What’s Happening at the IRS? A Few Observations for 2017

A fun thing about practicing law is to observe changes to governmental agencies.  The last few years at the IRS’ EO Division- the section of the federal government responsible for overseeing tax-exempt organizations- has been quite a rollercoaster. The IRS’ EO Division came under intense congressional and public scrutiny in 2013, under allegations that the agency intentionally discriminated against conservative, pro-life, and pro-Israel organizations.

The scandal’s effect on the IRS’ EO Division was monumental.  The Service today is different on so many levels from 2013.  Moreover, 2017 brings a new sheriff to 1600 Pennsylvania, and the IRS is certain to undergo further changes under Trump’s administration.   How have these changes impacted nonprofits, and what’s in store for 2017?  Here are some selected observations on audits, the Form 1023-EZ, and what might be ahead for the IRS under President Trump’s administration. 

Call Your Legislator Today! (or Not?): Lobbying Basics for Nonprofits

“Tell your state rep to vote for State Bill X, to protect __________!”  May a Section 501(c)(3) nonprofit legally spend its money (and use volunteers) to urge enactment or defeat of pending or proposed legislation?   Yes, but only through “insubstantial” lobbying, and subject to related legal constraints. For public charities, lobbying communications lie between fully permissible educational issue advocacy and prohibited political campaign activity.

Churches and the IRS: Why Trump’s Call to Repeal the Johnson Amendment Makes Constitutional Sense

President Trump recently told faith leaders that he would “totally destroy” the Johnson Amendment, referring to then-Representative Lyndon Johnson’s sponsored legislation banning churches’ and other Section 501(c)(3) organizations’ political campaign speech.  As W & O attorney Ryan Oberly recently observed in Modern Healthcare’s article, the prohibition is controversial and difficult to enforce, given both the free speech and religious liberty constitutional interests at stake and the IRS’s questionable capability to enforce the law fairly.  Many religious organizations have openly flaunted the ban by endorsing or speaking against candidates, leaving others to wonder whether they should follow the letter of the law despite its dubious constitutional legitimacy.

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