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NY Times: § 501(c)(4) Groups Push Tax Code Limits in Political Ads

New York Times, Groups Push Legal Limits in Advertising, by Michael Luo:

The basic rule of thumb for nonprofit groups organized under Section 501(c) of the tax code is that more than 50% of their annual activities cannot be political. Although it is a matter of debate how spending on traditional issue ads would be categorized by the IRS, it is indisputable that spending on express advocacy would be classified as political.

An analysis by The New York Times of data provided by the Campaign Media Analysis Group, which tracks political and issue-related advertising, found at least two major Republican-leaning groups, the American Future Fund and the 60 Plus Association, which bills itself as a conservative alternative to AARP, have now devoted more than half of their spending this year on television advertising for express advocacy.

Other organizations, including Crossroads GPS, a nonprofit group tied to Karl Rove, and Americans for Job Security, a Republican-oriented trade association, have been flirting relatively close to that threshold as well.

Even operating just under that dividing line, however, does not mean they are safe, because it is possible the IRS, in particular, could classify many of their issue ads as political too, Democratic and Republican campaign finance lawyers said. … Several lawyers said that while the 50 percent limit is widely cited, the IRS has never explicitly ruled that 50 percent is the official limit for political spending. It could, in fact, be less.


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