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Abstract: 

An organization that promotes the good and general welfare of a community might pursue exempt status under IRC §501(c)(4) (rather than IRC §501(c)(3)) if its activities do not rise to the level of “charitable,” if it intends to engage in a substantial amount of lobbying, or if it will engage in campaign activity in favor of or in opposition to a candidate for public office. This article examines compliance with provisions enacted as part of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), which require organizations to notify the IRS of intent to operate as an IRC §501(c)(4) by filing Form 8976 no later than 60 days after the organization is established. A penalty of $20 per day, up to a maximum of $5,000 is imposed on an organization that fails to timely file Form 8976. Organization managers also are subject to a penalty of $20 per day, up to a maximum of $5,000, if after demand by the IRS, they fail to provide the notification. The article also explains the recently promulgated final regulations implementing new IRC §506. Includes a helpful a comparison of IRC §501(c)(4) and IRC §501(c)(3).

Keywords: IRC §501(c)(4) Organizations; Form 8976; IRC §506; PATH Act

Affiliations:  1: Strasburger & Price LLP.