Organizations that have had 501(c)(4) applications pending for more than four months have new options through an expedited process announced by the Internal Revenue Service (IRS).
Applications that have been pending for more than 120 days as of May 28 – and the organization’s activities involve possible political campaign intervention or issue advocacy – are eligible to pursue the expedited option, according to a memo issued last month by IRS Exempt Organizations (EO) Director Kenneth Corbin providing interim guidance on (c)(4) applications. The IRS expected to send about 80 organizations a Letter 5228, Application Notification of Expedited 501(c)(4) Option.
Organizations could self-certify if they represent, under penalty of perjury, that they devote 60 percent or more of both spending and time to activities that promote social welfare and less than 40 percent on political campaign intervention – for past, current and future activities. Organizations must respond to the letter within 45 days.
The IRS would issue favorable determination letters on these applications, without further review, within two weeks of receiving signed representations from groups.
The percentages are not an interpretation of the law, according to the IRS, but a “safe harbor for organizations that choose to participate in the optional process.” The agency issued a preliminary report that conceded that “significant management and judgment failures occurred,” contributing to inappropriate treatment of some entities that applied for tax-exempt status, as outlined in a report by the Treasury Inspector General for Tax Administration (TIGTA) earlier this year.
Acting IRS Commissioner Danny Werfel presented the 83-page report, “Charting a Path Forward at the IRS: Initial Assessment and Plan of Action,” to Congress last month. The TIGTA report has since become the subject of numerous Congressional hearings and led to the removal or resignation of multiple IRS officials.
If organizations did not receive a Letter 5228 but believe they are eligible, the IRS suggests they review the eligibility criteria and call 877-829-5500.
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