Political Activity Compliance Initiative (2006 Election)
Internal Revenue Service officials released a report on the agency's examination of political campaign activity by tax-exempt organizations during the 2006 election campaign. A detailed statistical breakdown of the results of the examinations is not available. The report, issued in June 2007, provided the following summary results:
- The IRS received a larger number (237) of referrals (complaints) alleging political campaign intervention than in previous years. Of those, approximately 100 were selected for examination.
- Referrals alleging violations by churches and non-churches were almost evenly split, as were the referrals ultimately selected for examination.
- The 2006 project identified a relatively large number (269) of cases of direct contributions, totaling $343,963, from section 501(c)(3) public charities to political candidates.
- Initial IRS contact in cases involving contributions by public charities resulted in charities receiving over $121,000 in refunds of political contributions from political campaigns.
Building on the experience gained through its compliance projects, the IRS issued Revenue Ruling 2007-41. This ruling provides guidelines for exempt organizations on the scope of the tax law ban on campaign activities by section 501(c)(3) tax-exempt organizations. The ruling sets out 21 factual situations involving 501(c)(3) organizations, including churches, and activities that may be prohibited campaign intervention. In each situation, the ruling applies tax law and regulations and concludes whether prohibited political campaign activity has or has not occurred.
Procedures for examinations