Jeanne Shaheen sent a letter with six other Senators. One of the seven senators — Michael Bennett of Colorado — issued a press release alongside the letter complaining about Republican operatives -- U.S. Sen. Jeanne Shaheen, D-N.H., and six other Democratic senators last year urged IRS Commissioner Donald Shulman to investigate social-welfare organizations that get involved in politics, an indication of political concern on the left over the IRS tax-treatment given to politically active groups. Groups like the New Hampshire Citizens Alliance for Action NHCAA have engaged in candidate-specific partisan left wing politicking under the cover of the same tax exempt status that Shaheen finds so dangerous to an open political process. A process suppressed by the IRS' own admission, while the Senior Senator Jeanne Shaheen from New Hampshire was prompting them to act, and finger pointing at 501(c)(4)s along the way. Jeanne Shaheen ref: http://www.usnews.com/opinion/blogs/brian-walsh/2013/05/14/senate-democrats-pushed-for-irs-tea-party-snooping-before-criticizing-it Shaheen should explain the 2012 letter sent to the IRS. Party Executive Director Matthew Slater said serious questions exist about whether the efforts "contributed to the outrageous practices that took place at the agency." Dear Commissioner Shulman:We write to inquire if the Internal Revenue Service ("IRS") is investigating or intends to investigate whether groups designated as "social welfare" organizations, and thus receiving tax and other advantages under section 501(c)(4) of the Internal Revenue Code (IRC), 26 U.S.C. § 501(c)(4), are improperly engaged in a substantial or even a predominant amount of campaign activity. In section 501(c)(4), Congress created a tax preference for social welfare organizations because the nation benefits greatly from their social welfare activities. It is contrary to the letter and the spirit of the statute for political organizations formed primarily to advocate for a political candidate or to run attack ads against other candidates to take advantage of section 501(c)(4). Jeanne Shaheen Under the IRC and IRS regulations, section 501(c)(4) organizations are required to primarily engage in the promotion of social welfare to obtain tax exempt status. Section 501(c)(4) establishes tax-exempt status for nonprofits "operated exclusively for the promotion of social welfare . . . ." 26 U.S.C. § 501(c)(4). Jeanne Shaheen -- please scroll down IRS regulations state that a nonprofit operates "exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare for the people of the community." 26 U.S.C. § 501 (c)(4), 26 C.F.R. § 1.501(c)(4)-1(a)(2)(i) (emphasis added). The regulations require that a social welfare organization "is one which is operated primarily for the purpose of bringing about civic betterments and social improvements." Id.Even more to the point is what the regulations say about campaign activities: "The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office." Id. § 1.501(c)(4)-1(a)(2)(ii). This standard is clear, and it appears to Jeanne Shaheen - Letter Continued preclude the formation of 501(c)(4) organizations for campaign-related purposes.Courts have interpreted section 501(c)(4) to prohibit a group organized under that section from engaging in more than an insubstantial amount of campaign activity. Courts have consistently found that the presence of a single substantial non-exempt purpose precludes exempt status, regardless of the number or importance of the exempt purposes. See Contracting Plumbers Coop. Restor. Corp. v. U.S., 488 F.2d 684, 686 (2d. Cir. 1973); see also American Ass'n of Christian Sch. Vol. Emp. v. U.S., 850 F.2d 1510, 1516 (11th Cir. 1988). The IRS is tasked with applying this strict statutory interpretation of 501(c)(4) by the courts.IRS regulations, however, appear more permissive than the statute as interpreted by the courts. For example, the IRS authorizes section 501(c)(4) social welfare organizations to engage in federal election activities, including electioneering communications, as long as such activities do not constitute the "primary" activity of the organization. 26 C.F.R. § 1.501(c)(4)-1(a)(2)(i). Some political organizations argue that section 501(c)(4) organizations can spend up to forty-nine percent of their total expenditures on campaign activities without such activities constituting the "primary" activity of the organization. While this forty-nine percent threshold appears to violate the language of the statute and the subsequent interpretation of several courts, we are concerned that some political organizations may still be violating this exceptionally high threshold.

• published: 08 Apr 2014
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