Another blow to charities from the IRS

Last year the Internal Revenue Service (IRS) was in hot water for its overzealous scrutiny of applications from the Tea Party and others with similar wording on applications for tax-exempt status under Section 501(c)(4). The whole controversy started with an IRS apology of its actions prior to the last Presidential elections. All non-profit groups engaged in promoting “social welfare” requires to obtain Section 501(c) (4) tax-exempt status. The affected organizations claim that they were subject to more scrutiny and their applications were delayed by asking additional information.

These groups are primarily advocacy groups and not specifically election advocacy groups that are subject to the Federal Election Commission supervision. Therefore, the scrutiny of these groups falls only under the IRS code. In the latest explanation from IRS, it says that they didn’t single out just these groups and 200 or so similar groups have been closely scrutinized by the IRS during the same period. The IRS also indicates that they were merely trying to understand how these groups operate before taking an action to approve or deny their 501(c)(4) status applications. According to the IRS, more than 44,000 similar organizations including home owner associations, sports clubs, grass-roots such as Sierra Club operates under this umbrella.