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IRS treatment of 501(c)(4) apps
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Jun 5, 2025
Jon Roland at the Austin Constitution Meetup June 18, 2013, discusses the legal and constitutional issues involved with disparate treatment of conservative groups by the IRS.
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general look at the jun 18 2013
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constitution beat up in austin texas the
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next topic is the disparate treatment by
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conservative activist groups by the IRS
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in the processing of their 501 C 4
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applications I need to explain a little
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bit that there are two kinds of
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organization actually three kinds of
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organizations at play in this field the
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first are 501 C 3 s that's organizations
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donations to which are deductible the
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second or 501 C fours in which donations
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are not deductible and the third or 5 27
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which are political action organizations
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including political parties there are
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various statutes and rules and so forth
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applying to each of them but there's
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also a lot of confusion about it now a
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lot of people thought that they needed
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to file an application with the IRS to
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get a letter approving their Bible 1 c 4
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status that is not correct there
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requirement to do that the way that the
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IRS got involved in this whole thing is
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actually not from a tax statute but from
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a campaign finance statute which
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provided that if a if most of the
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activity of a 501 C 4 was in support of
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a candidate for a proposition the
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candidate for public office that they
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could be taxable at the lowest
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prevailing corporate rate on either one
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of two things either the amount they
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donated or the amount that they earned
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from investment income whichever was
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let's not words close to these
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organizations have no investment income
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therefore would not be liable for a task
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oh now the question arises then suppose
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that they did add investment
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that was substantial well they could
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avoid having to pay a tax simply by
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disclosing their donors if they don't
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want to disclose their donors and they
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won do you want to maintain their 501 c
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4 status under which they're required to
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disclose substantial donors to the RS
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but not to the public now in fact we
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have seen several cases where some of
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those lists of donors that supposed to
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have been kept secret by the IRS find
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their way to the possession of competing
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activist organizations so clearly the RS
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cannot be trusted to maintain the
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privacy that they're supposed to
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maintain over the information they
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received but it's a simple matter to
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avoid the whole thing by creating an
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organization not F not applying for 501
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c 4 status can go through an entire
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election cycle then just hold the
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organization there's nothing hearing
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so if you if you want to entertain
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yourself catch a few from past episodes
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which I think are on line of the colbert
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report in which he invites on Trevor
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Potter who is a leading the election law
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lawyer to explain all this and it's very
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funny between Colbert and potter they
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can make the whole subsetting seemed so
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ridiculous that you can't help but laugh
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however the question is how is it that
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all these groups thought they had to
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apply for it and that they couldn't
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conduct their activity until they got
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the approval well the answer is that
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it's all hopes there's no all know a lot
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of subjects
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that you have a violent pay income tax
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but naive organizers have been
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distracted and delayed in their efforts
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by deception inducing them to do things
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that part not required the result of the
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clever defusing and suppression of
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activist groups at the height of their
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enthusiasm this is a classic trick of
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tyranny the solution is not equal
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treatment but doing away with campaign
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finance statutes which only protect the
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corrupt
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