ISSUE
Although changes were proposed, the ban on political activity for 501(c)(3) organizations remains. However, “issue advocacy” is allowable.
SITUATION
Marathon Bible College (MBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and section 170(b)(1)(A)(ii). They are required to file Form 990 annually.
MBC’s Controller calls to ask, “What ended up happening to the provision in the tax reform bill about letting colleges participate in political activities?”
We answer that it did not make it into the final “Tax Cuts and Jobs Act,” so the “ban” still stands. However, discussion in Congress continues.
“Well,” he says, “we are looking at taking out an ad in the Miami Herald urging Floridians to contact our Senators about voting for an education bill that we favor and is about to come before them. We are naming the Senators and stating their positions on the issue, even though one of them is up for election in the primaries next month. Is that political activity?”
We tell them that the ad sounds like “issue advocacy” – which is allowed – rather than “political intervention” – which is not allowed. We send them a copy of Rev. Rul. 2007-41 and advise that they should ensure:
- The advertisement does not mention the election or the candidacy of the Senators.
- That education issues have not been raised as distinguishing your Senators from any opponent.
- The timing of the advertisement and the identification of the Senators are directly related to the specifically identified legislation MBC is supporting.
- The advertisement appears immediately before the United States Senate is scheduled to vote on that particular legislation.
- The candidate identified is an officeholder who is in a position to vote on the legislation.
“RULES”
From Revenue Ruling 2007-41:
“Organizations that are exempt from income tax under section 501(a) of the Internal Revenue Code as organizations described in section 501(c)(3) may not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.”
Situation 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 C’s position on the issue as contrary to O’s 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.
BOTTOM LINE
- Although there was a proposal in the House bill to loosen the restrictions of the “Johnson Amendment,” the ban on political activity for 501(c)(3) organizations remains.
- “Issue Advocacy” is different from political activity and is allowable and, in many cases, advisable for Christian colleges, seminaries, and universities.
- Revenue Ruling 2007-41, Exempt orgs.-political participation or intervention, is a wonderful source of information when you are charting your institution’s course with respect to “using your voice.”
- The conversation in Washington D.C. continues with regard to changes to the “Johnson Amendment.”
Specific questions? Email Dave Moja
The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.
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