paz Holly O
To: Grodnitzky Steven; Thomas Cindy M; Camarillo Sharon L
Steve,
Can you please let Cindy and Sharon know how we have been handling Tea Party applications the last
few months?
Thanks,
Holly
Sent: Saturday, July 03, 2010 9:46 AM
Cc: Paz Holly O
Subject: Re: Form 1023 Application
Sharon,
We transferred a few tea party cases to EOT, but I believe we are working others in coordination with
EOT. If I remember correctly, b(6) and b(7)(C)\... is coordinating these and working with EOT.
JW1559-001725
You may want to check with Steve Bowling and John Shafer.
------Original Message-----From: Sharon Camarillo
To: Holly Paz
Cc: Cindy M Westcott
Sent: Jul 2, 2010 1:28 PM
b(3)\6103
(b)(5) DP; non-responsive; (b)(6)/(b)(7)(C); (b)(3)/6103
(b)(3); 6103
(b)(3); 6103
JW1559-001726
(b)(5) DP; (b)(3)\6103; non-responsive; (b)(6)/(b)(7)(C)
b(6) and b(7)(C)\per...
JW1559-001727
Heightened Awareness Issues
JW1559-001728
OBJECTIVES
What Are The Heightened Awareness
Issues
Definition and Examples of Each
Issue Tracking and Notification
What Happens When You See One?
JW1559-001729
What are Heightened Awareness
Issues?
TAG
Emerging Issues
Coordinated Issues
Watch For Issues
JW1559-001730
Your Role
Per IRM 1.54.1.6.1, a Front Line Employee Should
Elevate the Following Matters Concerning Their Work:

1. Unusual Issues that Prevent them from Completing
Their Work.
2. Issues Beyond Their Current Level of Training.

3. Issues that Require Elevation in Accordance with
Statute, Revenue Procedure, or Field Directive.
JW1559-001731
What are TAG Issues ?:

Involves Abusive Tax Avoidance Transactions:
1. Abusive Promoters
2. Fake Determination Letters
Activities are Fraudulent In Nature:
1. Materially Misrepresented Operations or Finances.
2. Conducting Activities Contrary to Tax Law (e.g. Foreign
Conduits).
Issues Involving Applicants with Potential Terrorist Connections:
1. Cases with Direct Hits on OFAC
2. Substantial Foreign Operations in Sanctioned Countries
Processing is Governed by IRM 7.20.6
JW1559-001732
What Are Emerging Issues?

Groups of Cases where No Established
Tax Law or Precedent has been
Established.
Issues Arising from Significant Current
Events (Doesnt Include Disaster Relief)

Issues Arising from Changes to Tax Law
Other Significant World Events
JW1559-001733

Tea Party Cases:
1. High Profile Applicants
2. Relevant Subject in Todays Media
3. Inconsistent Requests for 501(c)(3) and
501(c)(4).
4. Potential for Political/Legislative Activity
5. Rulings Could be Impactful
JW1559-001734
Continued:
Pension Trust 501(c )(2):
1. Cases Involved the Same Law Firm
2. High Dollar Amounts
3. Presence of an Unusual Note
Receivable
JW1559-001735
Emerging Issues Examples
Continued
Historical Examples:
1. Foreclosure Assistance
2. Carbon Credits
3. Pension Protection Act
4. Credit Counseling
5. Partnership/Tax Credits
6. Hedge Funds
JW1559-001736
What Are Coordinated Processing
Issues?
Cases with Issues Organized for Uniform
Handling
Involves Multiple Cases
Existing Precedent or Guidance Does
Exist
JW1559-001737
Coordinated Examples
Break-up of a Large Group Ruling Where
Subordinates are Seeking Individual
Exemption.
Multiple Entities Related Through a
Complex Business Structure (e.g. Housing
and Management Companies)

Current Specialized Inventories
JW1559-001738
What is a Watch For Issue?
JW1559-001739
Watch For Issues:

Typically Applications Not Yet Received
Issues are the Result of Significant
Changes in Tax Law

Issues are the Result of Significant World
Events
Special Handling is Required when
Applications are Received
JW1559-001740
Watch For Examples
JW1559-001741
Watch For Examples Continued

Successors to Acorn
Electronic Medical Records
Regional Health Information Organizations
Organizations Formed as a Result of
Controversy---- Arizona Immigration Law

Other World Events that Could Result in
an Influx of Applications
JW1559-001742
Tracking and Notification
JW1559-001743
Combined Excel Workbook

Will Include Tabs for TAG, TAG Historical,
Emerging Issues, Coordinated, and Watch For

Tabs Will Include the Various Issues,
Descriptions, and Guidance.

A Designated Coordinator Will Maintain the
Workbook and Disseminate Alerts in One
Standard E-Mail.
Mailbox: *TE/GE-EO-Determinations Questions
JW1559-001744
When You Spot Heightened
Awareness Issues
If a TAG Issue, follow IRM 7.20.6.
If an Emerging Issue or Coordinated
Processing Case, Complete the Required
Referral Form and Submit to your
Manager
Watch For Issue Cases are Referred to
your Manager
JW1559-001745
From:
Sent:
To:
Lerner Lois G; Paz Holly O; Marx Dawn R
Subject:
RE: TIGTA report - draft email
Attachments:
FW Spreadsheet.htm
Lois and Holly,
Do you happen to have the spreadsheet that was attached to the May 6, 2010 e -mail from
b(6) and b(7)(C...
? If so, could you
please send it to us? If not, was that something you searched for but were not able to locate?
Troy
-----Original Message ----From: Lerner Lois G [mailto:Lois.G.Lerner@irs.gov]
To: Kutz Gregory D TIGTA; Paterson Troy D TIGTA
Cc: Paz Holly O; Grant Joseph H; Daly Richard M
Subject: FW: TIGTA report - draft email
Importance: High
We are looking at the latest draft and hope to have comments on the draft to you COB today or tomorrow morning. We
appreciate you taking many of our discussed concerns into account with the new draft. As you know, we are a bit
concerned about the 2 referrals for investigation in the draft report, and want to do all we can to clear up your concerns.
So, following our conversation last week, we again searched our records and spoke to EO Rulings & Agreements
employees about the May 2010 e -mail regarding the pre -BOLO criteria, and the issue of who approved the criteria. We
now believe that there was not a May 2010 e -mail sent to all Determinations personnel directing them to coordinate
these cases with group 7825. Rather,
b(6) and b(7)(C...
, a Deter minations specialist, and her group manager, Joseph Herr,
were developing the concept and a sample for sharing emerging issues, which what would be called the BOLO. They
exchanged drafts with each other via e -mail during this time period (see attached emai l dated May 6, 2010). The
concept was then introduced to Determinations specialists at their CPE sessions held in June/July 2010 (see attached
CPE schedule and materials from a session on heightened awareness issues - slide 7 discusses these cases). As r eflected
in the attached e -mails (which we provided to TIGTA in July 2012), these cases were initially held in the screening group
until the cases were assigned to
. The screeners had been alerted to lookout for these applications (see
b(6) and b(7)(C)...
7/2/10 email from Sharon Camarillo included in the attached e -mail chain) so there was no need to alert all of EO
Determinations through an email.
In regard to who developed the criteria used to identify cases sent to the advocacy group, EO made 10 individuals fr om
EO Determinations available for interview by TIGTA.
b(6) and b(7)(C...
and Joseph Herr both indicated that they were involved
in the initial development of the BOLO criteria. Ron Bell indicated that he, Steve Bowling, and Stephen Seok were
involved in the Ja nuary 2012 revision to the BOLO. Cindy Thomas, the manager of EO Determinations, indicated in her
interview with TIGTA that she was not involved in the development or revision of the BOLO criteria. All individuals
interviewed indicated that the process o f developing and revising items on the BOLO was very informal. In regard to the
criteria described in the June 2011 briefing memo, as we explained in our Nov. 2012 comments on TIGTA's timeline and
emails with TIGTA regarding those comments, and as reflect ed in the emails previously provided to TIGTA and TIGTA's
interview of
b(6) and b(7)(C)\per...
(a specialist in the screening group), the Acting Director, EO Rulings & Agreements asked the
JW1559-001746
EO Determinations manager in June 2011 what criteria Determinations was using to determine whether a case was a
"tea party" case. Because the BOLO only contained a brief reference to "Organizations involved with the Tea Party
movement applying for exemption under 501(c)(3) and 501(c)(4)" in June 2011, the EO Determinations manager asked
the manager of the screening group, John Shafer, what criteria were being used to label cases as "tea party" cases.
("Do the applications specify/state ' tea party'? If not, how do we know applicant is involved with the tea party
movement?") The screening group manager asked his employees how they were applying the BOLO's short -hand
reference to "tea party." His employees responded that they were including organizations meeting any of the following
criteria as falling within the BOLO's reference to "tea party" organizations: "1. 'Tea Party', 'Patriots' or
'9/12 Project' is referenced in the case file. 2. Issues include government spending, government debt and taxes. 3.
Educate the public through advocacy/legislative activities to make America a be tter place to live. 4.
Statements in the case file that are critical of the how the country is being run."
b(6) and b(7)(C)\per...
indicated in his interview
with TIGTA that he believed he provided some of this information to John Shafer, his manager.
So, we believe we have provided information that shows that no one in EO "developed" the criteria. Rather, staff used
their own interpretations of the brief reference to "organizations involved with the Tea Party movement," which was
what was on the BOLO list. The list is a compilation of the various staff responses to John Schafer's inquiry to staff.
Please let us know if there is any additional information you need regarding clearing up these issues.
Lois G. Lerner
JW1559-001747

To: Combs Peggy L
From: Herr Joseph R

To: Combs Peggy L
Peggy,

Joseph R. Herr
(513) 263-3725
(513) 263-4488 fax
From: b(6) and b(7)(C)\personal info...

To: Herr Joseph R
Importance: Low
JW1559-001748
From:
Sent:
To:
Paz Holly O
Cc:
Subject:
RE: Spreadsheet
Holly,
Thanks for the quick response. We appreciate it.
Troy
From: Paz Holly O [mailto:Holly.O.Paz@irs.gov ]
Cc: Lerner Lois G; Marx Dawn R
Troy,
Here is the May 6 email from
b(6) and b(7)(C)\...
with the attached spreadsheet.
Holly
From: Combs Peggy L [mailto:Peggy.L.Combs@irs.gov ]
To: Combs Peggy L
From: Herr Joseph R
To: Combs Peggy L
Peggy,
The email below is a draft of the BOLO/Emerging Issue spreadsheet dated May 6, 2010.
This draft is populated with a
sample named tea parties. A sample was incorporated into the draft spreads heet to help illustrate what information
would be contained in the spreadsheet.
Joseph R. Herr
(513) 263-3725
(513) 263-4488 fax
JW1559-001749
From:
To: Herr Joseph R
Importance: Low
JW1559-001750
From:
Paz Holly O
Sent:
To:
Lerner Lois G; Thomas Cindy M
Cc:
Light Sharon P
Subject:
Re: Updated numbers
When you say c4, do you mean all c4 or just advocacy cases?
-------------------------Sent from my BlackBerry Wireless Device
From: Lerner Lois G
To: Paz Holly O; Thomas Cindy M
Cc: Light Sharon P
Subject: Updated numbers
c4--Miller might want this as background for his testimony
how many apps sent to full development
how many approved
how many in the other categories
Lois G. Lerner
JW1559-001751
From:
Daly Richard M
Sent:
To:
Lerner Lois G; Paz Holly O; Fish David L
Cc:
Grant Joseph H; Medina Moises C; Marks Nancy J
Subject:
FW: 201210022-Draft Report
Attachments:
SecureZIP Attachments.zip
Joel Rutstein has just provided me with the draft of the report.
Joel appropriately asks why this is on something of a fast track.
This is the version we must respond to.
I have no answer, but am asking Troy.
Will let you know. In the meantime, lets get a draft response ready to send to Nikole by Thursday of next
week, April 18.
Mike
From: Rutstein Joel S
To: Daly Richard M
Cc: Landes Scott S
Subject: FW: 201210022-Draft Report
Hi Mike. TIGTA just issued the draft report, the discussion draft report for which we discussed last week.
trak case #2013-41614. The response is due to TIGTA by April 30, 2013.
the customary 30 days? Thanks, Joel
I've opened e-
Do you know why they're giving you less than
Joel S. Rutstein, Esq.
Program Manager, GAO/TIGTA Audits
Legislation and Reports Branch
(202) 622-4133
(202) 622-5247 (fax)
Email: joel.s.rutstein@irs.gov
Web: http://irweb.irs.gov/AboutIRS/bu/cl/la/lagt/default.aspx
From: Stephens Dorothy A TIGTA [ mailto:Dot.Stephens@tigta.treas.gov ]
To: Landes Scott S; Rutstein Joel S
Subject: 201210022-Draft Report
Fyi, the attached Draft Audit Report Inappropriate Criteria Were Used to Identify T ax-Exempt Applications
for Review has been signed and is ready for issuance. Thanks
Dorothy Stephens
Staff Assistant to the DIGA
IG for Tax Administration
Office of Audit (OA)
(202) 927-7161 (office)
(202) 622-6513 (fax)
JW1559-001752
JW1559-001753
(b)(5) DP; (b)(3)/6103
JW1559-001754
(b)(5) DP; (b)(3)/6103
JW1559-001755
(b)(5) DP; (b)(3)/6103
JW1559-001756
(b)(5) DP; (b)(3)/6103
JW1559-001757
(b)(5) DP; (b)(3)/6103
JW1559-001758
(b)(5) DP; (b)(3)/6103
JW1559-001759
(b)(5) DP; (b)(3)/6103
JW1559-001760
(b)(5) DP; (b)(3)/6103
JW1559-001761
(b)(5) DP; (b)(3)/6103
JW1559-001762
(b)(5) DP; (b)(3)/6103
JW1559-001763
(b)(5) DP; (b)(3)/6103
JW1559-001764
(b)(5) DP; (b)(3)/6103
JW1559-001765
(b)(5) DP; (b)(3)/6103
JW1559-001766
(b)(5) DP; (b)(3)/6103
JW1559-001767
(b)(5) DP; (b)(3)/6103
JW1559-001768
(b)(5) DP; (b)(3)/6103
JW1559-001769
(b)(5) DP; (b)(3)/6103
JW1559-001770
(b)(5) DP; (b)(3)/6103
JW1559-001771
(b)(5) DP; (b)(3)/6103
JW1559-001772
(b)(5) DP; (b)(3)/6103
JW1559-001773
(b)(5) DP; (b)(3)/6103
JW1559-001774
(b)(5) DP; (b)(3)/6103
JW1559-001775
(b)(5) DP; (b)(3)/6103
JW1559-001776
(b)(5) DP; (b)(3)/6103
JW1559-001777
(b)(5) DP; (b)(3)/6103
JW1559-001778
(b)(5) DP; (b)(3)/6103
JW1559-001779
(b)(5) DP; (b)(3)/6103
JW1559-001780
(b)(5) DP; (b)(3)/6103
JW1559-001781
(b)(5) DP; (b)(3)/6103
JW1559-001782
(b)(5) DP; (b)(3)/6103
JW1559-001783
(b)(5) DP; (b)(3)/6103
JW1559-001784
(b)(5) DP; (b)(3)/6103
JW1559-001785
(b)(5) DP; (b)(3)/6103
JW1559-001786
(b)(5) DP; (b)(3)/6103
JW1559-001787
(b)(5) DP; (b)(3)/6103
JW1559-001788
(b)(5) DP; (b)(3)/6103
JW1559-001789
(b)(5) DP; (b)(3)/6103
JW1559-001790
(b)(5) DP; (b)(3)/6103
JW1559-001791
(b)(5) DP; (b)(3)/6103
JW1559-001792
(b)(5) DP; (b)(3)/6103
JW1559-001793
(b)(5) DP; (b)(3)/6103
JW1559-001794
(b)(5) DP; (b)(3)/6103
JW1559-001795
(b)(5) DP; (b)(3)/6103
JW1559-001796
(b)(5) DP; (b)(3)/6103
JW1559-001797
(b)(5) DP; (b)(3)/6103
JW1559-001798
(b)(5) DP; (b)(3)/6103
JW1559-001799
(b)(5) DP; (b)(3)/6103
JW1559-001800
(b)(5) DP; (b)(3)/6103
JW1559-001801
(b)(5) DP; (b)(3)/6103
JW1559-001802
From:
paul streckfus <pstreckfus@gmail.com>
Sent:
To:
paul streckfus
Subject:
EO Tax Journal 2013-64
From the Desk of Paul Streckfus,
Editor, EO Tax Journal
Email Update 2013 -64 (Tuesday, April 16, 2013)
Editors note: These email updates are intended for the use of recipients and are not intended for
redistribution. Others interested in receiving these email updates should contact us
at eotaxjournal@gmail.com or go to our website, eotaxjournal.com , for additional information.
1 - The EOTJ Mailbag
2 - Treasury Still Targeting Deductible Easements, Supporting Section 4940 Excise Tax Change
3 - More on Senator Whitehouses Subcommittee Hearing
A - Statement of Mythili Raman, Acting Assistant Attorney General, Criminal Division, Department of
Justice
B - Statement of Gregory L. Colvin, Adler & Colvin, San Francisco
_________________________________
1 - The EOTJ Mailbag
Paul, with my tongue firmly resting in cheek, I wonder if Information Letter 2013 -0004 [reprinted and
discussed yesterday] is simply a self -help solution to the impact of the sequester. If it is correct, then virtually
every tax-exempt organiza tion that has undergone any significant operational or organizational change since its
application was filed is at risk. Id be willing to bet that every tax -exempt that has been in operation ten years or
more falls into that category, probably several hun dred tax-exempt organizations of all varieties.
Marc Owens, Caplin & Drysdale, Washington, D.C.
____________________
Paul, with the April list, Automatic Revocations have officially topped half a million, coming in at 500,092
revoked entities (after removing one duplicate). The IRS has not quite reached its stated goal of listing
organizations within one month of revocat ion: the most recent revocations shown on the April list are
revocations that were effective in January, 2013 -- in other words, organizations whose third missed return was
for the fiscal year ended August 31, 2012.
2,391 new names were added to the Auto -Rev List, and 340 were removed.
In a speech on March 21 [reprinted in email update 2013 -57], Lois Lerner mentioned that reinstatement
applications had reached 37,000. So far, the end of Transitional Relief has not slowed reinstatements. The
JW1559-001803
percentage of revoked organizations applying for reinstatement is still going up. More than a quarter of the
favorable determinations made in the last 12 months were reinstatements (11,339 out of 44,425).
Sandy Deja, Fairbanks, Alaska
www.501c3book.com
_________________________________
2 - Treasury Still Targeting Deductible Easements, Supporting Section 4940 Excise Tax Change
In March 21 remarks (reprinted in email update 2013 -61), Alex Reid, former JCTer now wit h Morgan, Lewis &
Bockius, Washington, said he expected to see continuing Treasury support for changing the section 4940 excise
tax change and probably continuing support for restricting golf course conservation easements. (A related
proposal concerns hist oric preservation easements.) Treasurys recently -released Greenbook does include these
proposals. Here are the relevant excerpts:
Reprinted from General Explanations of the Administrations Fiscal Year 2014 Revenue Proposals (Treasurys
Greenbook)
ELIMINATE THE DEDUCTION FOR CONTRIBUTIONS OF CONSERVATION EASEMENTS ON
GOLF COURSES
Current Law
A deduction is generally available for charitable contributions of cash and property. This deduction is limited
or disallowed entirely -- for certain types of h ard-to-value property. In general, no charitable deduction is
--
allowed for a contribution of a partial interest in property. An exception to this rule provides that a donor may
deduct the value of a conservation easement (a partial interest) that is donated to a qualified charitable
organization exclusively for conservation purposes. The value of the deduction for any contribution that
produces a return benefit to the donor must be reduced by the value of the benefit received.
Reasons for Change
Recent court decisions have upheld large deductions taken for contributions of easements preserving
recreational amenities, including golf courses, surrounded by upscale, private home sites. These contributions
have raised concerns both that the deduction amounts cl aimed for such easements (often by the developers of
the private home sites) are excessive, and also that the conservation easement deduction is not narrowly tailored
to promote only bona fide conservation activities, as opposed to the private interests of donors.
These concerns are particularly strong in the case of the deduction for contributions of easements on golf
courses. The benefit of an easement on a private golf course, especially one that is part of a luxury housing
development, may accrue to a limited number of users such as members of the course club or the owners of the
surrounding homes, not the general public, and the construction and operation of the course may even result in
environmental degradation. Easements on golf courses are partic ularly susceptible to overvaluation, as private
interests often profit from the contribution of the easement. Because of the difficulty determining both the value
of the easement and the value of the return benefits provided to the donor -- including indir ect benefits, such as
the increase in the value of home sites surrounding the golf course -- it is difficult and costly for the Internal
Revenue Service to challenge inflated golf course easement deductions. Thus, to promote the kinds of public
benefits intended by the charitable deduction provision and to prevent abuses, no charitable deduction should be
allowed for contributions of easements on golf courses.
Proposal
JW1559-001804
The proposal would amend the charitable contribution deduction provision to prohibit a deduction for any
contribution of a partial interest in property that is, or is intended to be, used as a golf course.
The proposal would be effective as of the date of enactment.
RESTRICT DEDUCTIONS AND HARMONIZE THE RULES FOR CONTRIBUTIONS OF
CONSERVATION EASEMENTS FOR HISTORIC PRESERVATION
Current Law
A deduction is generally available for charitable contributions of cash and property. The value of the deduction
for any contribution resulting in a return benefit to the donor is reduced by the value of the benefit received. The
charitable deduction is li mited -- or disallowed entirely -- for certain types of hard -to-value property. In general,
no charitable deduction is allowed for a contribution of a partial interest in property. An exception to this rule
allows a donor to deduct the value of a conservat ion easement (a partial interest) that is donated to a qualified
charitable organization exclusively for conservation purposes, including for the preservation of certain certified
historic structures. To qualify as a certified historic structure, a buildin g must either be located in a registered
historic district or be listed in the National Register of Historic Places. A 2006 amendment to the Internal
Revenue Code added several special rules, including additional substantiation rules, for contributions of
easements protecting the exterior of buildings located in registered historic districts. These rules do not apply to
buildings listed in the National Register.
Reasons for Change
Concerns have been raised that the deduction amounts claimed for historic p reservation easements are excessive
and may not appropriately take into account existing limitations on the property. Because it can be difficult to
determine the fair market value of such easements directly, the value of the deduction is generally determi ned
by assessing the drop in the value of the property caused by the imposition of the easement. The value of the
easement may be zero if it does not restrict future development more than the restrictions already imposed on
the building, for example, by lo cal zoning or historic preservation authorities. Some taxpayers, however, have
taken large deductions for contributions of easements restricting the upward development of historic urban
buildings even though such development was already restricted by local authorities. Because of the difficulty of
determining the value of the contributed easement, it is difficult and costly for the Internal Revenue Service to
challenge deductions for historic preservation easements. To prevent abuses, no deduction should be allowed
for the value associated with forgone upward development above an historic building.
In addition, to maintain consistency, the special rules applicable to buildings in registered historic districts
should be extended to apply to buildings listed in the National Register.
Proposal
The proposal would disallow a deduction for any value of an historic preservation easement associated with
forgone upward development above an historic building. It would also require contributions of conservation
easements on buildings listed in the National Register to comply with the same special rules currently
applicable to buildings in a registered historic district.
The proposal would be effective for contributions made after the date of enactment.
REFORM EXCISE TAX BASED ON INVESTMENT INCOME OF PRIVATE FOUNDATIONS
JW1559-001805
Current Law
Private foundations that are exempt from federal income tax generally are subject to a 2 -percent excise tax on
their net investment income. The excise tax rate is reduced to 1 percent in any year in which the foundations
distributions for charitable purposes exceed the average level of the foundations charitable distributions over
the five preceding taxable years (with certain adjustments). Private foundations that are not exempt from fe deral
income tax, including certain charitable trusts, must pay an excise tax equal to the excess (if any) of the sum of
the excise tax on net investment income and the amount of the unrelated business income tax that would have
been imposed if the foundat ion were tax exempt, over the income tax imposed on the foundation. Under current
law, private nonoperating foundations generally are required to make annual distributions for charitable
purposes equal to 5 percent of the fair market value of the foundatio ns noncharitable use assets (with certain
adjustments). The amount that a foundation is required to distribute annually for charitable purposes is reduced
by the amount of the excise tax paid by the foundation.
Reasons for Change
The current two -tier structure of the excise tax on private foundation net investment income may discourage
foundations from significantly increasing their charitable distributions in any particular year. An increase in a
private foundations distributions in one year will inc rease the foundations five -year average percentage
payout, making it more difficult for the foundation to qualify for the reduced 1 -percent excise tax rate in
subsequent years. Because amounts paid by foundations in excise tax generally reduce the funds a vailable for
distribution to charitable beneficiaries, eliminating the two -tier structure of this excise tax would ensure that a
private foundations grantees do not suffer adverse consequences if the foundation increases its grant - making
in a particular year to respond to charitable needs (for example, disaster relief). Such a change would also
simplify both the calculation of the excise tax and charitable distribution planning for private foundations.
Proposal
The proposal would replace the two rates of tax on private foundations that are exempt from federal income tax
with a single tax rate of 1.35 percent. The tax on private foundations not exempt from federal income tax would
be equal to the excess (if any) of the sum of the 1.35 - percent excise ta x on net investment income and the
amount of the unrelated business income tax that would have been imposed if the foundation were tax exempt,
over the income tax imposed on the foundation. The special reduced excise tax rate available to tax -exempt
private foundations that maintain their historic levels of charitable distributions would be repealed.
The proposal would be effective for taxable years beginning after the date of enactment.
_________________________________
3 - More on Senator Whitehouses S ubcommittee Hearing
For earlier coverage, see email update 2013 -61, Senate Democrat Seeks Prosecution of Political (c)(4)s
Making False Statements.
Senator Pushes for Investigation of False Statements by Dark Money Groups
by Lois Beckett, ProPublica, April 10, 2013
A Democratic senator is pushing for an investigation of nonprofit groups that told the Internal Revenue Service
they would not engage in political activity -- and then spent millions attacking or praising candidates in 2012
elections. Sen. Sheldon Whitehouse, D -Rhode Island, said at a campaign finance hearing yesterday that there
were numerous instances in which nonprofit groups may have made false statements to the IRS about whether
they planned to be involved in federal or local electio ns.
JW1559-001806
Applications for tax -exempt status are submitted to the IRS under penalty of perjury. If the IRS is not well suited to investigate these plain vanilla criminal cases, the U.S. Department of Justice should, Whitehouse
said. ProPublica has reported ex tensively on the gap between what these groups told the IRS they would do in
their applications for tax -exempt status and what they actually did.
Part of the benefit of being recognized by the IRS as a 501(c)(4) nonprofit is that these social welfare gr oups
do not have to disclose their donors publicly. But in order to quality as a 501(c)(4), groups cannot make
influencing elections their primary activity.
In 2008, Western Tradition Partnership, now known as American Tradition Partnership, told the IRS that it
would not attempt to sway elections. Shortly before submitting this application, it had blitzed Montana voters
with fliers weighing in on candidates in the states Republican primary. After the IRS approved the groups tax exempt status, it continu ed to send out fliers supporting or opposing candidates in both Montana and Colorado.
Similarly, the Government Integrity Fund told the IRS in 2011 that it did not plan to spend any money
influencing elections. Then, in 2012, the group spent more than $1 m illion on ads attacking Ohio Democratic
Sen. Sherrod Brown and praising his Republican opponent, Josh Mandel.
When Arizona-based Americans for Responsible Leadership applied for tax -exempt status in 2012, the group
had already spent $5,300 on get -out-the-vote efforts for Sen. Orrin Hatch, R -Utah, and given $57,500 to two
Republican political committees in Arizona. But it told the IRS in a confidential filing that it had not spent any
money, and did not plan to spend any money influencing state, local, or f ederal elections.
The group would go on to spend $5.2 million on campaign activities in the fall of 2012, most of it on phone
calls urging the defeat of President Barack Obama. After ProPublica ran a story on the group, a lawyer for
Americans for Respons ible Leadership told the Arizona Capital Times that the group had submitted an
amended application to the IRS that corrected the error.
The Government Integrity Fund told ProPublica that it worked hard to be in compliance with the law and that
Legally, the concept of influencing elections has been narrowly defined. And the American Tradition
Partnerships executive director said that ATP had obeyed all applicable laws and does no t, and never will, tell
voters which candidates to vote for."
At the Senate Judiciary Subcommittee hearing on campaign finance law enforcement hearing, Whitehouse did
not mention any nonprofit groups by name, but he cited ProPublica's reporting on these groups at length in his
introduction to the hearing, as his spokesman noted. Whether or not the IRS or the Justice Department is already
investigating any of these groups is not clear.
Representatives who testified at the hearing would not comment on any ongoing investigations. Larry Noble,
the president of Americans for Campaign Reform, said at the hearing that the IRS and the Justice Department
were hesitant to enforce the laws on the books because of fear of getting involved in politics, fear of being
called partisan when youre not.
Mythili Raman, the acting assistant attorney general for the Justice Departments criminal division, testified that
the rise of new 501(c)(4) groups active in politics increased the risk of bad actors using the anonym ity thats
given to them when they donate to corrupt the political process. Raman said that the department needed more
transparency in order to enforce anti -corruption laws -- as well as a clearer definition of coordination.
Super PACs and 501(c)(4) dark money nonprofits can raise unlimited amounts of money, but they arent
allowed to coordinate their advertising spending or other political activities with candidates campaign.
Proving coordination, though, isnt easy. We simply dont have the too ls to tell if super PACs are illegally
JW1559-001807
coordinating with campaigns, Raman testified. Part of the issue, she said in her prepared testimony, was that
the Federal Elections Committee has failed to define whether certain activities -- like a candidates moth er
running a super PAC expressly supporting his candidacy -- count as coordination.
Whitehouse also pressed for investigations of whether individuals or organizations had created shell
companies or used 501(c)(4)s to donate money to political action committees in order to avoid disclosure
requirements. Americans for Responsible Leadership is currently under investigation in California for what a
state watchdog group called campaign money laundering.
Sen. Ted Cruz, a Texas Republican, said at the he aring that aggressive enforcement of campaign finance laws
might restrict free speech. He cautioned against any prior restraint, or punishment after the fact for citizens
who choose to speak out against their elected officials. Cruz said that Organizing for Action, a continuation of
Obamas reelection campaign that is now operating as a 501(c)(4) nonprofit, was currently running ads against
him, and that his campaign for Senate had been on the receiving end of $35 million in attack ads.
God bless them for speaking out and being involved in politics, Cruz said.
____________________
R.I. Senator Deems Some Nonprofits Criminal, Urges IRS and DOJ Action
By Rick Cohen, Nonprofit Quarterly, April 15, 2013
How many 501(c)(4) social welfare organizations promised not to be involved in electoral activities, and then
spent oodles of money directly in elections? Senator Sheldon Whitehouse (D -RI) wants to know, suggesting
that organizations that misrepresented their intentions are plain vanilla criminal cases that should be
investigated by the Department of Justice. ProPublica cites examples of (c)(4)s that Nonprofit Quarterly has
covered before, such as the Western Tradition Partnership, which was involved in electoral activities in
Montana despite committin g in its application to the IRS that it wouldnt, and others such as the Government
Integrity Fund, which spent $1 million attacking Ohio Senator Sherrod Brown (D -OH).
Are these examples of (c)(4)s that simply made a mistake when they filled out their app lications? Implausible.
Are these examples of government having changed and narrowed the definition of influencing elections since
the time that these groups filed their paperwork with the IRS? How these groups might imagine that six - and
seven-figure expenditures on electoral candidates would somehow not qualify as electoral activities no matter
how broad or narrow the definition is hard to fathom.
Are they examples of organizations having made not entirely accurate statements on their application form s on
the assumption that the IRS wouldnt pursue the question? Hmmm.
We want to see if Whitehouse, the IRS, and the Department of Justice pursue this to the end. It means
something when the IRS asks social welfare organizations and public charities to fil l out application forms
correctly, or at least it should. Does anyone care? Or will the IRS and Justice give the (c)(4)s a pass on their
statements because governmental review of tax exemption applications is, as we fear, a mechanical formality
that doesnt really address issues of substance and veracity?
_____________________
A - STATEMENT OF MYTHILI RAMAN, ACTING ASSISTANT ATTORNEY GENERAL,
CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE
BEFORE THE SUBCOMMITTEE ON CRIME AND TERRORISM, COMMITTEE ON THE JU DICIARY,
UNITED STATES SENATE
JW1559-001808
AT A HEARING ENTITLED CURRENT ISSUES IN CAMPAIGN FINANCE LAW ENFORCEMENT
PRESENTED APRIL 9, 2013
Mythili Raman, Acting Assistant Attorney General, Criminal Division, U.S. Department of Justice
Subcommittee on Crime and T errorism, Committee on the Judiciary, United States Senate
April 9, 2013
Chairman Whitehouse, Ranking Member Graham, and distinguished Members of the Subcommittee: Thank you
for inviting me to share the views of the Justice Department on challenges to the criminal enforcement of our
campaign finance laws posed by the growing activity of Super PACs and certain 501(c) organizations. I am
honored to represent the Department at this hearing and to have the o pportunity to oversee the important work
of the Criminal Division.
Protecting the integrity of our elections is one of the Departments most important tasks, and enforcement of our
campaign finance laws is a top priority. There is no question that private contributions to political campaigns
are a fundamental part of the electoral process, and that, under the Constitution, the ability to make political
contributions is a protected component of our citizens political speech. At the same time, Congress and the
federal courts have long recognized the importance of transparency and fairness in campaign finance, to avoid
any individual or entity exercising undue influence over our elections or elected officials.
The Department of Justice, through the Criminal Divisions Public Integrity Section and the 93 United States
Attorneys Offices, is committed to investigating and prosecuting those who willfully violate the disclosure
requirements and contribution limits established by our campaign finance laws. We are greatly assisted in this
mission by the comprehensive disclosure system administered by the Federal Election Commission (FEC).
When the public and law enforcement can see who is making contributions, the Department can better detect,
investigate, and prose cute contributions exceeding statutory limits, contributions from banned sources, and
bribes.
RECENT CAMPAIGN FINANCE PROSECUTIONS
Since 2010, the Department has successfully prosecuted more than a dozen cases involving campaign finance
violations. For e xample, in February of this year, the Criminal Divisions Public Integrity Section and the U.S.
Attorneys Office for the Eastern District of Virginia secured guilty pleas from Virginia businessman William
Danielczyk and one of his employees, Eugene Biagi, in connection with a scheme in which Danielczyk
contributed over $180,000 to a federal candidate in excess of the limits imposed by law. Danielczyk and Biagi
used employees and others to make conduit contributions to the campaign, and reimbursed the straw
contributors in part using corporate funds. In that case, the district court initially dismissed two significant
charges, relying on the U.S. Supreme Courts 2010 decision in Citizens United v. FEC to find unconstitutional
the ban on corporate contributio ns to candidates. The Department appealed that decision and prevailed in the
U.S. Court of Appeals for the Fourth Circuit.
Also in February of this year, the Public Integrity Section and the U.S. Attorneys Office for the Northern
District of Florida obtained a guilty plea from Florida real estate developer Jay Odom, who admitted to making
$23,000 in conduit contributions to a presidential campaign in 2007. Odom pleaded guilty to causing a false
statement to be made by the campaign to the FEC concerning these unlawful contributions.
JW1559-001809
Last year, the U.S. Attorneys Office for the District of New Jersey secured a guilty plea from Joseph Bigica,
who contributed almost $100,000 to a federal candidates campaign committee in the form of conduit
contributions made through family, friends, and employees. Also last year, the Public Integrity Section and the
U.S. Attorneys Office for th e Middle District of Florida secured guilty pleas from a real estate developer,
Timothy Mobley, and his accountant, Timothy Hohl, for their roles in funneling corporate contributions and
contributions in excess of the legal limits to a state political part y and to the campaign of a Member of
Congress. The unlawful contributions were made through straw contributors whom Mobley and Hohl
reimbursed.
In 2010, the Public Integrity Section and the U.S. Attorneys Office for the Eastern District of Virginia secur ed
a guilty plea from lobbyist Paul Magliocchetti in one of the largest conduit contribution schemes in U.S. history.
Magliocchetti made hundreds of thousands of dollars of contributions in excess of legal limits and funneled
corporate funds to federal can didates for elected office by having his family, friends, and employees make
reimbursed conduit contributions. Magliocchetti also pleaded guilty to causing various federal candidate
campaign committees to unwittingly make false statements to the FEC in reg ard to these unlawful contributions.
CURRENT CHALLENGES IN CAMPAIGN FINANCE ENFORCEMENT
Under current law, candidate committees, party committees, and political action committees (PACs) are
required to register with the FEC and to disclose contributions and expenditures. Until recently, almost all
political spending occurred through these organizations, and we were able to detect and prosecute violations of
the campaign finance laws, often by using campaign and committee disclosures available to federal a gents and
prosecutors through the FECs comprehensive, searchable website.
Following the Supreme Courts decision in Citizens United, the manner in which individuals and entities raise
and spend money in our elections changed dramatically, and continues t o change. These developments are
having a profound effect on our ability effectively to enforce the campaign finance laws. The two most
important developments are the rise of Super PACs and the growing political activity of certain types of
501(c) organizations, such as 501(c)(4) entities. [bold added]
Super PACs came into being following Citizens United, in which the Supreme Court held that corporations
have a First Amendment right to spend money to seek to influence elections, invalidating a statute that
prohibited independent expenditures by labor organizations and banks. In light of Citizens United, corporate and
other entities, like individuals, can make independent expenditures that is, expenditures expressly advocating
the election or defeat of a c learly identified candidate so long as the expenditures are not coordinated with
candidate committees or organizations that contribute directly to candidates. In other words, as long as a
corporation or other entity spends money for political speech that is truly independent of the candidate or
campaign that it supports, it may spend as much money as it wishes.
Soon after the Citizens United decision, the U.S. Court of Appeals for the D.C. Circuit held in SpeechNow.org
v. FEC that it is unconstitutional to limit the amount of money that is given to independent expenditure -only
PACs, now commonly known as Super PACs. Through advisory opinions issued after SpeechNow, the FEC
clarified that Super PACs can accept unlimited contributions from individuals, corp orations, unions, or other
entities.
Similarly, as a result of Citizens United and related decisions, organizations described in certain
provisions of Section 501(c) of the Internal Revenue Code 501(c)(4) social welfare organizations,
501(c)(5) labor organizations, and 501(c)(6) trade associations that spend money on campaign activity
can now likewise accept unlimited contributions from individuals and entities alike under the campaign
finance laws. These types of 501(c) organizations are permitted to make independent expenditures to seek
to influence elections, and can meet the requirements imposed by Section 501(c) provided they otherwise
JW1559-001810
satisfy the requirements for tax -exempt status, which, in the case of 501(c)(4) social welfare
organizations, requ ires only that the organizations primary activity be the promotion of social welfare
rather than political activity. Unlike PACs, Super PACs and other political organizations, these classes of
501(c) organizations are not required to publicly disclose the ir donors to the FEC under the campaign
finance laws, even though those donors contributions may be used as expenditures to seek to influence
elections. Instead, their donors are disclosed only to the Internal Revenue Service (IRS), only as part of
their tax returns, and are specifically protected from public disclosure under the tax laws. Disclosure to
the IRS occurs well after the spending occurs, and only through tax returns that are not available to the
Department absent a referral from the IRS or a co urt order based on independent information. Thus, it
is possible for such a 501(c) organization one that is created during an election year and spends millions
of dollars engaging in campaign activities to ultimately disclose its donors and activities to the IRS for
the first time only a year or more after the election . [bold added]
The increasing use of Super PACs and the types of 501(c) organizations described above impacts transparency
and changes the kinds of criminal cases the Department can bring under our campaign finance laws. We
anticipate seeing fewer cases of conduit contributions directly to campaign committees or parties, because
individuals or corporations who wish to influence elections or officials will no longer need to attempt to do so
through conduit contribution schemes that can be criminally prosecuted. Instead, they are likely to simply make
unlimited contributions to Super PACs or 501(c)s.
As to Super PACs, there are significant challenges in seeking to establish, in a criminal ca se, improper
coordination between a Super PAC and a campaign or official. The FEC, through its advisory opinions,
regulations, and matters under review, has been unable to reach agreement or declined to take administrative
action in each of the following i nstances of possible coordination: a candidates mother running a Super PAC
expressly supporting the candidacy; sharing of office facilities by political committees and firms providing
services to candidates; candidates themselves soliciting contributions to the supposedly independent
committees; former campaign employees working for independent committees; sharing common vendors; and
the solicitation of contributions to federal candidates by email and on the website of an independent committee.
As a result, it will be rare that the evidence could give rise to proof beyond a reasonable doubt of a criminal
intent to illegally coordinate through contribution to, or expenditures by, a Super PAC.
The kinds of 501(c)s described above raise other challenges to ef fective prosecution. An individual or
entity seeking to skirt existing legal limitations under the campaign finance laws through contributions to
a 501(c) may do so free from public disclosure of donors to the FEC, with a lack of any required
disclosure to the IRS coincident with the contribution, and with restrictions on prosecutors access to any
eventual IRS disclosures. Thus, for example, a donor seeking to bribe a corrupt official could potentially
use a 501(c) organization to hide his or her identity, and we would be unlikely to receive the warning
signals we would need to investigate further. Additionally, the increasing use of 501(c)s, and the lack of
disclosure of 501(c) contributor information, may make it more difficult to detect the use of foreig n funds
to influence elections. While proven instances of foreign financial influence are rare, detecting such
improper contributions, should they occur, will be very difficult indeed given the lack of 501(c) disclosure
requirements. [bold added]
CONCLUSION
Vigorous enforcement of our campaign finance laws is essential to preserving both the integrity of our elections
and the publics confidence in those elections. The Justice Departments prosecutors and federal law
enforcement agents work hard to uncove r, investigate, and prosecute campaign finance offenses. The recent
changes in our campaign finance laws have made it more difficult for us to combat the ability of individuals and
entities to buy influence over elections and conceal their conduct. But not withstanding the added challenges,
our commitment to enforcing the nations campaign finance law remains as strong as ever.
JW1559-001811
____________________
B - Testimony to Senate Judiciary Subcommittee on Crime and Terrorism, April 9, 2013, Gregory L.
Colvin, Adler & Colvin, San Francisco
Problems in IRS Enforcement of Political Rules for 501(c)4) Organizations; Reforms Needed
Good morning, Senators. I appreciate the chance to come before you and address the q uestion why we have
seen so little enforcement -- civil or criminal -- of the federal tax laws that are supposed to regulate the political
activities of 501(c)(4) [1] organizations.
My law firm represents a broad range of nonprofits and their donors. For 35 years, I have formed tax -exempt
organizations, including (c)(4)s, and advised them on their political activities under Internal Revenue Service
rules.
Why is the IRS in the business of enforcing political rules? Every person, every entity, in the count ry has a
federal tax life. It must pay tax on its income unless it is exempt by statute. [2] The only entity allowed to have
a primary political purpose is a 527 organization; it has a partial tax exemption and must disclose its donors
over $200. [3] All o ther tax-exempts must have a primary purpose that does NOT include politics. Therefore,
the IRS cannot avoid the law enforcement duty to (1) qualitatively, define political activity and (2)
quantitatively, determine what is too much.
IRS Form 990 requires an answer under penalty of perjury: Did the organization engage in direct or indirect
political campaign activities on behalf of or in opposition to candidates for public office? [4[ Those who
answer yes must report the amount spe nt, the number of volunteer hours, and describe what they did. [5]
There is a fundamental problem affecting enforcement of the political tax rules on 501(c)(4) nonprofits. The tax
rules are vague, unpredictable, and unevenly applied. Only the most flagran t violations could be knowing,
willful, or deliberate and subject to criminal prosecution.
What is political intervention? The IRS interpretation must be gleaned from a few old cases and rulings, [6]
internal training materials, [7] and a few bursts of gu idance [8] from the last decade. The IRS insists on an
open-ended facts and circumstances approach rather than drawing bright lines between partisan politics and
truly nonpartisan voter education. Political intervention under tax law is more than express advocacy under
election law, we are told, but what is it? Reasonable minds could differ on that judgment, dramatically so.
How much political intervention is too much for a tax -exempt 501(c)(4)? Its primary operations must promote
social welfare the common good of the community with no element of political intervention or private
benefit. The IRS therefore deduces that non -qualifying activities must be less than primary. [9]
While the Service has never pinned this down to an annual level of expendi tures, it has tacitly accepted 49% as
a defensible figure. Yet because of the IRS facts and circumstances approach, we can never be sure. So, the
speech of some (c)(4) groups is chilled. They avoid the risk and stay far below the 49% level, while their
adversaries may go right up to the edge.
Two things about the focus of this hearing on (c)(4)s:
First, there are well over 100,000 registered with the IRS. Most are highly reputable and do very little or no
political activity. They do not present a law en forcement problem.
10
JW1559-001812
Second, enforcing these tax laws is not limited to the 501(c)(4) class. The vagueness of the IRS rules affects
(c)(3) charities, banned from political intervention entirely. And (c)(5) unions and (c)(6) trade associations must
obey the same primary purpose rule as (c)(4)s do. [10]
Heres the most difficult political tax law enforcement problem: what is the difference between political
campaign advertising and so -called issue ads that name a candidate, say something good or bad about t hem,
and tell the viewer to contact the candidate about the issue?
The Bipartisan Campaign Reform Act (McCain -Feingold) in 2002 required disclosure to the FEC of spending
on electioneering communications, defined basically as paid advertising that names a candidate and is
broadcast within 30 or 60 days before an election. [11] The IRS went in a different direction. It issued Revenue
Ruling 2004-6, listing a series of six bad factors and five good factors by which to judge advocacy
communications. [12] Three years later, it issued Ruling 2007 -41, with a seven -factor test on issue
advocacy. [13]
The two multi -factor tests are not the same. Neither of them directly applies to the key question in this hearing:
what political speech by a (c)(4) counts aga inst its tax exemption?
So, how can a lawyer advise his or her client, how can a prosecutor evaluate a case, in which a (c)(4) denies it
will engage in candidate politics on its federal tax form, and on that same day in March it broadcasts a TV ad
praising a Senator who is up for re -election in November?
Under the seven -factor IRS test, three factors look bad: it names a candidate, expresses approval of him, and is
not connected to an event such as a scheduled vote on legislation. But three factors look g ood: the election is
still eight months away, the ad makes no reference to the election or voting, and it mentions no wedge issues
separating the candidates. The group can satisfy the seventh factor with an ongoing series of ads on the same
issues.
What if the ad is targeted to a battleground state? Targeting is a factor in one IRS ruling but not the other.
With this kind of vague, uncertain, multi -factor approach, the (c)(4) can find a reputable lawyer to advise that
the ad is NOT political interventio n under the IRS tests. Therefore, an officer of the (c)(4) entity can sign a tax
return believing that its denial is true and correct.
Lets turn to the quantitative side of the puzzle. Is the IRS properly interpreting its own precedents if it allows
49%? In recent litigation regarding Vision Service Plan, [14] which did not involve political activity, the IRS
and the Department of Justice took the stance that ANY non -exempt activity, if substantial (that is, more than 5 15%), violates 501(c)(4). I have co me to believe that the critics of 49% are right. The permitted level for
political spending ought to be insubstantial as it is for private benefit.
A year ago, I proposed that Congress amend the Internal Revenue Code to set a 10% upper limit on politica l
spending for all 501(c) groups, while keeping the 0% limit in place for 501(c)(3) charities. [15] This silver
bullet would drive most of the undisclosed (c)(4) and (c)(6) money into 527 political committees, into the
sunlight where it would be disclose d.
I want to conclude by suggesting that the Internal Revenue Service itself can solve both the qualitative and
quantitative problems.
First, the IRS and Treasury can undertake an intensive regulatory project to establish bright lines defining
political intervention that wouldnt tolerate the disguise of targeted issue ads that refer to and reflect a
11
JW1559-001813
view on candidates, and that would provide safe harbors for genuine lobbying and genuine voter education. I
chair the drafting committee of the Bright Li nes Project, sponsored by Public Citizen, which is developing just
such a proposed regulation for IRS consideration.
Second, the Service can reconsider its position on the less than primary ceiling for (c)(4), (5) and (6) political
spending. It can esta blish a percentage, at 10% (more or less), and/or a dollar level, as safely insubstantial.
These reforms would go a long way toward restoring public confidence in the tax -exempt universe, toward
preventing the corruption of hidden financial leverage in ou r elections, and toward liberating the speech of
citizen groups who have too long been intimidated by the fear of losing tax -exemption due to the unpredictable
specter of IRS enforcement.
Thank you.
Questions
1. Has anyone ever been convicted of a crime for failing to report political activity on a nonprofit tax return?
I am aware of only one instance. During the Iran -Contra scandal in the 1980s, a man named Carl (Spitz)
Channell, president of the National Endowment for the Preservation of Liberty, pled guilty to a felony
conviction for conspiracy to defraud the government based on a number of violations of his organizations
501(c)(3) status, including political intervention. [16] He used tax -exempt funds to place TV ads aimed at
defeating certain Congr essmen who opposed aid to the contras in Nicaragua, and bragged about it to his co conspirator Oliver North. Other than that, criminal prosecutions for conducting political activities in a tax exempt organization, and failing to report that on an IRS tax f iling, are truly rare.
2. How does the filing of an exempt organization tax return relate to the criminal tax laws?
The Internal Revenue Code does contain criminal laws to punish dishonest reporting. Section 7206 states: Any
person who willfully makes a nd subscribes any return, statement, or other document, which contains ... a
written declaration that it is made under the penalties of perjury, and which he does not believe to be true and
correct as to every material matter ... shall be guilty of a felon y....
The annual Form 990 tax return filed by almost all tax -exempt organizations (except those with less than
$50,000 of income and churches), must be signed by a corporate officer under penalty of perjury, declaring that
I have examined this return, i ncluding accompanying schedules and statements, and to the best of my
knowledge and belief, it is true, correct, and complete.
3. Do 501(c)(4) organizations have additional reporting requirements on Form 990, Schedule C?
They do. They must also report:
expenditures for activities defined (somewhat differently) as political under Section 527,
filing of Form 1120 -POL reporting tax paid on the lesser of investment income or political spending during
the year,
a list of ALL payments made to 527 poli tical organizations, and
a proxy tax report under Section 6033(e) to the extent that the organization gave insufficient notice of non deductible political and lobbying expenses to its dues -paying members.
12
JW1559-001814
If your eyes are glazing over at this point, yo u can begin to see the problem. In my experience, many 501(c)
organizations and their accountants get lost in the minute technicalities and fail to file complete information on
the return.
4. Is political intervention defined in the Treasury Regulations ?
The Internal Revenue Regulation (only 113 words) is of little help defining political intervention, which is the
term that appears throughout the Code. [17] The Regs tell us very little beyond what is in the statute, only that
(a) intervention can be dir ect or indirect, (b) a candidate is an individual who offers himself or is proposed by
others as a contestant for elective public office, (c) such office may be federal, state, or local, and (d) statements
for or against a candidate may be oral or written.
5. Can you give some examples of organizations in the 501(c)(4) category?
You may hear about those very controversial (c)(4)s, connected to 527 SuperPACs and deeply involved in
federal elections, such as Crossroads GPS and Priorities USA. There are also long-standing (c)(4)s with well known policy agendas that do varying degrees of political activity, such as the National Rifle Association, the
Christian Coalition, and the Sierra Club. But there are also brand -name (c)(4) organizations that stay complete ly
away from political intervention, such as the AARP, Common Cause, the Disabled American Veterans, service
clubs such as Rotary and Kiwanis, many health care service organizations, and committees such as in my state,
California, that raise and spend full y-disclosed donations on ballot measures but stay out of candidate races.
6. What has changed about the political spending of 501(c)(5) and (c)(6) organizations?
After the Citizens United Supreme Court decision in 2010, [18] they are no longer required t o limit their
political spending to segregated PACs. Labor unions and chambers of commerce may spend unlimited amounts
of general treasury funds on independent expenditures in politics under the election laws now, which makes it
more likely that they will come closer to the edge and risk their tax -exempt status due to excessive political
intervention in an election year.
7. Is this a partisan issue?
It is not. Our law office has represented both liberal and conservative 501(c) organizations and donors aff ected
by this uncertain IRS enforcement, many referred by our Democratic and Republican colleagues in the
California Political Attorneys Association.
8. Has anyone questioned the disparity between the two IRS Rulings on issue advertisements?
In May 2012, I wrote the IRS asking for a single, consolidated Ruling. No substantive response. In August I
wrote again, asking four simple questions on how to reconcile the two Rulings. This January, after the election,
the Service finally replied, admitting there wa s no well established interpretation or principle of tax law to
answer my questions. [19] In other words, they just dont know.
9. Can you give an example of the quantitative problem -- how to determine whether a 501 (c)(4) should no
longer be tax-exempt due to excessive political intervention?
Assume that a (c)(4) spending $100 million on its programs during an election year spends $40 million on
independent expenditures expressly advocating the election or defeat of candidates, admitted and described on
Form 990 as political intervention. It spends another $40 million on broadcast issue advocacy ads that it
believes pass the IRS multi -factor test and $20 million on grants to other (c)(4) organizations.
13
JW1559-001815
Is the organization safely qualified to be a (c )(4) organization based on spending 60%, a primary proportion, of
its resources on social welfare? It depends partly on how the outgoing grants are treated. The IRS could treat the
grants as a passive use of funds that is not the organizations own program activity, and shouldnt count as
social welfare in the balance. If the grants do count, what does the organization need to do to make sure the
money is not simply being passed off to other groups that will spend it on political intervention? It could
stipulate that the grants are restricted solely to social welfare activity, but that could mean (money being
fungible) that the grantees other unrestricted funds may now be freed up to pay for more political advertising,
while the grant itself could be used f or more so-called issue ads. (Any (c)(4) grants made to 527
organizations, such as SuperPACs, are certain to be treated as political intervention.)
In this scenario, the $100 million (c)(4) organization is admitting that 40% of its spending was politica l. Thats
under 49% so it is less than primary and if the IRS doesnt challenge the social welfare character of its issue
ads or its grants, it would remain tax -exempt.
10. Has there been any attempt to quantify the less than primary test? What was th e result?
In 2004, I co -chaired a Task Force within the Exempt Organizations Committee of the ABA Tax Section that
recommended to the IRS a safe harbor or a presumption of compliance at the level of 40% of annual program
expenditures for 501(c)(4) organiz ations. [20] The Service declined to do so. It seemed a modest proposal at the
time, given the complete ban on corporate political spending that existed federally and in half of the states.
Then, the Supreme Court decided in 2010 that the (c)(4) organizati on named Citizens United, and all other
corporations and labor unions, could no longer be prohibited from making independent expenditures in
elections, and (c)(4)s became the vehicle of choice for large, undisclosed donations to be spent on a
combination o f explicit political ads, issue ads, and other borderline election -year activities.
11. Why do you say it is necessary to lower the amount that 501(c) organizations can spend on political
intervention?
So long as huge amounts and proportions of political campaign funds can flow through multi -purpose 501(c)
entities, the task of achieving public disclosure will be almost impossible. It is very difficult to create rules that
accurately trace political spending back to original sources in an organization wit h multiple programs. How far
back do you go? Do you count the dollars first -in first-out or last-in first-out? Do you allocate the spending
proportionately over all the donors? Do you let the organization say that the money came from investments, T shirt sales, and small donors, and not from any big donors? Do you require donors to specify whether their
money may or may not be used for politics?
Some of my colleagues worry that the dark money would go deeper underground to taxable vehicles with
even less IRS regulation, but at least it would not have the halo and blessing of the federal tax -exempt system as
it does now. I agree with my colleague Miriam Galston that 501(c) organizations should be whole -heartedly, not
half-heartedly, devoted to their tax -exempt purposes. [21]
Footnotes
[1] Internal Revenue Code (IRC) Section 501(c)(4) provides for the exemption from federal income tax of
social welfare organizations. All references are to the Internal Revenue Code of 1986 as amended.
[2] IRC Section 162(e ) prevents taxpayers from taking ordinary and necessary business tax deductions for
political campaign expenditures.
[3] IRC Section 527 sets forth the tax -exemption and disclosure rules for political committees, parties, PACs,
14
JW1559-001816
and other political organiz ations.
[4] IRS Form 990 (2012), Part IV, Line 3.
[5] Form 990, Schedule C, Part I.
[6] Revenue Ruling 78 -248, 1978-1 Cum.Bull. 154; Revenue Ruling 80 -282, 1980-2 Cum.Bull. 178; Revenue
Ruling 86-95, 1986-2 Cum.Bull. 73; Association of the Bar of the C ity of New York v. Commissioner, 858 F.2d
876 (2d Cir. 1988), cert. denied, 490 U.S. 1030 (1989); Branch Ministries v. Rossotti, 211 F.3d 137 (D.C. Cir.
2000).
[7] Judith E. Kindell and John Francis Reilly, Election Year Issues, IRS Exempt Organizations C ontinuing
Professional Education Technical Instruction Program for FY 2002, p. 335, www.irs.gov/pub/irs tege/eotopici02.pdf.
[8] Revenue Ruling 2004 -6, 2004-1 Cum.Bull. 328; Revenue Ruling 2007 -41, 2007-1 Cum.Bull. 1421.
[9] Treas. Reg. 1.501(c)(4) -1(a)(2)(ii); Revenue Ruling 81 -95, 1981-1 Cum.Bull. 332.
[10] IRS Gen.Couns.Mem. 34233 (December 3, 1969).
[11] 2 U.S.C. 434(f)(3).
[12] Rev.Rul. 2004 -6, 2004-1 Cum.Bull. 328, is limited to determining the 501(c) organizations liability for
investment income tax under IRC Section 527(f).
[13] Rev.Rul 2007 -41, 2007-1 Cum.Bull. 1421, is limited to 501(c)(3) charitable organizat ions.
[14] Vision Service Plan v. U.S., 96 A.F.T.R.2d 2005 -7440, 2005-7443 (E.D. Cal. 2005), affirmed 2008 WL
268075, 1 (9th Cir. 2008).
[15] http://blog.ourfuture.org/20120411/A_Silver_Bullet_That_Would_End_Secret_Tax Exempt_Money_in_Elections.
[16] 87 Tax Notes Today 83-3 (April 30, 1987).
[17] Treas. Reg. 1.501(c)(3) -1(c)(3)(iii).
[18] Citizens United v. Federal Election Commission, 558 U.S. 310 (2010).
[19] IRS Correspondence to Gregory L. Colvin, January 14, 2013, attached.
[20] Comments of the Individual Members of the ABA Exempt Organizations Committees Task Force on
Section 501(c)(4) and Politics (May 25, 2004), www.abanet.org/tax/pubpolicy/2004/040525exo.pdf .
[21] Miriam Galston, Vision Service Plan v. U.S.: Implications for Campaign Activities of 501(c)(4)s, 53
Exempt Org. Tax Rev. 165 (2006).
_________________
TAX EXEMPT AND GOVERNMENT ENTITIES DIVISION
DEPARTMENT OF THE TREASURY
15
JW1559-001817
INTERNAL REVENUE SERVICE
WASHINGTON, D.C.20224
January 14, 2013
Person to Contact and lD Number: Andrew Megosh, 1000221546
Contact Telephone Number: (202) 283 -8s42
UIL: 501.38-00; 527.03-00
Gregory L. Colvin
Adler & Colvin
235 Montgomery Street
Russ Building, Suite 1220
San Francisco, CA 94104
Dear Mr. Colvin:
This responds to your August 24, 2012, request for an information letter concerning Revenue Rulings 2004 -6
and 2007-41 . Your request is a follow -up to your letter dated May 7, 2012, in which you suggested that the IRS
issue a single Revenue Ruling on issu e advocacy communications that would apply to all tax -exempt
organizations.
You request that the information letter answer the following questions:
1) "Would the application of [Rev. Rul. 2004 -6] or [Rev. Rul. 2OO7 -41] ever result in different judgments for
the same communication, as to whether it was issue advocacy or political campaign intervention?"
2) "[Rev. Rul. 2004 -6] includes, as a negative factor "target[ing] voters in a particular election." While not
specifically mentioned in [Rev. Rul. 2007 -41], is the presence of geographical targeting still a relevant factor?"
3) "Which [revenue] ruling applies to the primary purpose test for qualification as a tax -exempt non-charitable
section 501(c) organization, such as a social welfare 501(c)(4) organiz ation?"
4) "Why are [Rev. Rul. 2004 -6] and [Rev. Rul. 2007 -41] worded differently?"
Section 3.06 of Revenue Procedure 2013 -4, 2013-1 IRB 126, provides that an "information letter" is a statement
issued by the Director, Exempt Organizations Rulings and Ag reements that "calls attention to a well established
interpretation or principle of tax law ... without applying it to a specific set of facts." It also provides: "An
information letter is advisory only and has no binding effect on the Service."
Rev. Rul. 2004-6,2004-4 lRB 328 determines, in six situations, whether an organization described in section
501(c)(4), (5), or (6) that engages in public policy advocacy has expended funds for an "exempt function" as
described in section 527(e)(2) and would be subj ect to tax under section 527(f). Rev. Rul. 2007 -41, 2007-25
IRB 1421, determines, in 21 examples, whether an organization described in section 501(c)(3) participated or
intervened in any political campaign on behalf of or in opposition to any candidate for
public office.
Rev. Rul. 2004-6 and Rev. Rul. 2007 -41 make determinations under different sections of the Internal Revenue
Code. There is not "a well established interpretation or principle of tax law that responds to your specific
questions. Therefore, pursuant to Rev. Proc. 2012 -4, we decline to issue an information letter.
16
JW1559-001818
Notice 2012 -25, 2012-15 |.R.B.789, published on April 9, 2012, invites all taxpayers to submit
recommendations for guidance for inclusion on the Guidance Priority List, which Treas ury and the IRS use
each year to identify and prioritize tax issues to be addressed through regulations, revenue rulings, revenue
procedures, notices, and other published administrative guidance. The due date for recommendations was May
1, 2012, but the Tr easury Department and the Service may consider recommendations subsequently submitted.
This letter will be made available for public inspection. The Internal Revenue Service will delete any name,
address and other identifying information as appropriate un der the Freedom of Information Act. See
Announcement 2000 -2, 2000-2 I.R.B. 295.
If you have questions, please contact Andrew Megosh at (202) 283-8942.
Sincerely,
David L. Fish
Manager, Exempt Organi zations Guidance
Washington, D.C.
_________________________________
17
JW1559-001819
From:
Lerner Lois G
Sent:
To:
Daly Richard M; Paz Holly O
Subject:
Re: TIGTA report on Tea Party Cases - rebuttal to initial selection issue
I hate computers! I can't open the secure zip on my home computer so this will have to wait for morning. GRRH!
Subject: TIGTA report on Tea Party Cases - rebuttal to initial selection issue
Just sent this to you, but its not showing up in my sent box.
again. Sorry. Mike
(b)(5) DP
Just to be safe, Im sending it
JW1559-001820
From:
Lerner Lois G
Sent:
To:
Paz Holly O
Subject:
RE: TIGTA report on Tea Party Cases - rebuttal to initial selection issue.docx
I said fuller so as not to be using our term of art --"full development" as the community keeps
saying they don't know what that means. We can keep thinking about it
Lois G. Lerner
From: Paz Holly O
To: Lerner Lois G
Subject: RE: TIGTA report on Tea Party Cases - rebuttal to initial selection issue.docx
Looks good to me. Just need to correct spelling of p rincipals to principles. Also, do we want to say "fuller" development
or "full" development?
From: Lerner Lois G
To: Paz Holly O; Daly Richard M
Subject: TIGTA report on Tea Pa rty Cases - rebuttal to initial selection issue.docx
Toned it down a bit, but I think it still illustrates our point --thoughts
JW1559-001821
From:
Daly Richard M
Sent:
To:
Subject:
TIGTA report on Tea Party Cases - rebuttal to initial selection issue - 2 + 1
Attachments:
I accepted all changes and worked from there.
(b)(5) DP
Mike
JW1559-001822
(b)(5) DP
JW1559-001823
From:
Lerner Lois G
Sent:
To:
Daly Richard M; Paz Holly O
Subject:
RE: TIGTA report on Tea Party Cases - rebuttal to initial selection issue - 2 + 1
I hear you--this is a complicated discussion. I think we
(b)(5) DP
Lois G. Lerner
Subject: TIGTA report on Tea Party Cases - rebuttal to initial selection issue - 2 + 1
I accepted all changes and worked from there.
(b)(5) DP
Mike
JW1559-001824
From:
Daly Richard M
Sent:
To:
Cc:
Grant Joseph H; Medina Moises C; Marks Nancy J
Subject:
TIGTA - Report on c 4s - April 18 2015 130 pm HOP - x
Attachments:
Ive made a few cosmetic changes. Could you take a quick look to ensure I havent strayed into error on the
substance.
Id like to send it to Nikole tonight.
Thanks.
Mike
JW1559-001825
(b)(5) DP
(b)(5)
JW1559-001826
(b)(5)
(b)(5)
JW1559-001827
(b)(5)
(b)(5)
JW1559-001828
(b)(5)
(b)(5)
(b)(5)
JW1559-001829
(b)(5)
(b)(5)
(b)(5)
(b)(5)
JW1559-001830
(b)(5)
(b)(5)
JW1559-001831
From:
Daly Richard M
Sent:
To:
Flax Nikole C
Cc:
Grant Joseph H; Lerner Lois G; Marks Nancy J; Paz Holly O
Subject:
TIGTA - Report on c 4s - April 18 2015 130 pm HOP - x
Attachments:
Hello, Nicole,
Attached is our proposed response to the TIGTA report on EOs review of (c)(4)s etc.
We would like to provide our signed response to TIGTA by next Thursday, April 25.
needed, we can get it.
But if additional time is
Joseph will sign the memo. I am sending the response to Joel Rutstein in Leg Affairs and anticipate no
concerns from his office.
There was no need to coordinate this response with any other part of the Service, and we did not do so.
Please note that in the second paragraph on page 1 we refer to
I did not wan t to delay sending this to you while we address that relatively
(b)(5) DP
minor point.
I will send a copy of the report by separate email, since I am still feeling my way on attaching multiple
documents in Windows 7.
We will be happy to hear of any concerns or s uggestions.
Mike
202.283.9964
JW1559-001832
(b)(5) DP
(b)(5)
JW1559-001833
(b)(5)
(b)(5)
JW1559-001834
(b)(5)
(b)(5)
JW1559-001835
(b)(5)
(b)(5)
(b)(5)
JW1559-001836
(b)(5)
(b)(5)
(b)(5)
(b)(5)
JW1559-001837
(b)(5)
(b)(5)
JW1559-001838
From:
Light Sharon P
Sent:
To:
Subject:
for your review: counsel-approved version
Attachments:
Denial.FINAL.changes.saved.doc
Lois, Nan and Holly we sent our final draft of the first advocacy denial to counsel several weeks ago.
They got back to
us with comments. We sent them a revised version early this week. They had a few minor comments today. I have
incorporated them in the attached document.
Please let me know if you have questions or concerns.
Sharon
JW1559-001839
(b)(5) DP
6103
6103
6103
b(3)\6103; (b)(5) DP
(b)(3)/6103; (b)(5)/DP
6103
JW1559-001840
6103
6103
(b)(3); 6103
(b)(3)/6103;
(b)(5)/DP
JW1559-001841
6103
6103
(b)(3)/6103;
(b)(5)/DP
(b)(3); 6103
JW1559-001842
6103
(b)(3); 6103
(b)(3)/6103;
(b)(5)/DP
6103
JW1559-001843
6103
6103
(b)(3); 6103
(b)(3)/6103;
(b)(5)/DP
JW1559-001844
6103
(b)(3)/6103;
(b)(5)/DP
(b)(3); 6103
6103
JW1559-001845
6103
(b)(3); 6103
6103
(b)(3)/6103;
(b)(5)/DP
JW1559-001846
6103
(b)(3)/6103;
(b)(5)/DP
(b)(3); 6103
6103
JW1559-001847
6103
6103
(b)(3)/6103; (b)(5)/DP
b(3)\6103; (b)(5) DP
JW1559-001848
From:
Light Sharon P
Sent:
To:
Subject:
RE: for your review: counsel-approved version
The agent noted it in an email to Justin, ccg me and Daniel W. Berry.
It was sent on 8/20/12, by which time we already
had our copy of the file. So I dont know how that information is noted in the official file.
From: Lerner Lois G
To: Light Sharon P; Marks Nancy J; Paz Holly O
Subject: RE: for your review: counsel -approved version
Hmm--we need to be consistent. I believe the rule we decided on was if they sent it in without
us asking, it stayed in th e file. If we asked and didn't use it, we destroyed it --is that
correct? Once we know the facts, I think we need to ask David if we have the authority to put
it on the non-disc losable side. One more question--where did the agent note this?
Lois G. Lerner
From: Light Sharon P
To: Lerner Lois G; Marks Nancy J; Paz Holly O
Subject: RE: for your review: counsel -approved version
I want to add one thing this org got one of the letters asking for donor names, and they sent a donor list.
The Determs
agent noted this and put the donor info in the non -disclosable side of the file in Au gust, 2012.
We expunged this info from files that were bucketed as approvals so the donor info would not be made public.
Do we need to do anything other than put the donor info on the non -disclosable side of the file with this denial? As long
as its a denial, nothing goes public.
Sharon
From: Light Sharon P
To: Lerner Lois G (lois.g.lerner@irs.gov); Marks Nancy J; Paz Holly O
Subject: for your review: counsel -approved version
Lois, Nan and Holly we sent our final draft of the first advocacy denial to counsel several weeks ago.
They got back to
us with comments. We sent them a revised version early this week. They had a few minor comments today. I have
incorporated them in the attached document.
Please let me know if you have questions or concerns.
JW1559-001849
Sharon
JW1559-001850

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Obtained by Judicial Watch, Inc.

Sinno Suzanne; Haynes Patricia J; Lunger Richard; Flax Nikole C

RE: Questions for hearing

you want us to do some bullets let us know.

Director of Exempt Organizations

From: Sinno Suzanne

Sent: Monday, April 08, 2013 12:06 PM

To: Haynes Patricia J; Lunger Richard; Flax Nikole C; Lerner Lois G

Cc: Barre Catherine M

Subject: Questions for hearing

issues. W hitehouse's staff came back with this:

Suzanne R. Sinno, J.D., LL.M. (Tax)

Office of Legislative Affairs

Internal Revenue Service

Obtained by Judicial Watch, Inc. via FOIA

Wednesday, September 19, 2012 11:02 AM

Exclusively Standard 09-02-11.doc

Justin is around but haven't seen him in a while.

From: Lowe Justin

Sent: Wednesday, March 21, 2012 12:03 PM

To: Fish David L

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

Obtained by Judicial Watch, Inc. via FOIA

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Obtained by Judicial Watch, Inc. via FOIA

Paterson Troy D TIGTA <Troy.Paterson@tigta.treas.gov>

Saturday, November 03, 2012 5:10 AM

Lois and Holly,

Ill work with the team to determine

whether we have any follow -up questions. I appreciate it.

b(6) and b(7)(C)\pers...

From: Lerner Lois G [mailto:Lois.G.Lerner@irs.gov]

Sent: Friday, November 02, 2012 11:34 AM

To: Paterson Troy D TIGTA

Cc: Paz Holly O

you may have in the meantime.

Director of Exempt Organizations

Obtained by Judicial Watch, Inc. via FOIA

Friday, November 09, 2012 1:12 PM

RE: Responses - TIGTA

From: Lerner Lois G

November 09, 2012 11:33 AM

To: Paz Holly O

job. I'm oK with this

Lois G. Lerner-------------------------Sent from

my BlackBerry Wireless Handheld

Sent: Friday, November 09, 2012 10:48 AM

Subject: FW: Responses - TIGTA

Obtained by Judicial Watch, Inc. via FOIA

Troy had three questions in

by the end of the day today.