In response to the 501(c)(4) “targeting” issue, the IRS has issued a report concluding that there is no evidence of intentional wrongdoing but that, among other steps taken to ensure that the situation doesn’t continue, the senior IRS staff members responsible for the determinations process have been replaced.
Ostensibly to right its wrong, the IRS is offering expedited review for 501(c)(4)s whose exemption applications have been pending for more than 120 days. In order to receive this expedited review, a 501(c)(4) must meet a safe harbor presumption establishing that the organization is primarily engaged in promoting social welfare.
How does an organization prove that it’s primarily engaged in promoting social welfare? It must confirm that it has spent and anticipates that it will spend 60% or more of its total expenditures and time on activities promoting social welfare and less than 40% of its total expenditures and time on direct or indirect political activity. If a 501(c)(4) meets this safe harbor, the IRS will issue it a determination letter within 2 weeks.
If you’re unsure whether your organization qualifies for the safe harbor, contact us or other legal counsel familiar with these laws.