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IRC §501(c)(4) Information
Compiled by Professor Annette Nellen

Background article:
  The Sec. 501(c)(4) story: Program notes, AICPA Tax Insider, Nellen, 6/13/13

501(c)(4) Story

Statutory Guidance

  • §501, Exemption from tax on corporations, certain trusts, etc.
  • §501(c), List of exempt organizations
  • §527, Political organizations
  • §4958, Taxes on excess benefit transactions

Regulatory Guidance

IRS Information on §501(c)(4)

  • Basics –



  • Differences among types of 501 organizations and 527 organizations - chart
  • IRS websites on 501(c)(4) organizations:

o       Social Welfare Purposes

      Includes this statement (emphasis added): "Although the Service has been making an effort to refine and clarify this area, [section] 501(c)(4) remains in some degree a catch-all for presumptively beneficial non-profit organizations that resist classification under the other exempting provisions of the Code.  Unfortunately, this condition exists because "social welfare" is inherently an abstruse concept that continues to defy precise definition"

o       Life Cycle of a Social Welfare Organization – information on creating and organizing a 501(c)(4), application process, required filings, and various requirements to satisfy

o       Social Welfare Organizations - Political Campaign Intervention (with several links to additional IRS resources)

o       1981 IRS training materials – "Social Welfare: What Does It Mean? How Much Private Benefit is Permissible? What is a Community?

o       1995 IRS training materials – "Political Organizations and 501(c)(4)"

o       FY2003 training materials – "IRC 501(c)(4) Organizations"

  • 2008 and 2009 training materials obtained by Tax Analysts per FOIA request and court order (Jan 2014)
    • Q&A on 501(c) organizations in response to TIGTA report
    • 12/10/13 internal memo - "Processing Guidelines for Section 501(c)(3) Applications Involving Potential Political Campaign Intervention"
  • IRS 7/7/11 memo from Steven T. Miller, Deputy Commissioner for Services and Enforcement – IRS no longer pursuing issue of whether gift tax applies to contributions to 501(c)(4) organizations and closing current examinations involving this issue
    • IRS website supporting the memo and noting: "As we consider this issue, it is possible that Congress may choose to clearly articulate through legislation the applicability of the gift tax to contributions to 501(c)(4) organizations."

Other Government Information on 501(c)(4) Organizations and Related Items

Timelines Related to the TIGTA Audit

  • House Ways and Means Committee – timeline covering March 2010 to May 2013
  • TIGTA report (pdf), Timeline of Events and Delays Involving the Processing of Potential Political Cases, April 2010 to May 2012, page 13.

Hearings and Related Reports

  • 4/15/14 - "RNC Sues IRS For Illegal Stonewalling" - article from RNC.com
  • 3/11/14 - Report of House Committee on Oversight and Government Reform, Lois Lerner's Involvement in the IRS Targeting of Tax-Exempt Organizations + website
  • 3/12/14 - Letter to Congressman Cummings from Morton Rosenberg, Legislative Consultant on contempt citation
  • 9/18/13 - House Ways and Means Committee - Internal Revenue Service’s Exempt Organizations Division Post-TIGTA Audit
  • 7/18/13 - House Committee on Oversight and Government Reform - hearing on The IRS' Systematic Delay and Scrutiny of Tea Party Applications
  • 6/28/13 - House Committee on Oversight and Government Reform - hearing on whether Lois Lerner waived her 5th Amendment privilege

Investigation Information

  • 9/23/13 - press release from Congressman Issa on Lois Lerner's retirement announcement
  • 8/21/13 - letter from House Oversight Committee to "Holly Paz, the former top deputy of IRS Exempt Organization Director Lois Lerner" about possible inconsistencies in her statements.
  • 8/14/13 - Tax Analysts (publisher of Tax Notes) filed a FOIA action against the IRS seeking its "provide training materials used for its guidance in exempt organizations determinations"
  • 8/12/13 - letter from Congressmen Camp and Boustany to Acting Commissioner Werfel about continued screening of some 501(c)(4) applicants solely due to their name (such as Tea Party) even if they say there is no political activity.
  • 8/7/13 - letter from Congressmen Issa and Jordan to FEC chairwoman; requests certain documents by 8/21/13
  • 8/6/13 - op ed in Washington Post by Congressman Camp and Issa - "The IRS Scandal's Inconsistencies"
  • 8/2/13 - House Committee on Oversight issues subpoena to Acting Commissioner Werfel for previously requested documents
  • 6/24/13 - House Ways and Means Committee Democrats press release regarding "progressives" on BOLO lists
  • 6/24/13 - letter from Congressman Levin (Ranking member Ways & Means) to TIGTA Russell George
    • 6/26/13 response letter from George to Levin
  • 6/20/13 - H.R. 2458 (113th Congress) introduced to "terminate any Federal employee who refuses to answer questions or gives false testimony in a congressional hearing."
  • 6/14/13 USA Today article on statements of Congressman Camp and Senator Baucus about the ongoing investigations
  • Transcripts of interviews of IRS employees released by Congressman Issa, 6/2/13 from the House Committee on Oversight and Government Reform
    • 6/11/13 - Rep. Cumming's statement on release of transcripts of interviews with IRS employees; he indicates there may not have been any targeting
    • 6/10/13 Washington Post article,"Cummings: Cincinnati employees say their actions started IRS targeting efforts," by Josh Hicks
    • 6/9/13 - memo from Democratic staff to Members of House Oversight Committee
  • 5/20/13 letter from Senate Finance Committee to Acting Commissioner Miller
    • Senator Baucus press release of 5/21/13 on the need to further investigage
    • Senator Hatch press release of 5/23/13 on the SFC investigation
  • 5/16/13 - Senator Hatch press release about Senate Finance Republicans calling upon TIGTA to investigate possible improper disclosure by IRS

Other 501(c)(4) Issues

  • 6/30/13 - FY2014 Objectives report of IRS National Taxpayer Advocate to Congress included special supplement - Political Activity and the Rights of Applicants for Tax-Exempt Status. Recommendations include having the FEC be involved in judging the level of political activity of a 501(c)(4) organization and making up to $1,000 "apology" payments to applicants affected by the recent 501(c)(4) controversy.
  • 5/29/13 - lawsuit filed by American Center for Law and Justice (ACLJ) against the IRS on behalf of 25 Tea Party groups + Amended complaint (6/25/13)
  • 5/21/13 - lawsuit brought against Dept. of Treasury by Citizens for Responsibility and Ethics in Washington (CREW), calling for Treasury to revise existing regulations to tie to the "exclusively" language of Section 501(c)(4). Petition includes some of the history of this issue.
  • American Bar Association Taxation Section letter to IRS/Treasury of 5/16/12 suggesting items for the 2012/2013 priority guidance plan included:
    • "Guidance regarding the measurement and extent of political campaign activity by section 501(c) exempt organizations other than those exempt under subsection 501(c)(3), specifically including guidance concerning the application of reserved Regulation section 1.527-6(b)(3), “Expenditures allowed by Federal Election Campaign Act,” in light of the Citizens United v. Federal Election Commission, decision, which broadens the scope of activity that must be constitutionally permitted under FECA." 
  • July 2011, the American Bar Association Taxation Section asked IRS for guidance on how the decision in Citizens United (558 US 310 (pdf) (2010)), affects the requirement that activities of a 501(c)(4) are primarily non-political (7/25/11 letter).
  • May 2004 American Bar Association Taxation Section letter to IRS on 501(c)(4) issues and needed guidance

Section 501(c)(4) and Tax Reform


Last updated 5/4/14.