Page

1 of 1
Flax Nikole C
From: Lerner Lois G
Sent:
Wednesday Janua
04
2012 12:06 PM
To: Flax Nikole C
Ce: Miler SEven
T;
Marx Dawn R
Subjec
RE: Work Plan
Thanks
so
much-m
good
with all
your
changes--
takes a
village!
I
assumewe
can
start
getting ready
for
our
usual
press
conferencelrelease? As to the random
sample piece
Ill check.
Director of
Exem nons
From: Flax Nikole C
Sent:
Tuesday January 03
2012 3:42 PH
To: Lerner Lo G
Cc: Hilr Steven
T;
Harx Dawn R
Subject:
RE: Work Plan
Lois - I am
en I hear
mo re
timing
Thanks
From: Lerner Lois G
Sent:
Thuda%
December
2
2011 4:39 PH
To: Rax Nikole C
Cc: Hilr Steven
T;
Harx Dawn R
Subject:
Work Plan
I
assume
you
are
gone
but
just
wanted to ask if we can
resolve the final
language
ASAP after we come
back-J like to srt
setting up
the
press
conference as we
have been asked
already
when it will be. Thanks and
Happy Holidays!
P.S. dawn Marx will be
my
new Execuve
Asstant and
Regeina
Hall
my
new
Manager Program
Staff aer
January
1
so
if
youre trying
to find
me
Ws
a
good
idea to
cc one
of them.
Director of
Exem nons
2/4/20 ] 3
Page
1 of 1
Flax Nikole C
From:
Sent:
To:
Cc:
Sue:
ARachmes:
Sorry
for the
lateness-meeting
is in the
morning.
Lemer Lois G
Wednesday
Oober
31 2012
4:38 PM
Hoon Wmonna F
Flax Nikole
C;
Miller Sven T
FW: Dual tck meds r STM
meing
Dual Tck
Summa
r STM
123012.do
Memo
Du-Tck.pd
Du-Tck
Pmceduspd
Dual Tck
Approach Diagm 7Q-12.p;
DuaTck
Inven Weekly Tcng
012-10.xlE
Dual Tck
Summa
3.doc
But
the storm inteered
Director of
Exem Oanons
From: Lowe 3usn
Sent:
Wednesday
October
31
2012 4:36 PH
To: Lerner Lois G
Subje:
FW: Dual track mateda for STH
meeting
From:
Downing
Nanee H
Sent:
Fnda%
October
26
2012 8:26 AN
To: Lerner Lois G
Cc: Lowe
3usn;
ndell 3udRh
E;
Narx Dawn
R; Downing
Nanee H
Subject:
Dual track mateda for STH
meeting
Several docs r
meeting
with Steve I have aached:
After
your
view
let me know ff
you
need
anying
else or
0
=

Nan
Page
1 of 1
Flax Nikole C
From: Lerner Lois G
Sent:
Monday
November
28
2011 11:52 AM
To: Flax Nikole C
Cc: Grant
Joseph
H
Subject:
Work Plan
An movement? I have another
s
it.
out. Thanks
Wdnesda and
was
ho to lk about
=ckfus is
ready ragging
about
)eng
Die.or of
Exem Oazons
2/1/2013
Page
1 of 1
Flax Nikole C
From:
Sent:
To:
Cc:
Suect:
Tuesday
November
2
2011 4:27 PM
Flax Nikole C
Lerner Lois
G; Letoumeau Diane
L;
Smith
Philip A;
Paner
Meney
J
EO Work Pn- ARached
Aachment$: 2012
WorkplanNALDRAFdoc
Hi Nikole:
Per Lois
reque
I am
aRaching
the most current version of EO Annual
Repot
and Work Plan...
Let me know if
you
need
anhing
else.
nd
Outreach
IRS
Exempt Organizations
202-283-1
(p)
202-283-8858
(f!
2/1/2013
Page
1 of 1
Miller Steven T
v

From:
Sent:
To:
Cc:
Suecb
Lerner Lois G
Tuesday
November
08
2011 11:34 AM
Flax
Nikole
C;
Miler Steven T
Grant
Joseph
H
Wishful
Thinng
Aachme 2012
WorkplanFINALDRAF
Aached is the final "Dra" of m
plan.
I know
we are meegng
with the
Commsner on
that next
Tuesday.
I am scheduled to
speak
at
Loyola
on
Thursday
and would love to be able to issue the work that so I can
talk about it.
Thanks
Direor of
Exem Oanions
1/29/2013
Ggs:
FY 2011
was a
busy
and
demanding
a
year
r
Exem Oanations (EO) as
it was
r
most of the
exem
seor. EO faced shs in
adersh began

move much of our work
from
proje
to
process
and
imemend new
federal
quimes
that affe
many
ousands of
exem oanEafions.
It was
impoa

us
to
accomplh
those
goals
while
continug
to deliver the
same
level of
sees
and
produce
the resul that our
exem
stakeholders
exped
from us.
That
experience
will be
put
to
good use
in FY
201Budg
conin
sung
fromthe
econom downturn continue to test federal
agencies
and
exem oanaons
ake. EO
ika
it i
grnqtljst
exem

a
n
ns
we a re
We are
shifting
from
pdnt publionstoemnic
versions that can be downaded
by
anyneare
lnganywhemore
on
anYthe
nrnitdoamnnClgWs
woshops
for
small
andmeum-size
oanations expending
wer soues
while
achng gar geographical ive
and
communy
voWemen
We also have woed to smooth the anon rsmall
exem oanns
who
now
must meet
filing quimments
asenaed
by Congss.
The Pennon Pion A
gtn
automatically
vokes
exempt
status for
oanations
that have not filed r throe
FY 2011 aomaed the end of
ethmyear phasmin
of the
desned
Form
990
Return of
Organization
Exempt
Fromcome Tax.
Recei
and ass levels that define who
must file the ful/Form
990
990-EZ
or
990-N
are now set. For EO
this
means Me
lead-up
time is
over
and the
edegn
has
begun

pay
off
by pviding
us with
more
inrmaon
about
exem
oanizaons.
Th alws us to use data
anas
and build risk mode that
ll
guide
our
work
andg improve
our
abili
to
suppo high
sndas of
tmnspancy
and
ewaship
among exem oanations.
As
always
we look rward to
woing
with
our
pane
and
akehoers in
the
year
ahead.
Sce
Lois G. Lerner
or Exem Oanafions
Organizational
Information
EO
Staffing
The EO
Rulings
and
Agreements
office
(R&A) processes apications
for tax
exemption
and
prodes
directn
through pdvate
er
rulg
techc advice memoranda and formal and
informal
guance.
_.__
The EO Examinations office
(Exam) pmmos commence by analyzing operation
and
finan activits of
exem oanns.
Exam
develops processes

idei
aas of
noncompliance develops
coEeive
stregies
and coordines with other EO nions to
ensu
compliance.
The EO Cuomer Educn and Oach office
(CE&O)
coordinates assistsand
suppos
the
devopme
internal and eemal
communcn
rms and
puations
and eemal
education and outreach effos.
Figu
A: Table of EO on-roll
employees
over a
3wear pedod
Rulings
&
Agmemen
2009 366
2010" 337
2011 332
Examinaons
525

538

-31.
--
Customer
Education &
_ 13
12
reoYs
Office
11
12
14
ToI
910
9O0
889
010
aued figus.
Figu
B:
O
cdRS
EmOanons
IAg
rn&A)l

[
Cusmer
Educnoutmach
(CE&O)
&l
Dermns
1
EMPT OlS
"
ManagemePmgm
1
I
I
Examinations
DeterminatinSAssu ranceQUality
1 I
Eminon
Pmgm
& Renew
PR)
1
5 Exanon e Areas
Guance
Compliance
In addon to
our
regar commence
wo in FY
2011
EO dediced
resoues
to two
snca
effos--
woing
to resoNe FICA refund aims for
quailed
medical redes and
inating hospal communy
benefit renews as manded
by
the P Protebn
and Affordab Care A
(ACA).
In
spite
of ese
additnal
responlities
EO coinued to maintain a
rong com#iance
presence
as the cha below
illustrates.
18000-
16000-
14000-
Rgum
C: Tal mr retums mew
10000-
8000-
6000-
4000-
2000-
0-
FY04
(Basel(ne FY09 FY10 FY11
Traditional Examinaons
[]Comgliance
Checks
EO Examinations
Over e
pa couple
of
yea
were
been
taking
a
flesh look at Cuomer
Satfacon
suwey
resul
and
consedng things
we can
do
make the
exam
process
less
buensome for
our
taxpayer.
Were
impmeed
several
improvemen
that
we
hope
will su in
a more
posive
examinaSon
experience.
I
like to share a
couple
of them with
you.
In addition to the Fast Track
Setfleme
process
discussed in the
box
bebw we have a new
EQ
Examinaons unit bcated at the
Ogden
Sewe Center that is dedicated to
resoMng proem&
like
map#d
paymen
or
incoe
imposition
of
penae& adsing
from examinaons of
exempt oanations. Also we have
been
gMng "plain nguage" updates
to
some
of
our
examinaon lee and
adding
coad formation for the
exam
agenfs group manager
in
case
organations
or
their
presentatives
wh to elevate their
quens
or
concerns.
EO Examations will
continue to focus on
cuomer seHice
improvements
in
FY 2012.
Nan
Downing
Dimor Examinaons
EO continued to
pilot
the Fa Track Seeme
(FTS)
program.
FTS is adminiered
by
Tax
Exem
and Governme Entries
(TE/GE)
and
Appeals
and
provides
an
expedffed process
for the IRS and
taxpaye
to resole
dispus
at
an
eady stage using
an
Appea
offial
as
a neu#al
pady. By resting dputes
before
a
formal
appeal
is filed
or
the
paes
go
to
couP
FTS
represen
a
sncant
me and cost
savings
to all EO akehoe.
Rulings
and
Agreemen
In FY
2011
much of EO
Rulings
and
Agemen
cus was on
impmenting
and
pding guidance
on two
sgncant pieces
of
gislation:
the Affoable Care Act
affeing
exem oanations
and the aom
vocn ineme
pcess
ced
by
the
Pension Protection Act of 2006
(PPA).*
*Additional rmation
on
ese two
projec
can
be und
on
pages
6 and
In
addion
EO
updated
consolated and
finaled
guidance
that
prodes
vital informaon
to akehoe. EO woed with Chief Counsel
and
Tasu
on the
folbwing:
Regulaons
Notice of
Pposed RumaMng (Pp. Reg.
301.6104(-1)
which vised the rules
on
ddosu to state
chari gulo reflecting
changes
made to secon
6104( by
the PPA.
EO cooined
eensNe
with the Naona
Assodbn of Sta
Chad
Oals duce
barders to es
padpation
in the
iormatiomsharing ping m;
and-

Fng
the
gations impmenting
the
vised Form 990
as. Reg. 1.170A4
and
1.509(a)4J. Among
other
measus
e
gulations
imina the bdensome
two4p
process
for
a new
oanaon
to
be
cogned
as a
publicly supposed chadW.
EO
Rulings
and
AgRemen
As
pa
of
our
ongoing
effo to
reamHne the determns
process
we have shifted from
paper procesng
of
applications

an eron case
pmcesng
syem.
This
syem
was
inial
teed
on
small
groups
of
determinns
cases.
Based
on
the
success of these
tes we
deeded the
syem
was
ady
for
use with a broader
cross-sen of EO Derminafions
cuome. In FY
2011
this
syem
was
rolled out to all EO Determations
cases. As is often the case with
new
en
syems
we have
experienced
glihes
that slowed our
process
but we are
confident that those will
be resolved and the
sysm
will have
a
posffive impa
on
the
determinatbns
process.
David Fish
Acting Directo
Rulings
and
Agreements
Revenue Procedures
Rev. Prec.
2011-10 which
updad
a
35-yeaFo
revenue
procedure
on how to oain a
derminn
on
public chadW
asscatbn and conveed it to an annual
revenue
pmcedu
in
oer to
provide
a mechanm r
more
gular updas;
Rev. Pc.
2011-33
which
updad
a
29-yeaFo
revenue
procedure
that
prodes gmom
and
conbu with reliance on PuNafion
78
Curnuve Lt of
Organations
adds
provkns
perming
reliance
on the EO Business Maer
File
and
incorpotes
the new automat
revocation
provbns and;

Rev. Proc.
2011-15 which increased the Form990
filing
sho from
$25 000
to
$50 000
and
consolated
many
of the
excens
from
filing
Form990 into
a
single
revenue
procedure.
EO ao
deveped
a new
form
Form
8940
Request
for Miscellaneous
Dermmation which
makes the submsn of nine
categories
of
dividually
wdtten
reques
for mcneous
derminations more
expedious
and the
procesng
of such
reques
more effic.
4
Education
EO maintained Ks
core
educational acts whi
continug
to
produce targeted
outreach
produs.
In FY
2011
EOs Cuomer Educatn and
Outreach office:
Completed
the fir two
ages
of a research
effo learn more about cuomer
needs
inuding
a
survey
of mo
than
1 200
small
exem organations.
Offend new inBe educational medal
help
the
public
underand the aum
revocaon
process
and worked with other IRS
offices to make sure that the most current list
of
oanns aumal
revoked is
avb on
IRS.gov.
Cad
a
landing
page
for the Affoable
Ca A
(ACA)
on the has and
Nonprofit pages
of
IRS.gov
that consated
all EO-d ACA inrmation.
Launched the Academic InsUlins Ine
Summer 2011 GBdua Student
Iemsh
pil
pgmm induing so citing
and
ceNing
mo
than 30
apns.and
cation of
a 10-week
iemsp
program
in
EOs
Rulings
and
Agemen
office.
Intduced
a seminar at the 2011 Nnwe
Tax Forums entled A
Day
e Life of an
Exempt Organation
Audit that walks

mugh
the
pacu
EO
exams.
Figu
D: EO educa#on and outreach effods
Oach
FY 2009 FY 2010 FY 2011
Efforts
EO
Upda
subscdbe
101 730 130 176 183 516
ndees at
speeches
Tax
Foms
wena
and
47 483 32 111 41 252
woshops
IRS.oWeo
Wesi
b
vws
4 994 022 33380
5 242 943
Customer Education
and Outreach
Im
pleased
and excited to be the new
director of Customer Education and
Outreach. Its a wondedul
oppouny
to
work with Lois and all of
my cagues
to
serve
the
exempt communy. Using
CE&Os micro
site
stayexempLirs.goK
and other
media
were
going
to
push
hard in
FY 2012 to do more
of
what
we do best
-
inform explain
and
educate.
Melaney
Paner
Die or
Cuomer Education and Oach

Staing
Out
Righ
What New
501(c)(3)
Organizations
Need to Know
(November
18 2010)

Sing
Out
Right:
What New NO
501(c)(3) Oanaons
Need Know
(Februaw 11 2011)
Mrnaonal Acwties of Domesc
Charib
Organ@aons (August 4
201)
Mo# weba
a
posed
on e IRS Video
Po# www.
i deos.
ov
FY 2012 WORK PLAN
L
iLegislati#elmplemb tation
....
In FY
201
EO will continue
impment
He Pensn Proction Act and He
Affordab Cam AcL
Auto-Revoca on for Non-Filers
The Pension Protectn Act of 2006
(PPA) required
that almost all
tax-exempt
organations
file an annual return or nonce wRh the IRS
every
....
year
and
provided
that
any organation
that does not file
a
required
return
or notice for three consecuve
yearSand matainaUtmaticallYa
list
oflSeSrevoked
s
tax-exemptorganations
status" The PPA
required
the_
IRS to
publish
EO worked hard to
prepare
for
impmentatioof
the automatic revocatio
....
requirements.
On June
8 2011
the IRS
published
the first Hst of revoked
organations.
The list is
updated month
as
organations
wh di
nt
fiscal
yeaFends
fail to file for
a
third consecuve
year.
The list also is
updated
as
needed
to remove
organations
listed in
error.
As of November
2011
thelist
totaled
about 380 000
organatns.
The list is avaab
on the IRS website in three formats.
There
are two searchab
formats
(Adobe
Acrobat and
ExceO
for
each
state
the
District
of
Cuma
and all
others
ntemationaO
and a
ASCII text file of all
organizations.
The
list
in all
formats
includes each
organizations name emp#yer
enficatn number
(EIN)
last
known
address
subsectbn of
exemption
effecte date of automac revocation and the
date
was added to the list.
--__
Yeciti
eeS!ll!!
t ev brt

on-l in
eand
wil I
includes
a
wea
of that
information.
This includes
guidance
to assist revoked
organations
that want to reinstate their
tax-exempt
status. No8ce 2011-44
provides
the
general
rules for
a#plyingfor
reinstatement of
tax-exempt
status
0nduding requests
for
retroactive
reinstatemenO
until
regulations
under the
new
PPA
provions
are enacted.
Nonce 2011-43 and Rev. Proc. 2011-36
provide
#anson relief for cedain small tax-
exempt organations
which allows them to
pay
a reduced
applation
fee of
$100 and
regain
their
tax-exempt
status retroactive to the date of revocation.
EO is
already pcesng
mineme
apations
and
as of the
beginning
fiscal
year
2012 more
than
5 000
oanEations
have taken
advange
of the #anson relief
r small
oanbns.
The IRS connues to send noOces to
organations
to remind them of their
filing
responsilitie&
In
addion
EO coinues to
update
its cuomer outreach and
educaonal materials to offer
ongoing
informal
guidance
and address
new issues
ting
to the automat revocaon
program
such
as
updating apab
FAQs on
the
IRS websffe
(www.i.gov).
Implementation
of the Affordable Care Act
(ACA)
The Affoab CamA of 2010
(ACA)
added
new
quimes
nat
exem
hospffals
must meet to maiain their
exem
status. It also created
new
Wpes
of
nonprofit oanation& inudg exem oanations.
In
addffion
many
of the
psbns
in the law cus
on
sponsies
of
em#oye including exem
empbye.
The ACA
quims
e IRS to view the
communiW
benefit aes of
hospil
oanns
at least once
eve
thee
yea. Accoingly
EOExam
rmed and
tined
a Review of
Operations
group
dedicated
complg
the
ud required
communffy
benefit views which
began
in Mamh 2011. These revws
a not
examinations and the
group
does not
expe
to conta
hospitawhile conducting
the
mews. As
we move
rwa
EO will
use
the information
ghemdffom
the vws for
mseamh
pong
and
com#nce
purposes
as
weHas
iden
aas
whe
addon
guidance
education or
Form 990
changes
a
needed. The IRS issued
Nonce 2011-52 in
July
2011
to addss the
CommuniW
Heaffh Needs
Assessme
quimes
and led excise x and
poingobligations apab
to
exem
hospffa.
We connue to work with
Tasu
and Counsel to
develop guidance
on
the
new Seion
501(0 mquimes.
EO is
working closely
wffh other
pas
of
theSewice
the Office of Tax
Policy
at
Tmasu
and HHS
impme
her ACA
provisions.
The IRS issued Nice 2011-23
in Mamh
2011
to
provide guidance
on
the
mqmmes
for tax
exemn
under
Seion
501(9)
whichcmed
a new
Wpe
of
exempt oanion
and annual
filing
quimmen
for
oazaonsdescribed
in that seion. EO is
woing
on
guidance
gag
e
applicaon pcess
r
cognon
of
exemption
under Seion
501(9).
In
Mah
2011
the IRS
sued No
2011 which summared how the IRS
expels
inrmionr chaab
oans
that
may
wish
paNpe
in the Shard
Savings
Pmam
EO
implemed
chang es
t0
Form 990 to accommodme new
poRing quimes
under the ACA r
m hospals
and
501(9)
Qued
Npt
Heath
Insunce Issue. In
addion
Schedule H
(Form 990)
was
revised to add new Pa
V(b)
to address the
new
501( mqmen
r
xxem hospa.
Form 990-T
s
vised to allow
eligible exem empye
to claim the small
employer
heath
care
x cdit under 45R.
The Form 990
redes&
whh ok effe x
year
200&
was
done with
a
goal
of
promoting compliance. Usg
me weal of formation me new
form
provide&
EO
devepg
risk mode
improve
case
sebn. The
following
FY 2012
projec
will
use da colleed from He revised Form 990 to
assess
He risk for
noncompliance.
(c)(4) (5)
and
(6)
self-declarers
These
groups
-
social welfa
oanations;
labor
agcuul
and hocuul
groups
and business
leagues
such as a chamber of commeme
-
can
declare emsees
exempt
without
seeking
a determinaon om e IRS. Risk
anasis
of information om
the
expanded
Form 990
sugges
however
that
some
oanations may
not have
assed emsees
correctl
and
they
may
not be
folwing
e res that
apply
to
them. In FY
2012
EO will dbute a
comprehenve
questionQaire
to assess
pin.ices
and will take measures to
improve compliance
where
necessary:

Plica( Ioption
A_Lona
gCVitvYemion)

In FY
2012
EO 11 use a duala
apph
to review
comn
wh ews
governing polcal campaign
ieenfion
by
all
pes

exem
oanizafions.
As in the
pa algons
of
impermiss
pcal mpaign
isention
11 be ewed
by
a
commee of
career
civil sean. On a second
tmc
EO will
use
inrmaon from e
desned
For 990 to
develop
ris#b#d
models to
ide pe
s.
Cases idenfied
by
these mode also
wilto
to the mmitteer evaluaon. Cases
enable EO to cus i
examao_
_
resources on
modus
algon&
Data
gaed
from the
new
For
990
plays
an
impoa
ro in this
process allowing
2omplian%
ing
risk-based
alNi.
In FY
2012EO
will be
Ioong
at
oano
that
po
unrelad business income
on their
Form90
but have n filed
a 990. or
that
coneny
file
a
990 but
de are
no ue.
Governance
........
In FY
2012
EO 11 use da om the
desned
Form 990 to
develop
risk models that
analyze
issues related to
composon
of
boas
cusing speccal
on
oanons
that have
mily
boards
or
one-peon
boas. Addon
aas
r evaaon
are
lad
oanons
materl den and
excess
benefit.
Mh of EO3 wo
bomfive
revolving
m staholdem
as
weft
as o
agu
and
a#s
elsewhere He &
a
we will bu on
g
bom#
projec cluding
He mal
proje
me Nal Re arch
Progm3 u

Employmt
x
Ream&
and e Am su a#.
We ao will wo oe m
our visn
on a w
proje
streame e
amma rman
on e harities and
Non.fits
page

&go
I nternaonal
Gbalation affects all
pas
of
our
economy uding
the
exempt
sector.
Many
tax-
exempt organations
in order to
accomh
their charitab
purposes
are
moving
money people
and
goods
across
U.S. borders. EOs concern is whether assets of
exempt organaons
that are dedicated for charitab
purposes internation
are
being
diveed for non-charitab
purposes.
To look at
this
EO has cborated with
our
counterpaslRS
eewhere in the TE/GE
division
as well as other
bsiness
uns of the
In FY
2011
EO formaled its
panershs
with outside
entities
to
gather
international
data and informatbn. We worked with the Joint International Tax Sheer Information
Centerinformationthe
exchanges.Canadian
RevenUewe
alsoAgenCYsuppoedand lnttsU tnricdgte
Large
Business and International
dMon on
the Global
High
Wealth
Industry
endeavo
In FY
2012 we
will connue to examine
exempt rganations
that
operate
overseas to
ensure
that those aces are constent with their
charitabl

purposes.
This will
include
a
number of
large prate
foundatns that have international aces wh
assets
or total annual revenue
greater
than $500 million_We will be
looking
at
com#nce
issues
unique
to
prate
founeaeaS _____
such as
self-dealing
failure to
distdbuteexpendures.income
excess
business
holdings dy
!nestments
and taxabN
In
addion we
will connue
took
at
organizations
that
repo ownership
of
a
foreign
bank account to
determine:
.....

Whether the
organizationmaintains adequate
books and records to ensure

f b
d
proper
discreon and conol
over
funds that havele the
United States
- "Whether
the
orgaaiation
hasmet
all
filing reqrements
and

Hoforen
operations
or
grantmang
fuhers the
organations exempt
purpose.

foreign
and domesticcharities wh internaonal actMes.
Academic Instuons Iniative
In
2009
EO establhed the Academ Institions Inate to cbore wh
educnal entries that educate and
develop pmssna
who will
shape
the
nonprofit
sectoF Our
goal
is to
help pmpa
the
nonprofit
adem of the future
by pving
cone
aining
about del tax law
sponsies.
In FY
2011
EO
pduced
i
woshop
pgm
r small and medium4ed
(SMS)
nonp oanaons
and cbod with nine unes to host the
pgm&
These
inuons
-
nging
from
communi colleges
to law
schools to
unebased
professnal devepme
progms
-
offered SMS
woshops
to their
culW
students
and
nonpro
and
practitioner
commune The colborative
approach
-
with schools
providing
the venues and
handling gistics
-
was
overwhming
successful and in FY
2012
all SMS
woshops
will be assorted with academic inuons.
In FY
2012
EO also will continue
projes
staed in FY
2011
including
a summer
iemsh
progm
r
gdua
uden ieed in
cae
in the
nonprofit
sector
and
an EducatoKs Resoue
Page
r the "Chares and
Nonpros

secon
on
IRS.gov.
National Research
Program
The IR$-wide Naonal Reseah
Program (NRP)
looks at
empyme
x maem
invoking
taxable and
exem oanations lae
and smaH
bunesses
and the
govemme
seor. The
resuRs of this
proje
will inrm
impmvemes
to IRS
procedures
r
audng pcesng
and
msong employment
tax return
cases.
EOs
potion
of the
proje
involves
examing
the
employment
tax returns of
1 500
oanations
wh 500 selected
ndom
each
yearover
a
three-year peod.
E will
continue to work
on
NRP in F
2012
the third
anfina/year
of the
project cusing
on
completing
all
mmng
exams
and
prodding
data r the overall IRS
repot.
EO
Examinaons Resource
Page
on
IRS.gov
In FY
2012
EO Cuomer Education and Omach will work with EO Examinaons to
provide
a ceml
resource
page
r
exem oanionson IRS.gov.
Posted content
will
help oanations
undemnd what
they
can
expe cluing
a
compance
check or
an examinaon
by arifying
the
vaousstepsin
the
process
and
prodding
dim links
to led
msoumes

are avaable eewhem onthe web re.

EO ao will be
working
on ese
projec
FY 201
ii!

1;
hlt
findingseXaminafinSdrawnfffomSeleedthe
questionnaire
clleges
anddata
Disaster Relief
mmunications
Dasters at home and abroad oen
promN
an immediate effo om the
exempt
communy
to raise and d#ute nds for relL
Unfounately
daste also
prese
oppounes
for
oanations
to abuse the tax law. In FY
2012
EO CE&O will
coordinate with EO
Examinaons and R&A to
identi spedfic compliance
issues that
are most
common
associated with disaster relief
effos
and will
develop
a
communaons
plan
to
help
educate
new and
existing oanations
about the rules
and
responsiles
in this
area.
We want to
help
groups
provide
relief to those in need
whout
engaging
in actives that
may
cause
them to be
penalEed
or
jeopae
their
exemion.
]0
Group Rulings
The
Adviso
Commee on
Tax
Exem
and Govemme EntRies
(ACT)
issued a
po
on
group
exemptions
in June 2011. EO will continue the
analysis
of the
group
exemption
issue
begun by
the ACT
by devong
a
quesonnai
be sent to a cross-
section of
group ling
holders. The
questionnaire
will
explo
the
pices
used
by
the
central or
paint oann
to meet the
quimen
of Rev. Pc.
80-27
and will
include
questions
about the meods used to
sis
annual
filing quime
In
addRion
based
on our
experience
wRh the auto-revocaon
process
EO
plans
to
expand
educaonal effos r
gup
ruling
member.
Mortgage
Foreclosure Assistance
As resenti foreosures have
mounted
the IRS has
seen the number of
exempt
determinecomplying
withwhetherth
e
requiremesthey
are
fuNIlingof sectiontheir exempt501
(q)pUrpoSe of
the Code.
and
wheter
they
are
State-Sponsored
Workers
Compensation Organizations
-
(c)(27)s
In FY
2012
EO will review the aes of a number of
aponsored
groups
that
provide
woe
compensation
sunce and claim
exem
us under Seion
501(.
We will send a
quesonnaire
to these
oanizaons
to dermine whher
they
are
meing
the cteria r
exemption
are
correassed
as
exem
and
are
paying
any empyme
taxes due.
EO Services and Assistance
In
2010
EO launched a reseah
proje
to arn how small
exempt oanations
receiVeoutreachX-latedan
d
educatninfrmatin.andprograms
forhWthem.EO drhl
hffrtci_ecu
s
groups
a
tephone
suwey
anda cosbenefit
anys
-
among oanations
drawn
om the EO Maser File.
Pan pants
included
representatives
from 501
(c)(3)
oanizationswith
less
than$20000
in
gross
ceip
and less than
$500 000
in
assets
(based
onTax Year 2Ot0s
filing resho.
determine
the topics
and
questions
for
subsequent telephone
surveys.
The
phone
sueys
conducted in
March and
April
2011
gave
EO
quanfiv
statistical
projectab
information. The third and final reseah
age
a cost-benefit
analys
in FY
2012
will correlate
taxpayer preferences
and EO outreach effos and
measure
cost
effecveness.
]!
COMMONER
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON D.C.
20224
May
3t
2011
The Honorab Oin G. Hah
Ranng
Member
Committee on
Finance
Unid Stas Sena
Washon
DC 20510
Dear Senator Hatch:
Thank
you
for
your
letter of
May
18
2011
regaling
the tax treatment of contributions to
oanations
governed by
Section 501
(4(4)
of me Internal Revenue Code.
Your leer raises me
general queion regag
whether IRS eneme
policy
as
it
peains

501(H) oanations
fluenced
by polc
consemtions.
As head of
the
agency
I
can assure
you
mat me answer

an
emphatic
"no." Th
agency
is
apolcal
and
non-pasan.
That is
a core
value of the
agency
and one
which I take
very
sedousl
As the head of the
agency
and me
only
polcal appoine
at e IRS in the dim
manageme
chain of the
pemonnel
who inad the ammenoned
ans
I
can
assure
you
that them was no
vvement
by
any
polical appn
inside or ounce
the
agency
in the aon of these lettem. I
can
her assure
you
that i have had
no
conveations with
anyone
ounce of the IRS
gaing any
eneme
gy
for
this
cagory
of
cases.
The IRS has the sk of
admtedng
a
set of ws that often touch
on
sense
issues
udg
e
polcal
process.
I am commied to
ensudng
that we
do
so
in
a i non-
paan
manne
Final
I have asked e
appmpda
IRS offidals con me Comme sff
address
any open questions.
Sincerer
Dou Shulman
COMMISONER
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON D C. 20224
May
31
2011
The Honob Jon
K
United Stas Sena
Washington
DC 20510
Dear Senator
Kyl:
Thank
you
for
your
leer of
May 18
2011
regardg
the tax treatment of codbutions
organations governed by
Sen
501()
of the Internal Revenue Code.
Your letter raises the
genes! quen regarding
whether IRS enforceme
policy
as
it
peains
to
501((4) oanations
is influenced
by polcal
conderafions. As head of
the
agency
I
can assure
you
that the answer
is
an
emphatic
"no." This
agency
is
apolcal
and
non-pasan.
That is a core
value of the
agenc
and
one
which I take
very
sedous.
As the head of the
agency
and the
on pcal appointee
at the IRS in the direct
management
chain of the
peBonnel
who inated e aforementioned actions
I
can
assure
you
that there was no voement
by
any
political appointee
inside or
outse
the
agency
in the ination of these ers. I
can fuher assure
you
that I have had
no
conveBations wRh
anyone
ounce of the IRS
regarding
any
enforcement
strategy
for
this
category
of cases.
The IRS has the task of
administering
a
set of ws that often touch
on
sensve
issues
ung
the
polcal process.
I
am commiRed to
ensudng
that
we do so
in
a i non-
paisan
manner.
Finally
I have asked the
appropriate
IRS offida conta
the Commee aff to
address
any open
questions.
Sincerely
is
H. Shulman
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON
D.C. 20224
May 31
2011
The Honorab Pat Robe s
Uned Stas Senate
Washgton
DC 20510
Dear Senator Robe s:
Thank
you
for
your
letter of
May
18
201 !
regaling
the tax tatment of conbutions to
oanations governed by
Secon
501)(4)
of the In real Revenue Code.
Your tter raes the
genel question regaling
wheer IRS enforcement
policy
as
it
peains
to
501((4) oanations
is influenced
by pal
conderations. As head of
the
agency
I
can assure
you
that the answer
is an
emphic
"no." This
agency
is
apoal
and
non-pasan.
That is a corn value of the
agency
and
one
whh I take
very
sedous.
As the head of the
agency
and the
only pcal appointee
at e IRS in the dire
management
cha of the
peBonn
who ated e aforemenoned actions
I
can
assure
you
that there was no
voNement
by any
polcai appnte
inside or
ouide
the
agency
in e ination of ese e. I
can
her assure
you
that I have had no
conversations with
anyone
ouide of the IRS
regaling
any
enfomeme
ragy
for
this
cagory
of
cases.
The IRS has the task of
administering
a set of laws that often touch
on
sensive
issues
including
e
polcal process.
I am
committed to
ensudng
that we do
so
in a
ir
non-
paan
manne
Finally
I have asked the
appmpda
IRS offida conct the Commiee aff
address
any open
question
Sincerely
Do
s
H. Shulman
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON D.C. 20224
May
31
2011
The Honob John
Comyn
Unid Ss Sena
Washgn
DC 20510
Dear Senar
Cornyn:
Thank
you
for
your
er of
May
18 2011 gaing
the tax treatment
of contdbuons to
organEaons governed by
Seion
501(c)(4)
of the In real Revenue Code.
Your tter raises the
genel question regag
wheer IRS enforcement
policy
as it
peains
to
501((4) oanatns
is fluenced
by pcal
consemfions.
As head of
the
agency
I can assu
you
that
e answer is an
emphatic
"no." This
agency
is
apolcal
and
non-pasan.
That is a core
value of the
agency
and one
which I take
ve
sedous.
As e head of the
agency
and the
on pcal appointee
at e IRS in the dire
manageme
chain of the
peonnel
who ad the aforemenoned
ans
I
can
assure
you
at there was no
invoNeme
by any political appointee
inside or ounce
the
agency
in the intn of these e. I
can
her
assure
you
that I have had no
conveBaons wi
anyone
outside of the IRS
regaling any
enforceme
tegy
for
is
catego
of
cases.
The IRS has the sk of
administering
a
set of ws that often uch on
senve
issues
including
the
polcal process.
I am
commd to
ensudng
that we
do
so
in a
fair
non-
paisan
manner.
Finally
I have asked the
apppda
IRS offida to con e Commee sff to
address
any open
questions.
Sincerely
Dou is
H. Shulman
COMMONER
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON
D.C 20224
May
31
2011
The Honorable John Thune
Unid Stas Sena
Washgn
DC 20510
Dear Senator Thune:
Thank
you
for
your
tter of
May
18
2011
regaling
the tax tatme of contdbuons to
oanations governed by
Section
501(c))
of the In real Revenue Code.
Your tter raises the
genel question regaling
wheer IRS enforcement
policy
as

peains
to
501((4) orgazations
fluenced
by polcal
conseraons. As head of
the
agency
!
can assure
you
that the
answer
is an
emphatic
"no." Th
agency
is
apolcal
and
non-pasan.
That is a core
value of the
agency
and
one
which ! take
ve
seriously.
As the head of the
agency
and the
on pcal appntee
at the IRS in the dim
management
chain of the
peonnei
who ated the aforementioned
ans
I
can
assure
you
there was no
invoNement
by any poical appnte
inside
or
outside
the
agency
in the inon of these e. I can fuher assu
you
that
I have had
no
conveaons with
anyone
ounce of the IRS
regaling any
eorcement
tegy
for
this
catego
of
cases.
The IRS has the task of
administering
a set
of laws that oen touch on sensitive issues
udg
the
pc
process.
I
am committed to
ensudng
at we do so in a
fai
non-
paisan
manne
Finally
I have asked the
appropda
IRS officials to con the Commee aff to
addss
any open
quens.
Sincerer
H. Shulman
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON D.C 20224
May
31 2011
The Honomb Rha Burr
United Stas Sena
Washon
DC 20510
Dear Senar Burr:
Thank
you
for
your
tr of
May
18
2011
regaling
the tax tatme of conbuons to
organations governed by
Section
501((4)
of the Internal Revenue Code.
Your leer raises the
general queion regaling
wheer IRS enrcement
policy
as

peains
to
501(H) oanations
is influenced
by polcal
condemtions. As head of
the
agency
I can assure
you
that the
answer
is an
emphac
"no." This
agency
is
apolcal
and
non-pasan.
That
a co value of e
agency
and one which I take
very sedous.
As the head of the
agency
and the
only polcal appoiee
at the IRS in the dire
management
chain of e
pemonn
who inated the aforementioned
ans
I can
assure
you
that ere was no voNement
by
any
polcal appee
in de or outse
the
agency
in the initiatn of these leers. I
can
fuher
assure
you
that I have had no
convemations with
anyone
outse
of the IRS
regaling
any
enfomement
gy
for
this
catego
of cases.
The IRS has the task of
admindng
a set of ws that oen touch on sente
issues
inudg
the
pc process.
I am commed
ensudng
that
we do so in
a
ir
non-
paisan
manne[
Finally
I have asked the
appropriate
IRS offials contact the Commee sff to
address
any open questions.
Sincerely
CHARLES W. BOUSTAN JR LOUNA
SUBCOMMITTEE CHAIRMAN
ANE BLAC NNESSEE
JiM GERLAC
PENNSYAA
VERN BUCHANAN ORA
AARON SCHOC
UNS
LYNN NH KANSAS
KENNY MARCHAN XAS
SUBCOMMIT[EE RANNG MEMBER
JiM McDERMOtT
WASNGTON
COMMITTEE ON WAYS AND MEANS
WASNGTO
DC 20515
DA CAM CHAN CHRMAN
SANDER M.

CHA RANNG MEMBER

COMMI ON WAYS AND MEANS
CONG.
CORR. BR
CL:LA
SUBCOMMITT ON OVERGHT
The Honorable
DouOas
H. Shulman
Commissioner
Intern Revenue Serve
1111 Constitution
Ave.
NW
Washington
D.C. 20004
De Commsionw Shm:
June
3 2011
Recved
by e
Commllones
Correspondence
Oce
JUN
8
ZOII
As Chrman
ofe C0mmiaee On
Ways
and
Means
I find e hck of IRS
transparency
deep oubling. Taxpayer ady stmggE
to
comp
wi
a Tax Code
th is too
comex.
Now
wi
no
wamg
e IRS
appes

have
sectivy tged
ceain
taxpaye
who
are
engaged

pc speec
N
oy
does ts threan
pol speech

cas doubt
on
e IRS
eliu
as an
imparti
enfo of e
nations tax law. The IRSs
aliU
to
effective
enfoe x law and work wi
taxpayers
to
ensure
comOiance
not served
by auditing unsuspecting taxpayers
for
vlg
mx laws the IRS has not
acknowledged
r decades.
There
are
approme 120 000 501(c)(4) organizions operating
across
the
United States. For
decade
donors m these
organations
and the donee
organizations
have relied
on
the IRS for
cenU
this
area
of x law.
Now
they
can no
nger
do
so.
All IRC
501(c4) organizations
must now
adse dono th thor coneutions
may
result in
a
targed audit despi uncertainty
in this area
of mx law.
Donor

turn
must then derme whether
a
donjon to a
501(c)(4) organization
will
trigger
an
IRS
aunt based
on
the
piticM
activities of the
organation.
Committeehas
an
oblation
mconduct
oversig.of
the IRS and Rs enfoemem of our
countrys
tax hws. Because of the serious
nature
of the IRSs audit acfivRies in ts area
of tax
I
que
th the IRS
answer
e
folwing questions

an
effo
prome
transpency
and
reassure
taxpays

k and conent enfoement

of the
countrys
tax
laws e norm.
Please
spond
no
ler an June 1

2011.
The
names
tifle
and divions and/or offices of
any
and 1 dus
who
were
voNed
or
conguted
the deccan
vee
whether
taxpayer
contributions to
501(c)(4)
organizations
shoed be
sue
to
the
fi
tax rus.
All IRS
rulgs
and m memoranda
latg
the
apaNliry
of e
fi
x
to
501 (c)(4) organizations.
Please
prode
copes
of 1
cord
intem
working
documents
and
coespondence
lg
to
e
same.
Prode a
dd
exanation
and rdevant
documents hd lhe
folwing
issues:

How e
e
emplees
wo e
and
R
s
ganid
win
e Sm
BSdf-Employ
DN
b. Whe e
empys
won
on
te
and
fi
x es
phyNcN
ced?
How
many
emoys

e IRS wo
on
ee d
fl
t
iu?
Pmve an
ganoml
es
employee
tn e
oan
stc
do Does the ee and

tax
office
prepe
an
annu work
an
mil
the armu work
Nan
rdead
by
e Tax
ExempffGovernment
Emities
Dion? If
so prove
a
copy
of the last five
yes
annu
po
If
noL
how does e IRS
oveee
the offices workad
and alloce
soues
this office?
e. How
many
tate
and

tax audits were

nducted

200 2008
and
20!0
rdad to
fis
made to
501(c)(4) ganization
How do
emoyees
th work on este
and
gift
tax sues within e Sml
BufinesSelEmpyed
Diction
gn
access
m e Form 990s r
501(c)(4) organizations?
go
How d
employees
e
Exempt ganizatis
DN
t
shrug
of e Form 990 rm o IRS
employees?
Is ts
a
mmon
France?
If
m
w
many
amons have
orinat
from
shed Form990s to oer IRS on
h. ovide the
names)
of the
indu(
who
decided
after 35
yes
m
le contributions m a
501(c)(4) ganization
as
e
m
e
g
rex?
i. Criteriathat are
used to
select
taxpaye
for
giR
tax examination.
j.
Provide all information that
analyzed
the
legal
or
political consequences
of
-
auditing gift
tax returns for contributions to
501(c)(4) organizations
4. How
are
taxm ganizations neral
cd r dk?
How
many
501(c)(4)
audi are
usuMly
conduced
every
tax
year?
Provide
a
breakdown of the tal number of
501(c4)
examinations conducted
annuM
over
the la five
years
and
identify
the tax issues invoNed.
Wh
peenge
of
fi
and ee tax office examinations
typicly origine
om
an intem re? Please describe IRS
protocol
for
making
inm
res and how mfes
are
processed.
Prode
any coeondence
and records shared wi the
Departmem
of the
Treury regarding
e
apNation offl
tax to
501(c)(4) oanizatm.
Dfil
H1 communications
(wriaen
venal)
between e IRS and e
Departmem
ofe
Treury
on
is
c
fince 2004.
Hease note

r
purposes

resndi
m this
mque
the rms
Ms7
ommunicMn
"lMing7
should be
ind
conent wi the aaached
Definitio
rms.
aank
you
for
your prompt
aenfion
to this maer.
Sincerely

DAVE CAMP
Chrman
DEFINITIONS OF TERMS
The
term
"record"
means
any
wrte recorded or
graphic
maRer
of
any
nature whatsoeve
regardless
of how recorded
and whether
original
or
cop
indudin
but not limited
to
the
following:
memorand
report
expense
report
book manu instrucon
financial
reports
worng
papers
records
notes
er notices confirmaons
telegram
receipt
apprs pampet magazines
newspaper
prospectuse
interoffice and
intra office
communicaon
eronic ml
(e-mail)
contract
cable
notations of
any type
of
conversao
telephone
call
meeting
or
other
communicatio bulletin
printed
mae computer pntouts tetypes
invoice anscpts
diaries
anyse
returns
summae minute bill
accounts esmate
precon compason message
correspondenc
press
rease drcar
finand
statement reew
opion
offer
studies and
invesflgaon questionnaes
and
surveys
and work sheets
(and
all
draff
preliminary
version
teraon modificaon reon change
and amendmen of
any
of the
foregn
as
well
as
any
aRachmen or
appendices thereto
and
graphic
or
oral records or
representaons
of
any
nd
0nuding
without limitaflo
photograph
chart
graphs
microfich
microfilm
deotap
recordings
and moon
pictures)
and
electroniq
mechanical
and ec records or
representaons
of
any
kind
0ndudin
without
limitaflo
tape
casseRe disk
and
recording
and other
we
pnte
type
or
other
graphic
or recorded maer of
any
nd
or natur
however
produced
or
reproduce
and whether
preserved
in
wn&
film
tap
dis
deotape
or
otherwise. A record
beang
any
notaon not a
part
of the
oonal
text is to
be considered a
separate
record. A draft
or
non-
idenc
copy
is
a
separate
record within the
meaning
of this term.
The rm ommucaon" means
each
manner or means
of ddosure or
exchange
of
inrmao
regardless
of
means uize
whether
oral
ecWoni
by
document
or otherwis
and whher
ceo-c
in
a
meen
by phon
mail texe dcusonK rease
personal delivery
or
otherwise.
The term
"relating"
with
respect
to
any
ven subjecL
means
anything
that
constute contn emboe reflect idenfie state
rears
to
dens
with
or
is in
any
manner
whaoever
pertinent
to that
suec
DEPARTMENT OF
THE
TREASURY
INTERNAL
REVENUE
IERVICE
WASHINGTON D C.
O24
Ju 1
2011
The
Honorabb
Dave
Camp
Chrman
Commee
on
Ways
and
Means
U.S.
House of
Representivse
Washgton
DC
20515
Dear
Mn
Chrman:
applicatinThe
!
amelRSrespondinglRWs
apolical
f
ganstaxYOUrandconbutions
of
JUnenopadan.areawem3 A8Section201nOdecisnsWay
influenced
1
501(c)(4)CmmissnermadeOanizatlonS.andbY
actionspOliticaiShulmankenCOnsemoni
assure
the
dutieS.onreSpeCtese
cases.No
eonematter
Wemoutsid
e of
ePeffrmedlRs
provided
by
careerpempyeeSregaing
the

theeorceme
normal
couedecnsof
r
T
msnses

ur spec
rue$ am low.
Because
of t
m
numr
of
otherUrveredaCcomnatedUndmdocumennSeCtnmP61
urof
epmviou$rlnternaldatedRenJunebeenpmvid201Ce.1

rueUnredactedur
staff.foonse
fis
and
TonreSnsever
thundqnsectJs
81been
provmlated
particurOUr
repg
tax
aud.
yr
rst
r
taxl
018
.ngSoanizaorm.and
inlarnal
memomn
taming
the
appaffili
the
g
Themforrnationlnformaonth
e
processhaVecoveredresponsivebeenof
pefformJngnunderrUlingSto sectionOnanreqUeelectron6103issUehaSrelatednCesearchbeenthe
issuance
OftoPrOvedo
f
filesParticUroftheOurgdividuaRevenUetaxrep
tOaudits.yourRUfinginvolvedTherequest82.
216.1RSfo
r
2
maF dussed with
ur
sff
e ru that arch 11 some
me

pruce.
3. De.ed
aon
and t dum rotad :
a. How
am
empyees
M wo on and
g
x
oanlzed
in e
Small Business/Serf
Empy
sn
(SS?
Commoner and
Depu
Common SSE
roor
Specia
Tax
Chief
Es and G
(E&G)
Tew Managem
E&G
Group Managem
E&G
Ea Tax
Aome (ETA) .e.
e fie exanem in
E&G)
The
Chief E&G
also has line
ahofi
over an
E&G
Picy
staff and
a
Planning
and
Specl Programs (PSP)
=aft who
prove
technical and case
assnme
assistance
for the fle examiner =affs.
b. Whero aro
e
eme
wo
on
= and
gi
=x
ysical
cad?
See Endosuro A r e
post-ofuty listing.
c.
How
many
empyees
in the IRS work
on
e= and
giR
=x iues? Prove
an
organizaffonal
cha
enfying
each
emoyee
in the structure.
As of June
2011
thero aro 361
empyees
in the E&G
program.
See Endosuro B r
the
oanizational
chad.
d. Does the E&G office
preparo
an annual work
an
simir to the annual work
an
released
by
the TE/GE Divion? Pin.de a
copy
of the st five
years
annual
reports.
The E&G
program proparos
an annual wo
pn
based on return csuros. The E&G
program
does not
proparo
a
wo
an
similar e annual wo
plan
roased
by
TE/GE
dcusng projec
r the
coming
yea
3
Workstream
.....
state
Under
$5M
- FLP
Estate
Under $5M
-
Non
FLP
S
tare
M
and
.Ov:
FLP
Estate
$5M and Over -
Non FLP
G- FLP
G- Non FLP
....
Total
3
2 1
2
15
1
0
2
6 263
1 640
1 370
1
032
2
1 503
1 44_
9
81
1 850
2
1 1
1 831
1 7_
25
155
Este Under M
Etate
M
a Ova""
Este To
G Total

2.16
1 766
.74s
_
823.
3 761 589
!
482 1 09(]
I
1 974 1 889
...045_ 27._
1 604 2 169
e. How
many
es= and
g
=xaudi=
were conducted in
2006 2008
and 2010
d
fts
made
501 oanizaons?
The E&G rm=n
manageme systems
do n
classify g
x returns
by pe
of
enti mceing
the
donaon; howeve
employees
the E&G
nion
do not recall
any
other such audits other an e
xpayem cuently being
exame
fi How do
emoyeee
at wo
on es= and
g
=x
suee wiin e SBISE
Dision
gain
access to e Form 990s r
501(c)(4) organizaons?
Eate and G x examem do not have direct
access to Forms 990
mugh
any
inmmal
system (an
inmal
system
es
prove
access
exem =ganation
rums
upon tuque=
necessited
by
a busess
reason
b E&G
empyees
have
n
requested
access th=
system).
When EO Examinaon mm
an
oann
r
potenti
examination
any
o
pad
the
IRS
pene
documen
are
senk
ese
mrra
m
include
copes
Forms
990
depending
on e sue voed. Note at
Forms 990 am availab on a
vade
of
publ website
such
as
Gue=a or
Foundation Ceen Forms 990
501((4) oazations
und
on
pubic
websites do
not dude conb Its.
g.
How
did
emoyeee
in the
Exempt Organizafons
Disn asset in the
sharing
of the Form
990 forma6on with
other IRS
emoyees?
th
common
pcUce?
ff
s
how
many
examaffone have
odginad
om shard Form 990s to other
IRS divions?
Information with
respe
to the
specc
E&Gcases has been
prodded
our
rep
to
your request
for formation covered under seion 6103 related to
pacur g
tax
auds.
4
Morn
gene
Form 990 inform can
included
sport

refea
other
opem
un. Whe
include
inrman deterrned a
case-by-ca
b
depeg
on
the mva
cts d dmumsns. Some refea
provide
engh
inform on e re.wed
entity
wtto e
need r Form 9 informan
whi oem
m
require
Form 990 ioation
super
e referral.
Shadng
Form
990 info does not occur

eve
rerral
b n unusu sham
rmon w oer Bune
Omng
DMsns wh needed.
(As
noted
above

e
majority
inrmaon on Form990 for section
1) orgizations

puc
w e
expn
e ntor
.)
Shang
information can occur
in several
ways.
Referral =her un
triggered
when EO
personnel
subm Form 5666
GE
Refeal Information
Repod)
or
oer
equa
inrmation
mpod
EO Ciasscation r
processing.
Form 5666 il dude
rmation
suppong
e submed refeal based on
the
Agents
examination
review
finngs
that address sues ounce e
scope

ExemOanizaons.
Submiffed inform=ion
may
include d=a und on
Form 990
ong
wh da
gaered
during
the examination and/or
revw
process.
EO Cssification rwards referrals
other un based
on
the
procedures specked
in IRM 4.75.5.5
(1
which ss at
EO Ccation 11 rwa Forms 5666
(mequa
information
mpo
n
vng exem oanation

anng
and
Spedal Programs (PS
r e
wito sewing
e
princ pce
buness
e
xpaye
i.
Sml Busess
and Se
Empyed BS Wage
and Investment
(W&
and
Lae
Buness
&
Inmaonal
B&I).
EO
pemonn
so can
rer
xpayem
oth than
exem oanizaons ung
the
onne
Spedalist
Refe
System (SR.
SRS aumates the
request
process
r
LB&I
SBSE W&I
and TEGE fie
specias.
SRS
can
be used
mfe or
mo
oRen

request
e ance

a
speciali= .
an
economist)
r
an
ongdg
examinaon.
Agen
can
genem
a
reque=
onne = g
aumica n
e
appmpa
Speci Managm
e
mceng
buness
un
as weg as the
refeng agents
manage
the
mque. Ung
the
SR
one can
generate
refea

or
mque
assnce
from a
Compur
Aud
Sped=ist
Economist
Empyee
Pns
Emoyme
Ta
Engineering
Exdse
Tax
Exem Oanations
Federal
a &
Local
Government
Rnand
Products
indn Tdbal
Govemment maon=
and
TaExem
Bords.
SBSEs E=a and G
(E&G)
Tax un has
own
referral
procedures
r other
operating
uns llow. The
procedures
dude
coning
e E&G PSP Referral
Cooinar and
competing
a
referral
rm
which is en emaged mmailed e E&G
PSP Referral Cooin=oF
In addon to e above
case-spedfic
refeal
process
EO Examination shams Form
990 formation wh
a
varty
of IRS
nctions
depending
on e circumstances.
They
inude the
following:
5
SBSs

Oevelopme
Center
-
In accoan with a
Memomum

UnderaCting
ere are
mne
exchans
informon
regai pmmotem
a
promote.
Semite-wide Coman Strategs
Exue
Stng
Commee
(SCS ESC)
-
T SCS
ESCes
e Nm
lop
a
unified croMsional
IRS
approa

complian
stregi
needi
lbomSon.
The SCS ESC
ensures
thorough
cooina
forcement
activ a reur
iues r ce-wide
techl su eme
iu or=nal
procedures
and
promom
investom
n
a
am
ed e
tax a transactions.
= Fm
Woing Gm
-
SBSE a
memr TGs
Fm
Woing Group
a
SBSE d Techl
Adm
wo with TGE
Fm Cooam d Fm
Specialist
as
waant
ass wh
developme
=
Hh
Income
Hh
WeaRh
- EO Em=n
cip=es
on SBSE am
was
rm
develop strategs
= addre
mpn
sues the
hh
incorneigh
weaRh
population.
Offi Secewe
Pena
BS
-
EO Emon
e
w
SBSE derme

nalties
am
bng
appli
consiste
in
appmpfiam
=ual
dmumans
and addonal
emphas
nd in
pacur
areas.
The IRS does not track e number of
examinaons that have
orinated
from
shadng
Forms 990s with other dns.
h. Provide e
name)
of e
inddua(s)
who decked tin=
conffibuUons
a
01(c)(4) oanion
as
sue
e
fl

The
response
to this
question
has been
proved
our
rely
to
your
reque=
for
informatn covered
under sectn 6103 re ted to
pacular g
tax auds.
A
vade
of cdda am
used in
selecting
rums
r examination.
Rums are seed

mugh
e csscaon
process

from a
related
open
examation
.g.
the
examinaon an estate for which
g
x rums are
required).
Returns are se
E&G csscation from a
number
odgs.
1 filed returns = meet ceain
screening
iteria are
sent dasscatio
In
addon
returns
may
be se
classcatn as a
msu of an
inmmal reffal or
from efforts
entify
nonem.
During
dasfication
the
dasfiem ok for
potential
issue A return can be sected coect an error on
e
ce the ream. The sues
may
invoke eher
legal
or vacation sues.
A
gai
sue is
one
does n
r appeam

not) satisfy
e
reqremen
e Inal
Revenue Code andr
Treasuw ReguEons
or
that n consiste wRh revant case
w. Th udes
pumng
non led returns whh are
required
be ed. A valuaon
issue is one
where e
gied
ass either
appeam
undewaed or an
approval
e
ass was not
provided
wi e retum as
filed. Classem
may
also utilize a
g
tax
dasscaon check sheet when there a
filed
g
tax rern.
6
J.
Provide a at
anal
e
I

lc consequenc

audng g
tax roms
r conbuons

1)(4)
oions.
Info
rose

r

specific
examina h bn
prov
in r
rop

m
r
r an vered uer section 61

r g
t aud.

ais
was
perfo
on
e
pdl nsequens.
The IRS is in the
process

dog
an electmn ar fis dua
io in th roarer. As discsed w
ur
staff
e rosu ah 11
me
produ.
How are
tax-exempt organizaUons genemfly
selected for audit?
Thero are
two
pdman/categories
of audits
(1) compliance
projects
and
(2)
casework
consisting
of
refea
cims for
refund
and
general
casework.
Compliance
Pmjts: Compes
rect rources

areas
own
eed
nmn. Pts
aro
dguh
om
nal
sework
because
ey
ha a
ed ose
and
may
inl moro than one funon or
a(e.g.
ens mmance
ec
ecal
outrea c.).
The
rateg Pnng Wong Group (SPWG)
whi me
up

empes
acm
ns in e
Em O=ons
(E
d
t
TaExem
a
Gomme Ees sn
EG

responsible
for
desN
e
mn
projes
bemme
pad
the EO
Workpn
r each 1
yean
As
pad
e
pross
eir aves dude
reque
and
reviewing p
from
a
de

soumes
analyzg md ropo dermining pects
be =ed or
nd
and
ma
rommend
EO es on
proposed ects
a
on
e
spe
a
diroon of the EO
workplan.
Commenceproje
ao can
dude
sue
Manageme
Team
(IMT) projes.
An IMT
is
pical
cross
nionaL
integrated
with oer Buness
Operating
Divions
(BOD
and includes IRS Chief
Couns
pemonnel.
Mo= IMTs
aro
rmed
rosponse
ffi Me
ecaon of an Abuse Tax Avdance Tmnsan
(ATAT).
An IMT
PYS
a
key
ro in
creang
alternative rosuon
=rategies monong
fid
pacipanUpromoter
inveodes
and
cooating
wh
campus
ats.
Rerra (IRM
4.75.:
Refea
(inrmation
ems)
can
be ehe
Eemal
- A dumt r
mmican
dung
an emn
mmunication
rece

EO Ccan from
a ur oside t
Inmal Rev
Sewe
whh
alges ps nmpe
with a x
7
w on
e

an
em oizan
pditical oizan
b
entity
dNu;

Intem
-
A dume
pmr

InUre= Ren Sei

emoy
a a EO Clascatio
whi iden ne
pote=
nmp
discored
dung
e e
procei

sn

any
oth 6me in e

offidal du.
Refea
may
come
from a
vadety
of
sources
duding:
EO
employees
cou
examins
proceing
deteina
= Om
IRS nn= areas
her
feral
agende

e.g.
Departme

bo Dertrnent

Houng
a Uan
Developme
or
Departme
Justi

Ste
and local
government
cs
d offida
Mem
e
exempt oation
mmun
The
general pubi
Membem

Congm
Ction staff determine whher an rmon m has examination
poal
no
examaon
potent
shou be coemd a
tum
yea
needs addon
information to make a dedon
or
shou be referred an
EO Referral Commiee.
Procedures e ensure
that no
sing
du makes case
seon
derminations when sensve es am
po
ived. Certain
agons
mt
be referred to an
EO Refeai
Committee
made
up

career
managem.
These dude
agations:

polcal

bbying
aivs;
cong
ence
legations

finandal tmao w known m
suspeed
od
connections;
invog
a
urch;
voWing himpa
or
sensRe iues
.g.
e deon
may
msuR in med
affen or
the inrm=n was
submed
by
an
elected
offidaL
oer an
Congress
or
Execve
Bmnc;
subffed

a
Memb
Congm .(or Congmnal
s;
or
invoking
h om
indicang
that revw
by
the EO Referral Commiffee wou be
deskab r masons
irne or
mgri.
In
consedng
whher a referral has
examination
potel
e membem e EO RefeKal Commiffee de.rinse whher
e rmation m estabhes a reasonab belief = rthm aon
by
the Sece
warraed.
Claims for Rend
(IRM 77):
Clams
am
received and
processed by
e
Ogden
Seice Cenr
(OSC).
All dams cannot be
processed
in the OSC
am
forwaed to
EO Csscaon. A alas=tier determines whether e claim is
cady
agowab
or
shou be se a
fie
group.
General Casewo:
Gene cawo des aud sected
ung
estaed
queHes (for examp
rta Form 990 ne em
msponses
or
combaon
on

)RC secbon 7217

pin bits
influence ovm
xpay
aud and other
vestigations by
ceda executive
branch offic.
8
&How
mat
S01(c)(4)
audi am
usually
onducted
eve
tax
yea
Pin de a
bmkdow
e 1 number
S01
enminatlormconducted
annu
over
e last five
yearn
and
Identify
e tax
Issues invoked.
Bew a
b
showing
e number
section
501(c)(4) oanizations
examed
r
the la
e fiscal
yearn
as
recoed in EO Exams Rems
ventow
and Classcation
Syem
The numbe below am
based on
the cal
ar
e exam was conuded. An
orgation may
be included twice
separate
examitions closed
sepam
fiscal
yearn.
For
examp
ff
an
empyme
x examatn
an
oanizatn
csed
2010 after the 2008 osum
a
Form 990 exanatn r at me
organatn

wou be consered two

separate
closures.
177 158 118 127 200
Whi them
am
Ins the informon th=
our
cing sm pin des
we am

the
pmss

dete
the mo=
mmon
ue codes ud.
6. What
peenge

g
and es= tax office enminaons
p odga
from an mal al? ease describe S
proc
f
maMng
rnal
rra and how mrra
a
processed.
No rm atistics
am ke
on
the
percentage
E&Gexamations
pical
origating
from m
ma The E&Gformal referral
procedures
am
mve
new;
in
Augu
2010
E&Grmzed referral
procedures
r her
oanizations
thin
the IRS to make mferra . nce the
procedures
were rmzed
E&Ghas
received 112 referm
(from
all IRS
organizaon.
If an
examer from another nion encounm a
ponti
esta or
g
tax issue
dudng
the course of an examination
e examiner con the Esta &
G Tax
Program
PSP RMerml Coordinar determine
ff
a refeff waand if
a referral
warrand
e examer will
complete
e E=ate &G Tax
Program
Referral Form and
ema the rm and
a mva
suppong
rmn and documention e PSP
Rerml Cooor.
When e PSP RefeKal Cooator receives a referral
he revws the referral rm and
suppong
rmation and documenon and then
dermines

an examn
warmnd ff an examation
warranted
e PSP Referral Coordinar concts e
appmpa Terdtow Manage expels
e cts of e
case
and asks whh
group

e
referral shou be
assned.
The PSP Referral Coordinator sends the refeal
inrmation a
PSP
Paralegal
r
case
buig .e.
dung
mva inrm=n in
the
case
fi)
and to eah the
case

our
ven
management
rmatn
9
systems.
Once the case
bR and
1
esshed
the PSP
Pamleg
me
case
the
assned group
and notes e PSP Referral Coordinar e
case
has been
shaped
the
group.
Pin de
any
correspondence
and recos shared wiffi e
Department
of e
Tasuw regai.g
e
applicaUon

g
tax
01)(4) oanizaUon
DeVil
1 commuNcaUons between e S and e
Department

Treasuw
on

c
nce 2004.
The
Department
of
Treasury
had no
input regardg
the enforcement decns made
with
respect
to
any giR
tax examaon
W
respe
me broad
r
Me IRS in Re
proce.

irg
an
emn arch fil dua involved in ts maffer. discu wi
your
staff
me msu seamh ke
some
me
proud.
My
aff avaib meet w
ur
staff answer
a
questions

wovide
dher
inrmon
mgag your mque
Shou
you
ha addonal
qutio pase
coa
m
ha
your
sff n
FWilliams mo
Office
glative
Affa
=
02)
622720.
Enosums
(2)
Pe
1 of 1
Hawkins Ann K
From:
Sent:
To:
Suect:
Hinton Irma D
Monday Ju
30
2012 12:35 PM
Hawns Ann K
FW: Leer from Sen. Cad Len IRS Comm. Shulman
uly
27
2012)
Aachmen: How
UNP.ml;
SecureZIP
Aachments.zip
pls process
Fm: rre Ca M
$n
Fdda July 2
2012 4:35 PM
To: Hinn Irma
D; Gmdn Steve;
Oez Cumbu
I;
Gs Dne M
Su::
Fw: Leer from n. d Levin IRS Comm. Shulman
u
27
2012)
Sent
using ackBey
From:
Robertson Mary (HSGAC) [mailto:Mary_Robertson@hsgac.senate.gov]
ent:
Fra Ju 2
2012 02:51 PN
To: Barre Catherine N
:
Neb Kaye (Len) <Kaye_Neier@levin.senate.gov>; Bean
Elise
(HSGAC)
<Be_Bean@hsgac.senateov>; Barkley
Chris
(HSGAC) <Chds_Barkley@hsgac.senate.gov>;
Robertso
Nary (HSGAC) <Na_Robertson@hsgac.senate.gov>
Subjef::
Leer from Sen. Cad Levin to RS Comm. Shaman
u
27
2012)
JUL 3
0 2012
CONG. CORR.
BR
CL:LA
Aached
pase
find
a
tr r
IRS Commoner Shulman om Senator Call
Lem Chmrman of
the Senate Permanent Subcommiee on
Invesgaons.
The
onal
will be
dropped
in the ma this
afternoon.
It would be
appreated ffyou
could make
sure
that Ms. Lois
Lerne
Director of
Exempt
Organizaons
also receives
a
copy
of this letter.
PLEASE ACKNOWLEDGE RECEIPT OF THIS
MESSAGE &
ATTACHMENT. Thank
you.
Ma
D. Roben
Chief Clerk
U.S. Senate Permane Suommittee on
Investitions
199 RusH SenSe Offi
BmMmg
Washgton
D.C. 20510
20224-9868
-
Direct
20224-9505
-
Mn
20224-7042
-
ix
RECEIVED
7/30/2012
COMMIEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFRS
WASHGTO DC
5162
July
2Z
2012
VIA U S. MAIL &EMAIL
(Cmherine M Baerirsov)
The Honorable
Douas
H. Shulman
Comminer
Inrnal Revenue Service
10

Street and
Pennsylvania
Avenu
NW
Washinon
D.C. 20004
JUL
&
0
ZZ
CONG.
CORR.
BR
CL:LA
Dear Common Shuiman:
I
mn
writing
to
exp my
concern abom how e IRS
infarcts
the law
gding
e
exnt to
which
501(c)(4)
"soci wdre"
organizatns
can
engage
in
paisan pc adiviU.
The
July
13
2012
sponse by
Lois G.
Leme
Dive or ofExem Oanizations
to
my
June
13
2012 letter
was
unsmisc.
In the
sponse
Ms. Lerner med m "The IRS rakes
sps
m
eonfinu
inform
organizzdons
offer
sponMlits
as sociM wdfare
organization
to
help
them avoid
jeopardifing
eir
mxxem
mu"
and
"activdy
educates section
501(c)(4) organizations
at
muld#c
states in
their
devepmem
about thor
msponlits
under e
tax
w."
[Emphas
added
]
Her scussion does
not describe
an
IRS
inifimive m
"continuM
intbrm"
or
cfively
educa."
RatheL
it shows e IRS is
oassively making
some
formation avMlable
once a
501
(c4)
entiU
is
alady
in exienc
FuheL
her scussn of the
explanatory
mafiMs available to the
puE
and e mmefiMs
themselve a
cons
This leads
to a
pdictabM
sult:
organizations
are
using
InternM Revenue Code Section
501((4)
to
gain
mx
exem
atus
while
engaging
in
paisan piticM campMgnm
"Iqere is
an absurd
mngM
of
vague
and
contradictory
mmeria thin the
IRS
provides. Making
e
problem
woe
is thin e IRS knows the is
a
problem
because oCthe
public
nature of the
actity
but has iled
to address it.
Fir e law.
26
U.S.C.
501(cX4)
stmes m
"Cic
leagues
or
ganiztns
not
oazed
r
o
fit bm
operated exdusdy
r the
promotion
of sodM
wdr or
local aociions of
mnployee
the
membeh
ofwhh is limid to e
emoye
ofa
dignmed
person
or
psons
in
a
paoicul
mupMity
and e
nm
earnings
ofwhh a deved
exduvdy
to chafimMm
educmnal
or
cmion
puos"
e
exem
from taxmion.t
[Enhas added]
MeiamWebst defines
"exclufivdf"

ngle
soM; whoM; unved7
The
it would
appe
the law
pves
entities thin
oane
under Section
5014)
from

aivity
at is not
operated exdufively
r the
pmmn
of social welfare
or an associmn
ofemployeem
1
26 U S.C.
501X#L
Coistent wi e law is
stus to a:
One
part
Intem Ren Sei Plon 7 in i
gdce sm
nsistem M the
law
M:
fyour gition
not
oanid
for
profit
and will be
operated on
to
pmmo
soc
welfe nefit e
commu you
shoed fi Form 1024
apOy
r
cogtn
of
exemption
om feml come
tax under ctn 501
(c)).

[Emphas
added
]
A
p
of ImM R e blk 557 ss
off aMg
wiM t I
uy

d
in
e

t " wel"

d not i
c
r
or

a
di
or c
So
f so
good
- -
until that
same
Publication 557 as:
"However
if
you
submit
pmofMm
yo organition

ganid excvdy

pmme
so
welfare
it can
obin
an
exemn [om
taxer
pu
offi
even
if it
sarticipates
kgMly
in
mine
pc aiviW
on
behalf of
or

oppositn
candas
Th
lg
seems
inconsistent wiM Me h
parts
Publkation 557
(
well

being
ims wiM law and
preceden0
k it
mes
that Me
exemption
it 1 r the
pificM act
funded
by 501(c)(4) rpts.
So IRS
g ss
the law
mm
l l
means
"#mly)
somethi

$fferem m
%
The IRS
web
s
an
emal
ining
k which
ses:
i
lf
iem
a
n
Mm nues
de pi
fifi.
Cl
easa an
d
judgmen
ill
quid.
a
[Emphas added.]
Fr
enougk
4
s

Tury Ruo haptcr

A
S.
i.501(cX41.
v
to:l/www.i.eov/ch;nonm.ofiicle/0..M=
i
56372..ml.
following
factors indicate th an
advocacy
communication
politic campaign activity:

The communation identifies a canda for

pu
office;

The
timing
of the communication cncides with
an
elecral
carnpg

The communication
targe
voters in
a
particular ection;
The communication identifies the candidate
position
on
the
pu polly
issue th the
suect
of the
communication;

The
potn
ofthe candida
on
the
public picy
sue has been raised
as
distingshing
the
candidate
from othem in the
campaign
either in the commucmion ielf
or
in other
pu
communication
and
The communication not
part
of
an
ongog
se6es
ofsubstantial
simil
advocacy
commucatns
by
the
organization
on
the
same
soe.
The
guide
further
lays
out
the factors that indicate when an
advocacy
communication b not
political
campaign activity:
The absence
ofany
one or mo
ofthe factors listed
above;

The communication identifies

spefic kgidion
or a
specific
event
ouide the conol of the
organization
th the
organization hopes
to
fluenc

The
timing
of the communication c&nces with
a
specific
event ode the control ofthe
organization
that the
organization hopes
m
influenc
such
as a
legiive
vote
or
other
major
legislative
action
(for
example
a
hearing
be
a
legiative
committee
on
the issueth is the
sue
of e
communication);
The communation identifies the candidate
solely
as a
government
offi who in
a
position
to act on the
pu polky
issue connexion with the
specific
event
uch
as a
legiator
who
is
ee
to vo on the
leglation);
and

The communication entifies the candidate

soly
the li of
key
or
pdncipal
sponso
ofthe
legislation
thin is the
sue
of the communicatio
is c fromt
appleton
of those factors thin wt is
going
on
the U.S. with certain
501(c)(4) oanizations
the television vesemenm
e
pcampaign
am
Bow
are two
transcripts
of adveisemen
were
put
on
televion
by
501
(c)(4)
organizations.
As
you
can
see
the
suect
of
Adveisement #1 is
a
Democratic
Senator
and the
suect
of Adveisement #2
a
Repuan
Senator. This not a
partisan
issue.
Teon Adveniseme #
I :
s time

Oay:
Who the
bigge supporter
of the Obama
agenda
OHo. hs Sheod
Brown. Brown backed Obams
agenda
a
whopping
95
peseta
ofthe time. He voted r
budget busting
ObamaCare th adds $700 llion W the defich. For Obamas $453 [[ion tax
ineas And
even
supposed cap-andrade
which cou have
co Oo
over 10000
jobs.
Tefi Sheod
Brown
for real
job growth stop spending
and
c the debt.
Support
e
new
majoty agenda

newraaj0tyagenda.org."
s
Compfi
Guide for
Tax-Exempt Oitn
pgs.
5.
3
Teon Advemem #2:
"Be W[ Seet

him
$20000
in
campai
ch
....
Be be voted to
bank CEOs take llious in
tax.yet
funded bonuses.... Dean Hr w a
stobro No wond he voted
again
WI Street
form; again holdi

e
big
banks accotabl Heller
even
vod to

S
Secu
be
e ock mk Dean H he votes Ie be ll wos r Wall
rcet
and afs d r
"
ose

d

many
like
e
clly
fit the the IRS has d out in s
g
r
what nms
a
c cgn acti
e venisemen me
no
ptense

isan;

afly
d
aggvely partisan
commications.
Entities fi under Section
501(c)(4)
ofe Intem Revenue Code and take
advange
of
tax
exemption
benefi should have make
a
chce: er Jose r
exem
status
(and
pay
tax)
or
dimple e
pasan polcai activity.
The IRS needs
immediate
revw e acfivhies of 501
(c)(4)
emhs
engang

runng
partisan poli6c$
ads or
ng
nds Secon 527
organizatns
run such ads The IRS needs to
adse
501(c)(4)
entities ofthe law in ts
area and e facto h will ok m
vwing 501(c)(4)
status and tax
exemion
sues.
Please
provide
me
with the
following
formation
no
later than
August
1

2012:
How
can
the IRS
interpret
the
explicit language
in 26 U.S.C.
501 (cX4)
which
provides
that
510(c)(4)
entities
must
operate "exclusively"
for the
promotion
of social
welfare to
allow
any
tax
exempt partisan political activity by 501(c)(4) organizations?
Since
partisan polc aity
does n meet the IRS deflation
of"promoting
so
welfare "
how
can an
organization
that
partipates
in
any
partisan
polc activity
be
"organized
exclusively

prome
so welfare?"
The
Exempt Organizations
2011
Annu
Repo
and 2012 Work Plan
sms:
"As in
any
election
yea
EO will continue i work to enforce the rus
reling
to
politic campaigns
and
campaign expenditus.
In FY
201
EO will combine what h has arned from
past
projec on
political
actities with
new information
gleaned
from the
redesigned
Form990
to focus i examination
resources on seous
allegations
of
impermissie politic
inrventm
"
a.
Typly
how
long
after
a
comOm
to e IRS does
a
comOiance
review
bin?
Whm
approximate
time does h take m revw the
compnt?
c. How
many persons
are
involved in e
enforcement ofthe
501(c)(4)
roles7
The
Exem Organizations
2011 Annual
Repo
and 2012 We& an states
501(c)(
organizations
"can decide themselves
tax-exem
without
seeking
a
dermination from the

Exempt Organizations
2011 Annual
Repon
and 2012 Work
Plan
pg.

Why
does e [RS flw
501(c)(4) oanizations
lf-dedare?
When an
organization
fdedare as a
501(c)(4) organization
how does the IRS
get
notice and how
long
does take the IRS condu e review
ensure
that at
ganization
has dasfified itself
correct?
5. The IRS
Complian
Guide r
Tax-Exem Orgazations
ss:
"When
a
501(4) (5)
or
(6) organization
mm
tly
the
tn
or ft of dl to

o
e mmucon is considered
lial camign aU.
A
tax-exem organization
tt mes
Mures
r
pl
campaign
fifi shill be
subject
t
in
mamount
equfl
m i net iemt income
e
s s

te amunt
M
n
pcampaign
actions
g
the
How does e IRS
keep
track of these
R
mmics and ensure e
organization
ps
s tax?
Wh
is t
reason for e
ruiment
that e tax ll based
on
"whichever is les
bwn i t iem iome r e

or the
gregate
amount
ex
on
poll camp
fit

Wh
tax world

oanization
have m
y
if it
sMs
all income
on
lificfl
Mvefi herere
has NO n investmem
comO?
6. M Lemers leer
quotes
the
IRS
webpage
on Social Welfare
Organizations:
"The
promotion
of social welfare does
not
include direct
or
indirect
participation
or
tervention
politick campaigns
on behaofor in
oppofifion
m
any
candate r
pu
offic
Howeve
a
section
501(c)(4)
soal welfare
organization may engage

some
pofiticfl acfifi so
long
as
that is not i
primary acti.
Howeve
any expenditure
it
mak r
political
actifies
may
be
suect
tax under section
52" [Emphas
adde
]
a. Whm e
statuto
bas the
lma
that fliows
501 organizations

enga

some
polificfl
acfivit
How does t IRS
kp
track ofe
pcfl
acfives and
ensure
that the
orgization
ps
the t under section
52?
% her
July
13
let
M Lemer
states
m e IRS flso addresses the issue
ofpoliticfl
acfifies
e Forms 990 and 990-EZ.
Are Forms 990 and 990-F..Z made
public7
If
so
where
can
they
be accessed7
Intemfl Revenue Service Publication 557 states
that
ira
501(c)(4) entity
can
"submR
proof
that
Ohe] organization
is
organized exclusively
to
promote
social
welfare
k can
obtain
an
t0
11
ComOi
Guide for
Taem Orgilions
p.
3.
5
exemion
even
if it
paaicipates gal
in some
pc aivity
on behalf of or
in
oppotn
m candid
rpu
office.
"2
Have Re
llowing 501(c)O) organizations applied
r;
and if
so b)
received Re
defibed
exemption
r
pE activiu
om the IRS?
9. Have
you
reminded 501
(c)(4)s
which
puidy
seem to
be
operating
in the
paaisan political
ana as to the cto
you
will consider in
determing
wheer
they
are
engaging
in
paisan politic activity?
IfnoL
why
n?
I have enclod
a
copy
of Ms. Lems leben If
you
have
any
queion please
conmo
me
or
have
your
affcomaO
Kaye
Meier of
my
aff
kaye_meier@levimsenate.gov
or
202/224-9110.
Agn
is
ue
m I cdve
your
answe
by Augu
10
2012.
cc: D Tom Cobum
Ms. Lois G. Lerner
Cad Len
Chrm
Permanent Subcommiee
on
vemigations
Puafion 557
(Re
October
2011L
p
51o
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON
D C. 20224
DEPUTY COMMONER
Augu
24
2012
The HonoraNe Cad Levin
Chairman
Permanent SubcommAee on
Investigations
Senate Commee
on
Homeland
Security
and Governme Affai
United States Senate
Washington
D.C. 20515
Dear Senator Levin:
I
am
responding
to
your
leer to Commoner Shulman dated
July
27 2012
requesting
addon information about section
501((4) oanation&
This
response
suppmes
the
previous responses
dated June
4
2012 and
July
13 2012
and
addresses the addon
questions
ised in
your
recent teer.
Queson
1. How can the iRS
interpret
the
explicit language
in 26 U.S.C.
501(c)(4)
which
provides
that
510(c)(4)
entices must
operate "exclusively"
for
the
promoon
of social
welfare
to allow
any
tax
exempt paisan political acvity
by 501(c)(4) organizaons?
We no that the cuent
gulation
has been in
place
for
over
50
yea:
Mooveg
unlike Internal Revenue Code secon
501((3)
which
specifica! pvides
that
oanations
may
"n
padpe
in or
inwene in...
any po@cal campaign
on
behaff of
(or
in
opposon to)
any
candate for
public oce.
seion
501()
does
not conin
a
specific
rule
or limition on
pcal campaign
ieenon
by
social
wel
oanation&
Question 2. Since
paisan polical
acuity
does not meet the IRS definion of
"promong
social
welre "
how can an
organaon
that
paicipates
in
any
paisan political activity
be
"organed exclusively
to
promote
social wre?"
As ated
above
long anding Tasu Regulations
have
intereted "exdusely"
as
used in seGion
501(c)(4)
to mean
pdmadl Treasu Regulation 1.501((4)-
1(a)(2) promuated
in
1959 pdes:
"An
oanation
is
operad exduse
for
the
promotion
of social welfare ff
primad engaged
in
promoting
the common
good
and
genel
wel of the
people
of the
communiW." Applying
this
Tasu
Regation
Revenue
Ruling
81-95
1981-1 C.B.
332 concluded
that "an
oanation
may car
on wful
polc
as and remain
exempt
under secon
501((4)
as
long
as
it is
primarily engaged
in actives that
pmote
social weffa."
2
Question 3. The
Exempt Organations
2011 Annual
Repo
and 2012 Work Plan
states: "As in
any
elecon
yea
EO will continue its work enforce the rules
relating
to
polical campgns
and
campaign expendures
in FY
2012
EO will
combine what it has learned om
past projects
on
pc
acvies with
new
informaon
gleaned
om the
redegned
Form 990 to focus its examinaon
resoues on serous
ailegaons
of
impermsib polical
intervenon."
a.
Typically
how
long
aer
a
complaint
to the IRS does
a
compliance
review
begin?
b. What
approma
time does it
ke to review the
comment?
The IRS
routiny
receives examinaon referrals from
a
vadety
of
sources
including
the
public media
Membemof
Congress
or
their
staff
and has
a
long standing
process
for
handling
refea
so that
they
receive
an
impaal independent
review
from
career
empbyees.
When the
IRS receives
a
refeal about a
paRicur
organation
is
prompt
forwaed to the Csscaon unit of the
Exempt
Organizatns (EO)
Examinaon office in
Dallas
Texas. Pumuant to IRM
4.75.5.4(1)
within 30
days
of
receMng
the
referral
the Csscaon staff
begins
evaluang
whether the referral has examination
potential
should be conMdered in
a
future
year
needs addional information to make
a
decision
or
falls within the
categories
of maem that
are refeed for EO Refeal Commiee review.

Ahough
IRM
4.75.5.4(1)
sets
a
goal
of 90
days
to
complete
renews of
refea
the time it
takes to
fully
review a
pacur
referral
vades depending
on such factors
as
the
issues involved and the
availabily
of relevant informaon
(i.e. organation
Forms
990
eernal
sources
such
as media
repoRs
internet
searches etc.).
In those
cases
in which the IRS needs addonal information about the
sue
of
a
real that is not
adily
aviaN&
such
as i Form 990 th has not been filed
yet
for the tax
year
at
issue
Csscaon
may suspend dassiing
the referl and
places
it in the
follow-up catego
until the addon information is avmN& Once
the addon information is
received reviewed
and
suppos
the refeal
being
dassed
as
having
examinaon
potential
the refert is sent to
unasMgned
invenry
ungl a revenue
agent
wi the
appropriate
level of
experience
for the
issues involved in the maer is avb to condu
an
examination.
Once in
veo
the
are numerous faom that
can
affeG how
long
it takes to
complete
the examinaon
process.
While it is difficu to
pdiG
how
long any single
examinaon will
take
for
cases closed in FY
2011
the
average
time it took to close
a case was
210
days.
c.
How
many persons
are involved in the enforcement of the
501(c)(4)
rules?

Pursuant IRM
47&5(4)
cases forwarded for Commee review include those:
contng
evidence or
gations
of
potical
or
lobbying actives; invog
sensve information submied
by
an elected offici or a Member of
Congress (or Congresonal staff);
or
vng
other factors
indating
that renew
by
the EO Refeal Commiee would be desaNe for
reasons
of fairness or
integrity.
The
Exem Oanizaons (EO)
nion is
sponb
Dr the eomeme
section
501() u@
roles and
gutations
as
well
as
those
appcab
to all
other
pes

exem oanations.
For FY
2011
the total number of EO staff
was
889. Other than the 14
empbyees
in
the Directos
office
the three EO offices are staffed
as
follows:
Rulings
and
Agemes (R &A
whh includes EO Determinaons and EO
Technical ensues
oanations
meet
ga! requimes dudng
the
applation
or
private
leer
ruling
process
and
rough guidance.
In FY
2011
R&A
had 332
empbyees.
EO Examinaons
(Exam)
is
comprised
of vadous
uni.
including
the
Clasficaon
unit
e EO
Complnce
Unit
and the Renew of
Operations
un. Exam
develops processes
to
enfify
areas of
noncompliance develops
coecte
strategs
and cool ares with other EO funions to
ensure
com#nce
so that
oanations
maintain their
exempt
status.
In FY
2011
Exam had 531
empbyees.
EO Cuomer Educaon and Oach
(CE&O) cooates
ass and
suppoRs
the
devebpme
of educaonal mateda and oach effoRs for
oarlations
to undetand ther
responbes
under e tax law. In
FY
2011
CE&O had
a
aff of 12
empyees.
The
employees
in ese Nncl:ions
are
sponsib
for the
regation
of all
Wpes
of
taexempt oanation& including
secon
501(c)(4) oanations.
Queson & The
Exempt OanaSons
2011 Annual
Repo
and 2012 Work Plan
stes that
501(c)(4) organizations
"can decla emsees
tax4xempt
wiout
seeking
a derminaSon #ore e IRS. EO will ew
organaons
to
ensu
that
they
have classified emsees
corctly
and that
they
a
comping
wh
apab
rules
a.
Why
does the IRS allow
501(c4) organizaons
to s#declare?
The Internal Revenue Code
express prodes
that ceRain
tax-exempt
oan
must
give
notice to the
IRS
by filing
an
applation
for
exemption
in oer to claim
tax-exempt
status. The Internal Revenue Code does not
require
an
oanation
to
prode
nonce to the IRS to be treated as
described in secon
501(c)(4). By contrast
for
examp
Section 508
generai reqres
an
oanizat#n
to
proNde
notice to the IRS before it will be treated
as
described in
seion
501((3).
When an
organaon
"self decs"
as a
501(c)(4) organizaon
how does
the IRS
get
nonce and how
long
does ke the IRS to conduct the view to
ensure
that the
oanaon
has classified ielf
cormcy?
th her x
em oo oo claiming

em
under section
501(c)(4) general
are
required
to file
a
Form
9902
on an
annual
basis.
3
The
Exempt
Organations
office of the IRS is
sponb
for the
compliance
of
over
one
million
organations
with dNerse
goals
and
purpose&
In older to ensure the
highest degree
of
com#nce
with tax taw while
woing
wh limed
resources
EO
maiains a
robu and multi4aceted
post-filing complnce
program
that conduc
renews of
exempt organations
in vadous
ways
such as:
Renew of
Operations
views:
Because a
ROO view is not an
aud
the ROO cames o Ks
post-filing com#nce
wo whout
co.acting xpaye.
Inead
the ROO looks at
an
oamzation
Form
99& webM
and other
publicly
avlab iormation to see what is
doing
and whether continues to be
oazed
and
operated
for ta
exem puoses.
If
appea
fm
a
ROO ew that an
oanation
may
n be
compliant
the
organization
is refeed for examinn.
Commence
checks: In
a
complnce
check
IRS
cons
taxpayem by
leer when
we
dcover
an
appant
eor on a
xpayeKs
return
or
wish to
obta fudher information or darcatbn. A
com#nce
check is an
effident and effeNe
way
to maiain
a
com#nce presence
whout an
examination. We also use
compliance
check
queionnaires
to
study
specc pas
of e
taexempt community
or
specc
cross-seor
praices.
Examinations:
Examinns
ao known as
auds
are ahofized under
Seion 7602 of the Code. For
exem oanations
an examination
dermines
an
oanions
coinued
qualcn
for
exem
atus.
We condu #o diffe
pes
d examinations:
correspondence
and
field.
Because
the I RS cannot renew
eve
exiing organation
in
every
tax
year
we
use the renew
technues
described above to mamize
our
coverage
of the tax
exempt
seor in bo
our
general
program
wo and
our
proje
wo. The
proje
work
which resus from
our
strateg pnning process
is
designed
to
focus
on
specc
areas
affecting
the EO sector and to dire
more
effectNe
use of
our resources in e effo to
strengthen compance
and
improve
tax
administratio Described in the EO 2012Wo
Plan
the seions
501(c)(4) (5)
and
(6)
Self-Decrem
one such
project.
Th
proje
focuses
on
organations
that hold themsves out as
being tax-exempt
rather an
seeking
IRS
recognon
of their
exempt
status.
Question 5. The IRS
Compliance
Guide for
TaExempt Organations
states:
=
Rerence e Form 990 inudes e entire
applab
Form 9g0-sedes annual inrmation
returns
such
as Forms
99& 990-E 990-PF
and 990-N
e-postal.

Treas.
Reg. 1.6033-11).
"When a
501)(4) 5)
or
(6) orgazaons
communicaon
exicity
advocas
the election
or deatof an
dividu to
public office
the communicaon
conded
poicalcampaign activity.
A
taxxempt organization
that makes
expense s
for
pcal campaign
activities shall be
suect
to tax in
an amount
equal
to i net
investment income for the
year
or
the
aggRgate
amount
expended
on
polical campaign
acvies
dung
the
year
whichever
is
less."
a. How does the IRS
keep
ack of these
explicit
communaons and
ensure that
the
organization
pays
this tax?
Taexem oanations ing
Forms 990
or
990-EZ
are
quid
to
poR pc
activies.
Oanations
that
engage
in dire
or
indire
polcal campaign
acvies
are
also
quired
to
compile
Schedule C of Form 990
or
990-EZ.
Oanns
sue
to x under seion
527(0
a
quid
to
comply
with the
uto poRing
and
payme
rules. The IRS ao receives rea
regaling
such aives from
a
vady
of
sources
that
a
handled
through
an
impa independent
view. See
the
sponse
to
queion
3 for the
description
on the IRS real
pcess.
What is the
reason fo the
quiRment
that the tax will be based on
"whichever is less" between i net investment income for the
year
or the
aggga
amount
expended
on
political campaign
acties?
The statute under section
527(0 explicitly
states that
a
50t(c) organation
is
sue
to s tax based
on
"an amount
equal
to the lesser of-
(A)
the net investment income
of such
organation
for the taxable
yea
or
(B)
the
aggregate
amount
expended
dudng
the taxable
year
for such
an
exempt
function."
c.
What tax would
an
organization
have to
pay
if it
spends
a# i income on
political adveisi# #hefo
has NO net investment
income)?
Under the atute ced
above an
oanation
that othepise mee the
reqremes
of seion
501(c))
social welfa
tax-exempt
status
which
spends
all
i income
on
political adveng
and has
no net inveme income would not
owe
any
x under seion
527(0.
It
may
however
through
such
spending (and
depending
on
the herwise
ap#ab
fas of the
case)
no
longer qualiN
as an
oanation
that is
taexempt
under section 501
(c)(4).
Question 6. Ms. LerneCs leer
quotes
the IRS
webpage
on
Socl Welkin
Organizaons:
"The
promotion
of social welkin does not include direct or indirect
paicipaon
or inwenton in
political campaigns
on behalf of or
in
oppositn
to
any
candidate for
public
office.
Howeve
a secon 501
((
social welre
organation may engage
in
some
pcai activies
so
long
as
that is not i
p#ma acti. Howeve
any
expendure
it makes for
pc
acStes
may
be
suect
to x under section
527(f). [Emphas adde]
a.
What is the
story
basis of the
language
mat allows 501
(c)(4) organizaons
to
engage
in
some
political
acvi6es?
Please
see
responses
to
questions
1 and
2
above.
b. How does the IRS
keep
#ack of these
polical
acvi6es and ensure
that the
organation
pays
the x under secSon
527(8?
Seion
501(@) oanations filing
Forms 990
or
990-EZ
are
quid
to
poR
p@cal
acflvies.
Oanations
that
engage
in direG
or
indireG
polical campaign
actives
are also
quid
to
complete
Schedule C of Form 990 or 990-EZ.
Oanations sueG
to tax under seGion
527(0
are
requid
to
comply
wh the
stu poRing
and
payment
rules. The IRS also ceives rear Is
gaing
such acflvies from a
vade
of
souses
that
are
handled
though
an
impaRial
independe
view. See the
response
to
quesOon
3 for the
description
on the IRS
feal
process.
Ques6on
7. in her
July
13
lee
Ms. Lerner ss that the IRS also addresses
the issue of
polical
acvi6es in me Forms 990 and 990-EZ.
Are Forms 990 and 990-EZ made
public?
If
so
where
can
mey
be accessed?
Yes
Forms 990 and 990-EZ
are
made
public. Taexempt oanations
are
required
to make their returns
widely
available for
public
inspection
Oanations
are
required
to allow the
public
to
inspeG
the Forms
990 990-EZ 990-N
and 990-PF
they
have filed
wh the IRS for their three mo recent tax
yea.
s
Exempt oanations
also
are
required
to
provide copies
of these informaon returns when
requeed
or
make them
available on the
Intemet
The annual information returns also
are
avb from the
IRS
7
as
well
as
from
thi-paRy
sources
that
po
them on their webses.
QuesSon 8. internal Revenue Sewices Publica6on 557 stes
tha
if
a
501(c)(4)
entry
can
"submit
proof
that
#h organizaon
is
organized exclusively
to
pmmo
social
wel
it
can
obin
an
exemp6on
even
if it
pacipes legally
in
some
political aivi
on behalf of
or
in
opposi6on
to candidas for
public
oce."
Have the
following 501 oanations a) applied
for;
and if
so b)
received
the described
exemption
for
political acvity
#ore the IRS?
4
IRC
6104(d);
Treas.
Reg. 301.6104(d)-1
and -2.

IRC
6104(d)(2);
Tas.
Reg. 301.6104(dl(a).
6
IRC
6104(d)(1);
Treas.
Reg. 301.6104(d2.
7
IRC
6104(b);
Treas.
Reg. 301.6104(b)-1.
Due to ddosu
law& an
oanation
mu
subm Form
4506-A Reque#
r Public
spection
or
Copy
of
Exempt
or
Poticd
Organation
IRS
Form
the IRS oce indicted on
the rm
or
accompanng
inGns.
Inl
to
crify
sedan
501(c)(4) oanations
do not receive
"exemption
r
polcal adwity
Rathe
oanbns
are
recognized
under sedion
50!()
as
exem
when
they
demons#e that
they plan
to be
pdmadly engaged
in
acties that
pmmo
social welr& If
they
meet that
anda
the fad that
they
engage
in other aMes th do not
pmme
social
wel
such
as
political
campaign iemention
will not
pclude mcognon
of their
exem
status.
Whher
an
oanation
mes the
u
and
gulo quimes
of secon
501(c)(4) depends upon
all of the fads and
mumances
and no one
fador is
determinative.
As discussed in
our
response
to
you
dated June
4 2012
secon 6103 of the
In real Revenue Code
prohibs
the disclosure of informatbn about
specific
taxpaye
unless the ddosure is authorized
by
some
proon
in the Internal
Revenue Code. The IRS cannot
legally
disclose wheer the
oanations
on
your
list have
applied
for tax
exemption (unless
and until such
application
is
approved).
Seion
6!04(a)
of the Code
permi publ
ddosure of
an
applation
for
recognon
of tax
exempt
atus
only
aer the
oanation
has been
recogned
as
exempt.
Seamhing
the
names
exadly
as
prodded
our
recos show that e
following
oanations
have been
cogned by
the IRS
as tax
exempt
under sectn
Americans For
Psperity
Ameran Future Fund
60 Plus Assoaon
Patriot
MofiW
USA
Cizens r
a
WoAing
America Inc.
With
resped
to the other
oanations
for which
you
inquired
we
will be able to
determine if
they
have been
recogned by
the IRS
as
tax-exempt
with addon
information
such as an
address
or
EIN
that
specifical
idenfies the
oanation. Organations
often have similar
names or
maintain
mulple
chapters
with vafiaons of the
same name. With
respect
to
many
of the other
oanations
you
idenfied numerous
organations
in
our
records have
very
milar names. IRS aff can work wh
your
staff in
entifying
the
specc
organafions
for which
you
are
interested. IRS staff is also avmb to
assist
your
staff to
navigate
searchable databases on the IRS
public
webse As
preouy discussed
information on
organations
with
ap#ations currently
pending legally
cannot be
proved
unless and until the
ap#ation
is
approved.
Please note that
organations
that hold themseNes out
as
tax-exempt
whout
IRS
recognon
and
organations
that have
pending applations
for
recognon
are
required
to file annual returnslnoces.
Queson 9. Have
you
reminded
50t(c)(4)s
which
publicly
seem
to be
operang
in
theaan polcal
arena as to the factors
you
will consider in
determining
whether
they
are
engaging
in
paisan political acvity?
if
not
why
not?
As described in the
July 13
2012
response
the IRS takes several
steps
to
continu
educate
oanaons
of the
requimen
under the tax law and
inform them of their
sponbi!es
to avoid
opaing
their
taexempt
status.
We believe these
sps
ensure
the IRS adminte the naons tax laws in
a
fair
and
impaal
manner.
I
hope
this inrmation is
helpful.
If
you
have
questions please
contact me or
have
your
staff contact Catherine Barre at
(202)
622-3720.
Sincerely
Steven T. Miller
Depu
CommMoner
for Seices and Eoeme
September 27
2012
VIA U.S. MAIL &EMA
athne.M.Barre@i.go
The HonomNe
Douglas
H. Shulman
Commisoner
lnmM Revenue Service
11 l 1 Constitutn
Avenue
N.W.
Washington
D.C. 20224
I
RByEExeEcultiVveEsDecretariat
at12:36
pm Sep
2
20121
Dear CmnmisNoner Shulman:
[
appmdae
e
SeNemb
14
2012
response
by
Steven T.
Miller
Depmy
Commison r
Serees and
Enforcement
to
lny
letter of
Augu
31
2012.
As a
follow-up
to
leReg
please prode
me
with the
*bllowing:
1.
Quen
#15
on
the IRS
Applation
for
RecogNfion
of
Exemption
Under Sen
501(
states:
"Has Ne
orgmation spent
or
does
plan
to
spend may money attemptg
to
fluence the
se
nomm election
or
appotment
of
any person
m
any
Feder am
or
cM
punic
office to an
office in
a
pdNcN organization?
lf"Ye"
exNn
in detail and li e
amounts
spent
or to be
spent
in each case."
m For the
following organizations
please
forward
copies
office
responses
to
Question
#15:
3)
Americans tbr
Prosperity
4)
Patriot
MorRy
USA
b. Please
provide
with each
answer the
explanatory
"detaiP and the lists of the "mnounts
spent
or to be
spent
in each case" referred to in
Question
#15.
In e IRS
sponse
of
August
24 2012
Mr. Miler stmed thin
an address wod be needed in
order r the IRS to tell
us
whether
or not an
organization
has been
recogtzed by
e IRS
as
rex-exempt.
I have
prodded
address lbrmation
on several
organations bdow
as
wall
as
verbatim emms fiom ese
orgaNzations
webNms
mgNng
thek
501(c4)
stores.
Americans for
PmspiU
2111 Wilson Blvd.
Sure 350
Arlington
VA 22202
............................................................
Pfi
Mori&
USA 1
.........................
717 Rhode Island
.....
Avenue
NW
WasNngton
DC
20036
"Amefns r
Pib
is
a
501
{c) ) emi
under the IRS codm
ConNbm
or
gifts
m
Amr
fi
e n x ductibleY
"Patriot
Mi"
USA is
a
501(c){4)
N the
Nima
purpose
of
encourang
a
discussi
ofonom issues in fle
Unhed ates."
For
your
rmation
I
n
endoNng
a
copy my
mce
Congressnal
Record emem
regarding
e temM Revenue Sce and s tamem of
501organizationm
If
you
have
any
question please
comact
me
or
have
your
aff con
Kaye
Meier of
my
staff a
kaye_mei@kn.sene.gov
or 20224110. Nease
prode
1hN inrmation
by
October
9
2012.
Thmk
you.
Sie
C Lev
nnan
Pennana Scommiee
on
Invesfigons
Endo
Dr Tom Cobum
RMng
Memb
Permem Sukommittee on
gations
Mr. Sven T. Mi
Depu
Commission r Se d Entbrcement
mal Rue Sve
$6428 CONGRESONAL RECORD NATE
Seplember 1
20t2
WMe I
uperv
(.he motive lmhlnd th
b:g
latlon and believe ensuing
the
salty
of
stat and loc courthouses a noble
gel
1
belivve he
lsponslbitY
to addrea this
issue lies with m stae and local
govern-
ments l do not bive the deral
govern-
meat hms the
authomty
under tile CoImtltu-
on to
provide Lralnmg tr local and state
law enforcement or to
pvtde security
equipment
Vo state and local ourthouses at
the dml
govsrnment
expense.
Further. 1
b!leve the
training program
this hill au-
thozes
duplicates exiting federal
traleing
program
Firs S. 2076 auOmzes the Dector of the
State Justice Institute
(8JD
to
carry
out "
trrining
and techual astauce
pram
designed to teach
emoyees
of Stalin Ical.
and tribal law enrcement
agencies
how to
amte
and
respond to violent encounters
cluing
the course of their dut es invading
duties
relating
to
smurity
at State
county
and trial eom-thouses " TI
rpose
o SJI 1
to further the
devopmen
ned
adoption
of
improved judicial admlntraMon in state
courts in the United Svaes which is net a
federal sponsibity under the Constitu-
tion. States
are reponsible
for the adminia-
traon o[ their courts. Adding an addlonal
allowable
purpose
to SJI meIly brolens
thF eurtheUr.nConsitune lven
though S. 2076 does
nor
I.
each of this
ageneypr .ovid
e
any
addionM
funng for SJI the
agency
could use the authoHOon of addional re-
spenaibities
aa a ba for
requesting
future
appropriations
om Congret s.
Second the SJI
training plgram
author-
lzed in this biIl
poteaally duplicates
exsv-
ins gtaledra alnd lootalraminlgw prgrale nforccmt.vaflablTh
e
e
lt?
for Judicial
Secu rty
Ofllce of Prot ecve ln-
tligenc
Shares threat information with
state and local law enfomement agonies and
providefo Srcementrainho lgfficettOwhS
otat;ra
dead lOCac lourbhousl caw
en-
secumty. Alo providea guidance and u]>
fmrt
to dtct offices and Judicml
Secuy
[nspecto[
(JS1s} cemtucng high
threat
pro-
ceedings
and
protecve reslmes
2. U.S. Marslml Smw*ce National Center
lprrovtdesJ aUdiciahtmonS theeUritY Fcwghtr
iPmntngprograP mrgrnfo;r
state
local and lnenlaoual "*court secu.
ty managc="
3. FBIs Unilorm Crime
Reperng (UCR)
division and Law Enfold:smear Officers
KHd and Assaulted {LEOKA) progrn
UCR and LEOKA collect data on law enforcs-
ment orficei who have been killed or an-
saulted in the line vt" duty.
The FBt then
conducts LEOKA
tralnu pngrams
tr slate
and local law enforeemen
personn
based
on this dat
4 FB!s Law Enforcement Training
for
Salty
and Surv (LETSS}
prelim;
Trains FBI
police officei
and inta mOnal
w enlbement
personnel
i stnwhal tech-
nique
5 FBI Field Police Tinlng
proclaim;
In-
eludes firearm training
lot state and local
partners.
6 FBI Law Enforcement Execve Dev-
opmen
Assoclaon
program;
Trains heads
of stat and local law enforcement agencies
with between 50 and 5
personnel.
7. Advanced LAW Enforcement RaMd Re-
sns Training (ALERRT}
pcogram:
Trains
officers tn dealing
wh violent tatiom.
lnu(hng
those
they
face outside of but-
rags
nd in urtn
uetng
Iucludes core
cses such
a ;Basic Acve hootcr Level
1 d 1L" "TerroAsm Resnse TacsAd*
vanct PoI " "Combat RifleT" "Combat
and "DOD Sniped Course."
8 Communivy
Oriented
Policng Services
pmgrms (COPS
%
Depm%ment
ef Hero.and
Securitys
Fed-
eral Law Eal:ement
Training
Center
(FLETC)
programs;
and The Suw Shoo
ing Tralng Program (8STP) under FLETC
an eigllt and a half day training prugm
that teaches law enrcement olfice iLEOsl
"ho to
empty
sever
types
of
weapon sy>
ten und in most
polme
arna {m erv-
i{e handgun shotgml
suhmaene
g*m
and
e). The LEes will
devep marksmmhip
skills as well as all
pertinent gun haning
5kills
(drawing
from the hMuteL tload im-
rapl yet conoHed
pace. UIMmatM
the
SS2
presses
the LEOs to survive a deadly
foix:e cononton
through omnpent
de :i-
sign making an4 confident
gun hmng
skills" The Rcacve
Shooting Intructor
Tranig Preston (RSITP) ndcr FLE
tins law enl)rt.:emlL istructors in han-
dling
thor fire.ms to survive
hhess
ttons
10 Buau of
Alcohol Tobacco aAd Fire-
ar Naonal Firearms xaminer
Academy
promms
The training
progrn
includes
traing
that enaes tate and local law en-
fmx:ement officers to enD
aned
gunnum
and intrude thor
margln
of
:l y."
Fly this hill
gives
sd e and local
courthouses
pnoty
in obtaining exces d-
er security
equipment
)1 Roe om tte
cis. The courthouse would only y
the
meat
purchased by
vhe der govelment-.
and thereby the Ameran
taxpaFer--shoold
be utilized
by
the deral
governmvn
i at
all
pessie.
II not Ddofl
agonies may
have to
pulx:e equipment they
otherwise
could have Obtalned v ee bat for le Late
aim
localgovennen taking
it
Ang
sLatea d localtle the
aly
to obtain
this
equipment
r flee
may
lead to situs-
Hens where they acquire
iho equtpnmnt sim-
!:.2)alse
iL I ee not becau e they tru y
Artie I Section 8 of the OonstuMon
enumerates e limited
power
of
Congre
and nowhere are we tasked wtth funding or
hecomlng
levered with State and local court
secuNty I
iirmly
believe this issue the
re-
PoOv:;;t; .i:;:;i $;:; Ts
althe reds:"
les
aCttl iis
rea. we hould evMuate urr.nt
PrO-
gram
determine
any
Meeds that
may
exg
and
prze
those needs for
funding by
cup
tins
orn the deral
budget programs
frltught wir.tl wast aud. abase and
duph
catkin
Congress
must start
making tough
deci-
gram ther than
continuing
to kk tim can
down the road lear rig our
children mM
grandehildrmi
t clean
up
he incus. It ia i
responMbM Ibr Concuss to jeolxr(llze tile fu-
ture standard of
living
f our children
by
tom.wing om ture
generations.
The U.S
naonM debt is new over $16 iln. at
means over 0 000 in debt for each man
woman and chiM in the Uned S A
yea
resteagO bhe natnalto ondeht
waSspent
lng.$1t
trll
Ileal....ledge
\VaM
lagton adds hiliion to the national dolt
8%. Wc cnnov connue to
support
deral
funfli
for
preglms
and iniaves that are
not doral
responlies am dictaed
by
our CostuMom Otbelwe we wily never
get o" scal house in oe
Slnearely.
TOM A COBUth. M.D
U.& &hater
INTERNAL REVENUE SERVICE AND
5R4)
ORGANIZATIONS
Mr. LEVIN. Mr.
Pred or
p-
rcsentaive rm of
government
is
based on the
plmise
that citizens who
vote in our ections are informed
about who is
seeking 0 influence elec-
tions
Sadly
we ten hue to see mt
lnlormttion obscured
by arganizaons
who are misusing our tax cod Ibr
pc*
litical
gain.
AS
wc have discussed on this floor
many
times the
Supreme
Ctmrt
opened
oar campaign
finance
system
o a or-
rent of unlnlted and secret speciatn-
forest
money
in Citms United. But
even e Suoreme Court acknowledged
in CiMzens UniVed that disclosure is
important:
"[PJrOmpt
dtscio:nre of
expenditures c
prode
Oiareholders and Lns with !.he
intkwmatn needed t hold
corporaMon
and
elected hcia accountable l:or heir
poi-
on aud
uupporter
ShareRde an de
Lorraine whether it sir corloraon pelham
speech
advances the
cerporaonu
interest in
mains profits and zens cm see whether
ected olfls are in the
pocket
of so-
called
moneyed interests) Citenu Umed v.
FEC 30 S. CL 876 6 0L
Yet.
according
to the Center fi)r Re-
sponsive
PoliCes. as of
Seember 13.
spending
on
politica advertting by
groups
that either do no disclose or
only put ally
dispose Oeir donors
has incrotsed fou>fold from $32 mil-
lion in fle 2008 election to more han
$135 million at he same
oint
in the
current election
These
groups
are exploing our tax
code
by organizing
as
tax-exempt
"so-
cial welfare"
creeps
and then
spendlng
ens of millions of undisclosed doliar
on polical campaign
The InternM Revmme Service lIKe)--
the
organizaon
that
grans
these
groups
mir
tax-ecmp
statu in hc
first
place.-.should
be
prctecng
he
vobilig ubli hom these
groups
that
pret:ond to be
acting
in the social wel-
fare bu are instead engaging in
par-
tisan
pMiic
2m law in his area is clear. 26
U S.C.
501c4)
states at "Civic
leagues or mNanizaons
no
organed
br
rofit
but
operated excluvely
fl)r
fle
promotion
of social weliare or
local assoeiaons of
employees
the
membership
o hi is limited to the
einployets
of a designated peraon or
persons
in
particular municipality.
and the net eamdngs of which are
de-
voted exclusively to charAabl edu
caon; or recreationM
purposes" are
exempt
from taxation The wor "ex-
clusively" is in he Lax code for a rea-
son.
Congre
didnt
say partialyd

or
"primaly.

We said bha these

groups
had to be
operated "xchmively-

he
promotion
or social welfarm lle
IRS. in wring the
imemenng Pecu-
lations to the statute said tha "An
organizaon i80[Olated exclusivy lbr
Oe
p:omotion uf social welfare g it is
primarily egaged
in
promong
in
some
way
the common good and
gen-
eral wfar"
[emphasis added] By
sub-
sMtung
bho word
"primarily"
in the
regulaon wi he word "ecluveiy"
the statute the IRS
ossenally rc-
dened wlla Congress
required
a ocia]
welti
organlzaon
to be.
Mr. PreValent
I aked he IS Ior an
explanation a o
why they
have not
September 19
2012
responded
to the
increasing growth
of
groups
that
prade as social welre
groups
but
re obously organized
for
poHclly parsan purposes.
In
my
lette
I asked the IRS how
they
inter-
pret
the
exploit language
in the tax
code which
says
tlt enes must
op-
erate
"exclusivelY"
for the
promoon
of soci
wear
to low
ally
kX ex-
That the regulatn
has been in dace
r over 50
years.
Tat is not
an
excuse
if new abuses reqre a review of an
IRS
regultion
I ako asked the IRS ff
they are rule
flllg their enforcement funcon
by
noln these
groups
that
rs
oboe
ously engaged primarily
in
pocal
ac-
Uity that
they are aon of the
law.
Again
he IRS
response
was
lnado
eua. Durln
the
past 6 month ac.
cordg to the US tteL no notes
of
proposed
or final revocation hve been
iued to section 5 orgniza-
on None. So even Under the "p-
mrfly" test the IRS is not enforcing
the law in the face of the avanchs of
odsncs that our laws are being
flou
ed.
The law is cle. Even the watered-
down IRS
regulation
is sar. It is time
that the IR enforces the
law or at
]east i own
rogation.
I k unanimous onsent that the
correspondence
with the be
printed
the COaD.
Thee
being no oecon the mate-
was ordered to be
pned
in the
lcogD as foows:
U.
ENATE. 0MMrIi O HOME-
Wngono O. July 27. L
Hon. Dooua H. 8mMA.
Whon O
DAg COMMSO$R SHUbMAN: I am wtin

exe my
concern about how the I in-
terpre
the law
kaLing the exnt to
wch 4) "es welfare"
oanlza-
tlons can
engage

partisan poHcal
acw
t.
The
Jy 1
rospOzme by
LOlS O.
Lerfl. Dlrecr of Exempt 0rganizaons.
my
June 13 letr waS
ttusasfacry.
e
respons
Ms. Lerner sted that
le IRS tak
eps

cuntually
inform
oaniastions o the
responeib
aS .
ol welfare
organizaon

help
em avid
JeopardJg their
xxempt stus." nd
aboutoneatp:/ hl)(dveOloranae

respotles under e tax

law."
nphas added.]
inlttiVeve
ucate.
Her
dlscmmtnt
"cntinuRas
des
ntit
shows the
infrmdascbe
runl]tS"acIRSl
paastvy making
me fornzaon avlo
ae on a
14) enty
already

ex-
tence Yure
her
dlumln of the exo
plunary
mas available to e pul
and the maa emaslvee e onusin.
Fhis leads a
predo
resul organize.
ason
l(c)(/) ga
are

Inrtax
exemptRevnuestue
while
Cde Soc-
enasln

lrtisan pollMc campais=s.

The
--
aurd
tng ot
vagus
and con-
rlicry maHak t!mt the IRS
provides.
Mkin e pblem worse Is that
the ltS
knows e k a
pmem
because the
pu
Hc natm-e of the
ao but b fled to
CONGRESSIONAL ICORD-- $NATE
S9
Flm
the
U.
Olic
stes that "c
lonu
or
oanlzons
not
organized
for
of
ploy
e
membeh
of wch Is
ld e
ploye
a
dd r-
son or
a
C mclt
d the net
e
of wl devoted ex-
deles
"cluvy
latin
(PhP"d
le.
sole;exemptMelWeterfmmwhole;
"
und erefo. It woul
ap
at
e law
preven
enes that
oae der
Secon l)(4)om
any aoty
tt not
orad exclusively r the
Pmotion s
welfe or an atton
emoyee
nsisnt wi e w Is 1 ietr
om the S
den -exempt
stus a
o
ld e Naon
Policy Fom. e
tr dls at the S
brad l deni
on
e ft t e
oon w en-
ter
" p] scUty
do not
omo
sil wel defied stion
c)(4 d tt e pant "nefl
selt indivlds or
u.
ltead of the
ommi whole.
One
t
1 vue See Fu
lication l uidce coisnt
wl the law
pflt
"
Yffd wfll[n
opened

ntoned
pmo
r
ocl
file Fern
neflt e
cou

app
r
m
on o
exempon
m deml income
"
""
raly
d

daOn
rpuN
oce." e 8 cu
-
rst

sme

Pnas
t
t0
Y
1
t i we"
vocy
do
not lncde
ng
r or
t
a
cdid or dl
So f
d--til
t e Publica-
tion s; "HoweveL If
you
submit
po
t
your gl
oex-
y

omo i w.
It c
obn
exemptl [m x]
even If It
rtl ]ly
In some
HI v-
1 on beh of or in
oltion to c-
s for
blic e
at
e sse cosnt wi e
oer n
p
of blion (
wl
g cot wl law d
entLtion
isnt ve
1
itrmS
political
tezem
lon
ed
by 1(c4)
p.
8ntlonFeis
1(c)(4)o

sSexy
guNt
that"r r-e
pr
ggo
dcol.
m00nin
omot
me
way
e
ded]
welf ff
o e
oe
of e

rffy
-
qment. mly....exclvely. me"excluvelve
ffent
Iy
meSO
m
lle which st
ste np that conu
de pcl
cl Jumen still Ui."
[Emp-
Onlo
e S lv mn m-

how to me oa.by evs]-

on wth
s colcaon Is
1.
at Oulde

t e
Ioiwl fm
HMc c acMvlty:
The communaMon ldenMflos a canda
r
public office;
Te
timing of the commtmlcaon cora-
cles wRh an electoral
camp;
The communication
tae
vom a
partlcar election;
The commtmlcatlon idonfles the can-
date
poon on
the
public policy iue
that the subject
the communication;
The
position
of the canda on the
publ
policy
issue has bees raised as dletatshlng
the candate om othem in the
eampaiffn
either in the communication It.ll or in
other
public communications; and
The communicaon not
part
of an
ono-
g
sees of substan similar advocacy
oommucatlone
by
the
organiztlon
on the
8e iMue
The
ule further lays out the faoo that
indica when an advocacy commulicaMon
ie not political
campaign acuity:
The absence o
anyone
or more of the fac.
tora iid abov
The communicon identifies
speclo leE-
ielaon or a specific
event oulde the con-
trol of the orsunizao that the
organlza-
on
hoIm
to
fluenc
The
timing
o the cornlunicatn coin-
cMee with a
speflc
event oulds the con-
ol of the
organlzaon that the
erganiza-
on
hopes
to
influence such
as
a legislative
vote or other major legislative actn Ifor
mlteexan. on thea
hearing/su
e
r
aslecV;//t;
cmmunicatl;The
communication enfles the can
dida
soly as a overnment official who
in a
poon
to act
an
a ll&tor
whoinThecectlncommunlcatlonWlth
theiNeenNfl
epscicpubl
po
vo on
theevtth
e
(such.
da
solely
the lt of
key or
pgnp&t
sponsom
of
the
car Crom
leg/slan that the
subjeCth
e applicaon of those
factom that wht
gng on in the U.
with certain
501(c)( organizaons in their
lev$ion advertieemen
are politiai cm-
pan
acacias
Bow am two
transcrip
of advere
men that were
put
on tevieion
by 0c
organization& Ae
you can ass. the
eebJect o
Advereemont #1 is a Democratic
enatoL
and the
sub oct of Adveement # a Pe-
publican
Senator. This is
not a
partisa
iu
elevieion Adversement #1:
s me to
a
Who is ths amt eu
53 llion
vOtedadds
00 Uion
r
budgette increaae tobUSMngth
e
deflci&nd0bamaCareeven
supp
ortedr
Obama
sthat
caandtradedebalVer
bl00000guppor
tgrowth.Jb&tbewhlchetopTellnewCdspendingmo SherrdhaVeandBrwnasendaCStcut Ohltherat
newnJo tyaenda.org."
"Bere Wall Seet
Kave hm 0.060 in
cnpstn
cash
....
Be he void to let
bnk CEOs tke ndHus
taxpayer
funded
bonuses
....
Dean Holler
wa a stockbroker.
No wonder he voted ainst Wall Stoat r
rm; aainst holn the bis banks aoun
abl Hler even votsd to sk
your
Socl
Se0tL
dty here. the stook marke Dean
Holler: he votee like he sMH works Wail
Sas and thaws bad r
yo"
Those sds and so
maJy
ke them.
asr
fit the actom the has ld out in l
Kulde
for wba constutes a
poHMc I cam-
pn activitY. The advertisements nke no
pretense
at
nonparbip: they
ame &-
tantly and
a8elvely partlasn communtca-
Mon
S0
the Intero levenue Code and take advan-
teo of It tax exemption benefl should
h to make a choic ther lose the ex-
empt
status (and
IY taxes) or eliminate the
"le IRS needs to
tmmed
renew the
K paxttn polical
ads
or ving
fun to Ssoon 6 organizaons that run
such ads. "the IRS need8 to adve c)(4)
enes of the law in th ares and the fac.
tom wl look at
mewing 1(c4) eta-
marion no later an Aueust 1 1
L How can the IRS
terpr
the
explit
leae
in U. c
wch
pro-
des that ??6.. (4] entices must
operate
"exclusively"
r the
promoon
of eoci
welfare low
any
tax
exempt prsan
poCal acuity by 1(c)(4) oons?
Since
partisan pocal acvl
does not
mt the IR8 deflon of
"promotta
social
weKe0"
how
can an or6uiztion that
par-
ciptes

any
partisan political acvity
brd exusive to
promote
socl
wfare
The
Exempt OrKanJzatione
11 Annu
Repo
and 12 Work Plan eta "As any
on yea EO will connus lie work to
ene the rules
tin
to
pollc cam-
pns
and
campan expenture
In IVy
EO will combine what it hes learned
om
past projects
on
plc
activies
with new formation
lcaned
from the md
einsd
Form 990 to focus 1 enint on re-
urees on usous
lesons
of tmpermis-
the does a
compne
vw
beK?
What
&pproxlnte
time does It take to
review the
compla4n
How
many persons
are vved the
enfoement of the I(c)(4) rules?
The
Exempt Oranlzao - ! #mnu
1
and Work Plan stas tJt !
4) oi84Ltaons "oa n deolare Lhemselves
tax-exempt
without 8sokln8 a detormln&tlon
from the I. EO will view
oranon
to ensure that thol have clarified them-
8v
correctly
and that
they are
com
with
appcable
rule"
Why
does the IRe w ) oranl-
zaons to self-declare?
a
I(cW oa%we/thS
8noce
and
--
"

how
Ion8
does it ke the IRS to
conduct the view to ensure that that
org
zation has clmmifl0d Itself correctly?
The n
Companco
Odo for Ta-Ex-
erupt Latlons etes:
"When a
1(c4 ( or )
oanltion8
comrrtunication
explly
advocates the
eleoon or de at of an individual to
public
offlc the communication considered
poe
lical campaign actyo
A
tax-exem
o
Kanization that makes
expenres
r
po-
lll
Jupll aces 8hil be
euect
to tax In an amount oqtml to i net inv
ment come for the
Year or the
ate
amount
expended
on
pocl campaiSn ac
vlLies
dttrinK the
year.
whlchev less."
How does the
koop
track of those ex-
it communicaon8 and ensure tha the
orKnLtn pays
tax?
What the
eson the
reqment
that the tax wl be based on "whichever
less" between its net vestment ome r
the
yoar or the
sKoKa 8nount
expended
co What tax wod an
oanlzatn
have to
pay
ff
8ponds
1 of lie come on poritical
ndvertlsin (therere it has NO net voe
ment income)?
Ms. Lornor letter
quotes
the IRS
wsbPso on Soci Welf8o
Orsnons:
*"1"he
promoon oo welfare does not
clude rsct or ret
part pato or
CONGRESSIONAL RECORD--SENATE
September 1
2012
that file under Set on cR of teenon litic campalg on behalf tio
may "not pticipato or teens
of or in
oppoon
to any
candidate for pub.
I office. Howeve a 8econ 50c)(
social
welfare
orsanlzon may enage
in ome
po-
lical acvities SO lon Its that IS not its
pms acuity. However.
any expsotttre
it nkse for
pedicel
cMes
may
be sub-
Ject to tax under 8soon 6(?" [Eanphusie
added]
a What the statutory
bus of lho lan-
guage
that lowe 601(cK4) organizons to
engage
in
some pedicel
acGes?
How does the IS
keep
track of these
nizonPOrical
artlviti and ensure that the
orgaopay
s the Ux under section 5(?
. In her
July
loo M Imrner states
that the IRS also addresses the issue of
pc-
ticl activles in the Forr 990 and
Are Forms 990 and 990-F made
puMic?

so.
where
can they
be accessed?
Itrl Revenue Service Publietion 55
state tha if a o snty can *submit
proo
hat
[the] organlon orgnld ex-
usy
to
promote
soci
weUar
it can
obtain an
exemption
even If it
partlcateo
lelptlly
in some
political cty on behf of
or
oppoon
to candidates for public o
rice+"
Have the olwin )1 orsanLtios

appld
and if
so b) uslved the de-
scbed
exemption
for
poc activity om
the IRS?
Croeoade Grasaroo
Pocy Strates
b. Prioties U.S A.
c. Americans Elect
Amecn Acon Network
e. Amecans for
Propety
fl American Future Ftmd

Americans for Tx Reform

Plus Aessoiaon
I. Patriot
Majority
USA
J. Club for Growth
Citizens r a Working
Ameca Inc.
1. Susan B. Anthony Lt
Have
you
retarded
501(c)(4 which
pub-
cly sosm to be
operat
in the
parsan po-
litical arn as to the factom
you
wl con-
der in
determining whether they are
ensa-
In
in padsan polical activity? If not why
not?
I have enclosed a
copy
of Ms. Lerner le
ter.
you
have
any questione sa con-
tact me or have
your
staff contact Kaye
Meier of
my
staff at
Sincerely.
CAn LVIH.
Clm rman. Permanent Subcommfte
on lnstgatlons.
DP BTMSNT OF THE
Washington. DC.. Auout 24. 201
Ho CRb Ivm.
Chrman. Permanent bcomme on es.
DEAR SEMATOR LVIN: I am respondin8 to
your
letter to Conuniner Shulman dated
July . 20.
requtu
adtion inrma-
on about ssotn
60cX4) ormtlons.
Th
response eupeme the
prvus re-
sponses daed June 20 and Jy I. 201Z
and addrees the on
quesons
raised
In
your recent teL
queson
L Row can the IRe
interpret
the
expllt laneuae in U.C.
54]I(c)
which prodes that
c4) entits must
oPera "excluslve" r the
promotion
of
eocl
welfare
to low
av
tx
exempt pr.
!n
poetical acuity by I organize-
ons?
We note ttt the current
rel&on
hs
been
in pIce for over 50
yer. Moover. un-
like Inta Revenue Code set on
II(c)($).
which
specLqcsly prodes that
organist-
in
. . . any poHc campalg
on beha of
r in oppoon to) any
candidato r
public
office %
son
cX does not oontain a
speflc
role or lirnitaGon on
poHtlrl
cam.
paign intesotton by social weare
oanl-
atione.
Queson
Z nce
part.4 pedicel
acv-
lty does not meet the IRS deflnlon of
"pro-
meting eocl welfe how can an
organize-
Men that
imrtlcipts
in
ay parao POH
c
acvlty
be
"orgsnlTd excinlvely to
promote
social welfareS
As elated above.
ngatandlng Trensury
Regaons have
interpd "exclusiveS"
as used in ctlon 1)) mean prl-
marl. Treasury Regaon L14
a)(2Rl promuated
in
199. proves:
"An
organlzMon
is
ortod exclusy
for the
promoon social welfare If It Is
primarl
engased
in
promoting
the
common good
and
general welfare of the
peop
of the commu-
nity." Applng
this
Treasury Relul&tlo
Revenue
Ruing 81-. 11-1 3. con-
cluded that "an
organization may earry on
inwl
polltlc
activities nd remain
exem
under eccon e ns long It Is
p-
maly engaged
in aces that
promote
eo welfare"
Question & The xempt Organizations 11
Anu
P.eport
and Work Plea states:
"As in
any
elocen
year.
EO will son hue
lie work to enfoe the rus
rellng
to
po-
Hc
campaigns
and
campan expendi-
ture In FY . R3 will combine what it
ha learned Irom
past projects
on
poBcal
aces with new tnformaon
eaned
om the
redesigned
Form 990 to cus it ex-
amination resources on sua
allegtions of
the 11 does a
compliance
revlew
be?
What
appromate
t4me dnse it take to
ew the
complaln
The IR8
routny receives exatlna on
fsrrals rom a varletV
of soure
includlns
the
pubH medi Membem of
onero or
their etef and hue a
Standln
precis
r
hantn8
fo8 so ttt they reve an
hupaxttL independent ew from career
empy&
When the IRS mce. a ferral
about a
parttcar organlon
it is
prompy
rwarded to the ClaasUlcatlon
unit of the
Exempt OrganLvons (EO) Ex-
amino.on office Dallas. Text. Pungent
to IP.M
4.?6.&lL
within days
receiving
the
ferraL the Clnseification staff
begins
evaluang
whether the referral hes erJmina-
on
potenel
shou be considered a -
ture
year.
needs additional Information te
make a dsokion or lle with the caF
egorles of marten that are referred r EO
Referral Committee ow.
Althouth UtM
?5.&l) ae a
go
of
days
to
complete
vlews of
referral& the time It takes to
lly revw a
particular forral varies de-
pending on such ctom as the lemnos in-
volved and the
avlshility
relevant info
mutton (i.e. organtzttoWe Forms
0. exter-
nal sources such
aa mesa reports. tornet
In thee
caea in which the IRe nsmls addt-
on information about the
suect a r
tl that not readily av inch
as
lie Form 990 that has not been filed
yet
for
the tax
year
at
tuo. Clmmlflcaon
my sus-
pend
laasltng
the ferr and
places
it in
the
folw-up category unl the adonaJ
formation is available. Once the adtional
formatien is mcve reviewed and
su
porte
the rerral
being aesified ns lining
examination
potenCY
the ferml mot to
unassigned
inventory
until a venue
asent
with the
apopate level
expeence r
the issues voed in the mater k avble
to Conduct an exsmlLution.
Once
Inventory
there are numerous f-
to that
cem affect how
long It takes to
$6431
R00 looks at an
oranizaos
Form 990.
web to and other
publly
avlab infor-
mation to see what

doin
and whether it
onnues to be
oranised
and
operad for
tax-exempt purpose
it
appears
om a
RO0 review that an
ormizatlon may
not be
complian
the
organizatn
reed r
ezamaon.
Compliance
checks: In a
compliance check.
IRS contac
taxpayere by kttsr when we
scover an
apparent
eor on a
taxpayers
return or wish to obtain further information
or rlflcaon. A
omplines
check an -
flcient and effecve
way
to maintain a
com-
pliance presence
without an examinaon.
We ao use
compliance
check
questionnaires
to study epeflc parts
of the
tax-exempt
community
or
specific crop-sector
prectlces.
Examinaons: Examaons. so known
s auo are authorized under Secon 60
of the Code. For
exempt prgenizatlons an
connnedexamatinquallflcaondermlneSforantaxoexemptranizatlnSsta.
tus. We conduct two different
types
of ez-
amlnatlons:
corespondents
and fld.
Because the IR cannot review
every os
the
ing
r6nlzanree
w
techniquse

everYdescbed
tax
Yearabove
we
uSeto
maximize our
coverage
of the tax
exempt
ourSeOtor
projectbOth
our
enerwork
"
The
project
program work
andwork

which
resultein

desned
sector and
urfctm
on
ePeftceatetorectPlangareaSmorePrcessaeceffec.
ve use of our reso
in the effort to
strengthen comiance
and improve tax ad-
mistrao Described in the EO 01 Work
Plan.
the secons
604
(5) and ) S
Decistere one such
proJec
Tiffs
prelect
focuses on ornizaons that bd them-
selves out as
bein taxxempt
rather than
ecekin
ItS
reco6nlGon of tho
exempt sta-
tus.
Queson
The IRS
Compliance Guido r
cmmuicatinecon
or
defeateXlcitof
an
lnvldualadVCateSto
public
the
llcel
fflc
thecampanCmmunlcanacty
"
AlStax.axemp
cnsidsrod
Por
"
ganlzation
that makes
expendurss
r
po-
tolltlclt

cpelin
an amour
t.1
to l
axNse lll
bene
t
sutv
meet income r the year
or the
agregate
pays
this tax?
lcit
communications and ensure that the
oranization
Tax-exampt organtzaons fllin Forms 90
or 990-F.Z are required to report political ac-
vlGe Organizaons that
enae
in dkect
or indect political campaign
aces are
so
required
to
compete
chedule C of
Form
990 or 990-Z.
OrUanizaons suoct
to
tax under section
27( am reqred to com-
fy
with the
statutory reportln
nd
pay-
lent rule. The IRS also cees refes
re$ardin
such
acG
om a
vaety
of
sources that re handled through an
impar-
tial. doPendent renew. See the
response
to
quceon
$ for the
dsecrlpon
on the ]S re-
rtl
proceed.
Wt the reason for the
requirement
that the tax will be based on *whichever
se" between lie net investment income r
the Year
or the
aroato
amount
expended
on political campln attss?
The stute under secon 5( expy
etat that a Ol(c) oranizaon

eubect
to
ite tax based on *an snount equ
to the
sser of--A) the net vestment come of
such orlmlzatlon for the tsshle
year. or (B)
the
ggreato amount expended dun the
taxable
year
r such an exempt
[mlon
c. What tax wod an organization have to
py
if It
spends
all ite income on pocl
adversln (therefore it ha NO net Inves
ment income)?
Under the etatu eld
abov
orgai-
lion that otherwise meste the
reqnlremen
Of eecon 501()(4) social weare
tx-exsmpt
status whh
spend6
1 i income on poli

advertlsin
and ha
no net investment
come would not owe
any
tx under secon
7(o It
may however throuffh
euh
spend-
ff (and
dopendtn on the otherwise
ap
e facts of the caas no
longer qulfy as an
orSanlzaon
that
tax-exempt
mdor coc-
Oon 50
Question Ms. Lerner letter
quotes the
IS
webpee on
cl Wfare
Crza-
lions:
"The
promoon
of social welfare dose not
cinde direct Or indirect
prcltion or
tervsntion pollt campaigns on behalf
of or in
opposition to
any
candate
for pu
l c offlc However. a section 501(c social
welfare
oranization
may engage
in some
po-
tical ace so lon as that not i
pmarymakesectlvity.r
poiltal aces
Hwever
any
mOXpenturebe
sub-
ot
to tax under secon
5(. [Emphs
added
a. What the
statutory
basis of the an-
nuals
that aws 501(o)(4) organizations to
engeeFleaseinseeSOms
poli
actteS?rseponse
s to questions
1 and

abVeb.
How does the ]tS
keep
sok of these
zaon
paysPlitlcalsecon
activities and
ensuro01(c)(4
) orantzaons
the tx under ssoon
/(f)?thatfiltheFormsrga-
90 or 990-EZ are
required
to
report political
aces.
Organizations
that
onge4
in -
rect or indect
polial campaign
vtivitise
are
also
reqred
to
compte
Schehfle C of
Form 990 or 996-E. Orgmiasons sob)oct
to
tax trader secon 52( are required
to com-
fy
with the
statutory report
and
pay-
ment rulo The IP.S so receives rerrals
garding
such acttvtse om a vrioty of
sources that are handled through sa
lmpar-
tl.
independent
review. See the
response
to
question 3 for the
descpon on the IS re-
rral
process.
Queson
7. In her
July
13 lot M
erner stae that the IRS also addresses the
issue of political
aces in the Forms 990
and 99-Z.
Are Forms 990 and 990-EZ made
pnblic?

e where can they
be accessed?
Yes
Forms 990 and 990-EZ are made
public.
ax-exempt organizations are
required
to
make theft returns
widy
availabk tor
pub-
lic
inspecon. Organiz&ons are reqned
to
allow the
public to inspect the Forms 90.
990-EZ 990-N and 990-PF they hove flied
with the IRS for the three most recent tax
years Exempt orffanizations also r
qued
to
provide copies of these information
returns when
requseto
or make them avafl-
ab on the Intorne The annual infonaticn
returns also are avaflao from the I as
well as om
third.arty sources that
post
them on their website
Question
& Intorn Revenue Servloe Pu
laon states tha if a
S01(c)( entry
can "subm
proof that [the] oraniztion
organized exulvely to promote scowl wel-
fare it can obtain an
exempon evau if it
participates legally in Some poHcal activ-
ity
on beha of or In
oppcelon
to can-
didtos r public office/
Have the
followin 501)) organizaoas
a)
applied and if
s b) receded the de-
sobed
exemptn for
political ctivit
om
the ]RS?
a Crossroads Grassroote
Policy Strategies
Porlse U.S.A.
Amerans Elect
American Action Network
o. Americans for
Prcepety
American Future Fund

Americans r Tax Reform

60 Flus Aseecon
L Paiot
Majoty_USA ..................
Sepmr 1
12
CONGRESSIONAL CORD-- NATE $64
Question
How
many 1(c4) oaniza-
ons wMch
appear
be
primarily eaed

polltic ativl have been nofled

by
the within the last e months that
they
may
be in aon the law?
When the IRS sxamln a stlon 14)
oranizaon the oecve the &ud
de.trains whether that
organization qual
fl for
tax-exempstatus
as & socl welfare
organtzaon. As discussed In our June 4 1
response

your
March t that
derminntlnzatlon
Is primarily engaged
IO0s
whethln
ac that
the
organl-
promo
social
welfare.sra
d r
profl
and
nths ranlZednet
earn nee
r
of
wh do not inure to the benefit of
any prt-
va sharohd or invidu. The exama-
tion looks at the activltl
sneaked

durl
the
comple
taxable
year
at lu
Although
the
pmmoon
of soci welre does not ln-
ude direct or indirect
partlpatn
or
enon
political campaigns on behalf
Of
orasal.o
n csl eng
c
fflceloi

as It
OptlOn

cdaa
ctlon
PNmtt.I

ltic
tlvltleeolltl
scll
welfare
r
Puli.
the lit8 bv that an oanlzaon
do not meet the
requlremen
under se
on l(c)(). the IRS no ties the oruniza-
Non i non revoke the oaniza-
os
exempt
status exaJJI
the law add
ronsnslstralzatlnrpst
or appasl
has
proposed
vocatlon.
Theday
s
itrathe
determination
the da of that

beam a final revocation later is lued to

the
ranizaDurin
the
past
x month no noc of
loposed
or final vocation we issued to
secon l(c)( organizations.
NO that the
IRSIu
some of whloh
ilu::
has
me.tholed
s whether the or-
t"

ongoing ex-
ganizaon

primart entered
ac
that
promo
socl wolrs It is eo im-
portant
to no that the Service also main-
talus a dermaon
process
visw the
operations
of an organization to de.rinSe
whether it should be recognld as
x
ex-
smp
In this
area. we so renew
ompl
an
with the leg requirement mudin
whether an oranltion

primary engaged
m acvl that promo socl wr
Them are currency morn
than
L60 ornl-
zations the dermatlon
process
eklng
rognton as a sectn
McH4) organiza-
tion The lsv of
pocal acvlty
is an
issue in a numb o these dermination
case
I
hope
th lnforaon is
hel
If
you
have
questions. ease
contact me or have
your
staff contact Catherine BruTe.
Scely.
Depu Common f $ and
EnforcemenL
TRIBUTE TO JUDGE BRUCE
BIACK
M BINGAMAN. M
Pden
I
want to
cog the stlnshed
seice of
my
friend Bruce ack the
Chief
Judge
r the U. Dt Court
r the District New Mexo.
Bruce has chosen leave the Fed-
oral bench at the end of is mont
His dson rstlro is a lo r our
Sta and r the Naon. But he has
served
our Naon wi
great
disnc-
on and
abty.
Bruce was
appoted
to be a st
court
Judge by
PreValent Clinton In
1995.
Durra
the 1
yearn
of h see
in that
poon
he has
exemplified the
integty
and
gh
standards of fatness
and
impartiality
which we stve for in
our Federal
Juary.
Throughout
his
years
as a Feder
judge
he has never lost
ght
of the
rei effects of the courts deons
on the lives of those who
come bere
the cour
Bruce and his
wi Mary have exci
lives. They are
ing plane
for
thecloseneXtfrisndsshapterto
myOf
theirwl

Are
and me. We wish them the
very
best in future
years.
TRIBUTE TO JONA OLSSON
M BINGAMAN. Mr.
Presiden
today
I wish to
recognize
Jona Olsson
fire chef of the Latir Volunteer Fe
VteerDepartntentolon
was recently
honoredFirelctedchiefnearofQuestatheasYearthe
NM2012by
Fire Chief r her teless work at the
hatir Volunteer Fire Department and
her efforM to increase divemity in the
loo fire service. She was honored on
Augtst
201 during
the
openg se
sion of the International Aociation of
Conference
FIre
ChiefSandFlreRescueExhitionlnternanalin
Denve
CO.
OlssonAerwasmvtngrecruitedt
NeWtoMecj
n
theinLatir
1999"
Volunteer Fire
Department.
She
quick-
ly became integrated
in the fe
depar
menteventuas
a tratng
rising
thrughflreOfflcean
d
EMsthSdeputyrankSchiefchLservingr
theand
department
in 006. Olsson has facili-
tated aln
to didual
depar
ments and fire conrences across
Noah Amec
as well as the nited
Klnedom.
During tough
economic times Oleson
and other volunteers have contued to
expand
the fire
department increasing
traing
hours and the number of
qualified
volunteem. All 18 of Latis
volunteer flrefhtem are structure
traine 13 are
qulfled
with wildland
Red Cards.
and nine have EMS Hcenses.
The Latir Voluner Fire
Department
also has an active Junior flreflghter
program.
In
addition
the fire
depar
ment recency built a new &ddlon to
the fire staon and
purchased
another
fire
enn
I ask that
my colleagues in
me in
heading Jona O]sson and the excnt
work of the Latir Vunteer Fire De-
partmen
The dedicatn of Oleson and
the
community voluners hps ensure
the
delivery
of vital services to New
Me co re dents.
HONORING OUR ARMED FORCES
M IAUTENBERG. M
Preden
over
2
years
have
passed
since I last in-
cluded the names of our
troops
who
have lost their lives
serving
in
support
of
opera.Gas
in
Ir&q
and
Afghanistan.
IrlflceWlShbyt
lncludin
bnr
theirthrServiCenamesandin sacth
e
CONORSlONA POORD.
Since I last included the names of
our fallen
troops
on July I 201 the
Pentagon
announced the deaths of
1.020
oops
in
Iraq
and in
Opera on Endu
ing Freedom. which includes Ahani-
stan.
They
will not be rgotte and
today
I ask unanimous consent that
their
names be
pnted
in the RECORD.
There being no
obctio
the mate-
rial was ordered to be
pnted
in the
I. OORD as llow
CW2 Jose
Monnro J of Houston
TX: CW2 Thalia Rame of San Anton
TX: PFC Shuns W. Cant Corunna. MI;
LC
Alec . Terwke. of Dubo. IN; SSG
eremie Boe
of
Meul.
IX: SSG
Jona Schm Pembu. VA;
SPC
Kyle

Rooke of Osw NY: SSG

Jesaica M. W Alexandria. VA: SOT
Christoph
J.
Btrdwe Wor. CO;
SPC
Mabry
Andes. Baker
tyo O;
PFC Pa-
tina Horn of Oreenwood. M SOT
Louis
Torre

Oberl. OH; SGT Dad

Williams. of Frec MD; SIW CoaSt
Debose. of Sta Line. M SGT Richard
A.
Essex. of Kelssyvll] CA;
SGT Ls A.
Oilv Oa bath. of San Joan. PR; SO2
Dav Wamen. Kentwood. MI; O1 Pa
rick Fesks. of
Edgewar. MD; FO1 Seen
Cano Des Moe WA;
CV Bureah N.
A.
Krauss. Cathedral
ty.
C
CW3 Ean D.
HorDsb.

Melbourn F
POI Darrel End. Colorado Sprtu. CO:
VA;StpF
C
SPCMlchaGgrYJamesTA.CpeDemlcoJUSCe.
0f
LynChofH.GrovsSNohNC:
AdamSOty.SsgtPAlMA:scottPFcSSOAndrswEr CDicnsoj HmanKellSr.o
f Sere
of
Tlsard.
f
EvansDieg0.
CA;
C
icha A. Rlvem Jr.. of Venra.
CA; LC Oresory
Bucky.
of
0eanside.
OySgtNY;MatthswSStRyanSkYManoukiaR"
Mof
Hodon.
f
Ls
El
DradAlsV&lHflle.CaptCA:
CA; MSt Orogory Tmn
NorW MA;
MAJ Thomas
Kenny.
of Wt Po NY;
CSM Ksv J. O of Larami WY: SPC
Ethan J. Mart. Lswlston. ID: M
Wr
D.
Gy. o Conyers. G PO3
Cyton
R.
Beaucham
of Weatherford. TX; C Daniel

Linnabary H. Hube. NC.

ISG Russell Bell. of
Ty
TX: SSG
Matthew Bitten. of Lar F 1LT Todd
W.
Lmbk
of
Frase MI;
PFC Jus J.
Lop.
of San Bernardo. CA; SPC
Ko

McCla. Rochr HII. MI; LCI Curt
Duar. Cov CA; Oyt
JoDathaD W.
eiffel o Pm
Bay. F OySEt
Daniel
Pc
of Hollan MI; ILT Seen
Jacobe.
Reddin. CA; SOT John Hanse Aua
TX; 8PC BeDJam of Turlock.
CA; SFC
Bobby
Eafl of Lebanon. O
PFC Jose Osc Belmontes. I
V. CA;
PFC Theodore M. Olend RochesL NY;
St Justin M.
Hasen. of Traveme
. MI;
SPC Justin L.
Hole
of Pm
Bay. F
PFC Brenden N. Sazar. of Chuo. F
PFC Adam
Ro.
Lyrmm.
SC; ST Eric
Williams. of Murrieta. CA: PFC Jian
Cv.
Blrminksm.
AL.
SSG Richard
Berry.
of
Sttsd AZ:
PO Mlcha J.
Bmk
of Tamarac. F
SSG Brandon
Psppo
of Yor PA; SPC
Darrlon Hicks. of
I.leh. NC; PFC Je
fey
Rice.
Troy.
OH: PO2
Joseph
P.
Fitamo. of Rusn. IA; CPO Seen S-
van. of S Lou M SPC
Krystal
M.
Fit. HouSto TX; Cpl
Joshus
Ashls
of Rancho
Cucamona. CA; SOT D A.
Rodu.
of Baimors. MD: SOT Joe
Reyss.
of San
Lozo. PK; SPC
Ser
Perez J. Cwn Poin IN; SPC lcas

Tao
Berne. IN; SOT Erik N.
Ma of
LakeIndendenceHavasu
KS:CItSSOACarlsoT

HammarMichae
1
rE.
RIs of lockfo. IL: SPC
Srlln W.
Wyat of Colum M PFC amsron J.
Stamtuh.
of
Sprin drove. P PFC
DEPUTY COMMISONER
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON
D.C. 20224
November
23
2012
The Honomb Carl Len
Chairman
Permane Subcommee
on
Investigations
Senate Commee
on
Homeland
Secud
and Govemme Affaim
UnRed States Senate
Washington
DC 20515
Dear Mr. Chrman:
I am
responding
to
your
leer to Commsner Shulman dated Oober
23 2012
mqueing
addon informn about sen
501((4) oanations.
This
response
suppmes
our
previous
responses
dated June
4 2012 July 13 2012
Augu
24 2012
Seember
14 2012
and Oober
17 2012
and addresses the addon
questions
raised in
your
recent leffe[
Quesbon 1. The October
17 2012
leRer om the IRS indicates that it is unable to
locate the
applicaon
submiffed
by
Americans for
Prosperity
)
for
x
exempt
stus under secbon
501(c)(4).
Has the IRS asked Americans for
Prosperity
for
a
copy
of i
applicaon?
If
so please provide
a
copy
of the
response
om Americans for
Prosperity.
We have not asked Amecans for
Prospety
for
a
copy
of Ks
applatn.
As indicated in
our
responses
dated June
4 2012
and Oober
17 2012
sexton
6104)
of the Internal
Revenue Code
he Code) requires
tax
exempt organations
to make ceain
documes
including applations
for
exemptions
av=b for
public inspection. Any
dividu
may
reque copies
of
applicatns
for
exemption
and determination leffeB
dire
om the
oanations.
Under the
Code

an
oanation
has filed
an
apatn
for
taexemption
and we have
approved
the
apation
the
exem
atus
applation
matea shall be
made avb
by
such
oanation
for
inspection
upon
reque
of
any
dividu.

Section
6104(d)
of the Code.
2
Queson 2. Has the IRS examined whether
or not the
following 501)(
organaUons
are
engaged pdmad
in the
promoon
of social welre? Please
indica
yes
or
no
and
ff
yes
whether the examinabon is sUII
pending.
As
preous
stated in
our
response
dated June
4 2012
section 6103 of the Code
prohibits
the dosure of informatn about
specc taxpayers including
whether
they
are
underof
the
!gvXremilt ;rlitefsmclitnhfOOrrimz:Obnyrar;l:d
On
examination
acty.
QuesUon 3. In
my
leRer of March
30 2012
I asked the IRS to indicate how
many
leer
rulings
have been issued
by
the IRS since
January
1 2007
to
deny
or
revoke the
x-exempt
stus of an
organaUon
under secUon
501(c)H)
due to
invoement with
pc acUvity.
I fuher
requested
tha
if the IRS had issued
10
or
less such leer
rulings
the IRS
provide copies
of all such lee. Mn Miler
responded tha
"The
apaUon
process
for
taxxempt
status does not involve
the revocaUon of tax
exempUon;
mthe
it
only
concerns the denial of
apicaons."
He did
not
provide copies
of the denials of
apaUons
he referred
to.
Please
provide
the documentaUon
requested
in
my
March
30 2012
leffer.
As
preous
ated
section 6103 of the Code
prohs
the ddosure of information about
specc taxpayem
unless
some
proon
of the Code authorizes the dosure. Seion
6104(a)
of the Code
permi public
disclosure of
an
applation
for
recognon
of tax-
exempt
atus and
suppong
mateda
only
after the
oan=ation
has been
recogned
as
exemp[
Under section 6110 of the
Code

we
umaty deny
the
applation
for
recognon
of
taexempt atus
the denial leffer and
background
information is
sue
to
public spection
with
entifying
and other information
redacted
to
help
the
public
understand
our
reasoning
while also
proteing
the
enti
of the
oanation.

Section
6103(f)
of the Code sets foRh the means
by
whh
congressn
commees
may
oain access
to return and return information
(at
is not herwise made
publicly
avb under sens 6104 and
6110).
We are av=b dcuss ese rules in
more detail wi
your
a
Since
Janua 1 2007 we
have issued n advee dermaons to secon
501))
applas.
We concluded that me
oanations
did not
primad opem
r me
pBmotion
of social weffam.
Generally mey
were
pdmad engaged
in
actives that benefited
pdva
inddua and
ins
andr consted dire and indi
polcal campaign
iewenon
on behaff
ot
or in
opposon
candates r
public
office. I
am
enong
daed derminn leeB
denying
seion 501
)H)
tax
exem
us to the ten
oanation Note however
that me number of adveBe derminaons does not
pse
the number cf
oanations
m
applied
but we n
ginned exem
us
under sen
501)H).
Some
oanations
whdmw their
applation
r
exemption
when
they
learn mat
a
denial is
hcoming.
OtheB do not
rmal
wimdBw
but do not
spond
to
ques
r inrmaon
necessa
to
develop
their
apations.
Aer
addonal iled
aems
to
get
the inrmn from the
apant
we
close those
applations
as
"ilu eablh."
QuesUon 4. In
August
2012
I asked the IRS to indicate "how
many
501)(4)
organaUons
which
appear
to be
pma engaged
in
pc acuity
have been
noUfied
by
the IRS within the last 6 months that
they
may
be in oUon of the
law." Mr. Miller
responded
tha
"Oung
the
past
six
months
no noUces of
proposed
or final revocabon
were sued to secon
501(c)( organaons
a.
How
many
noUces of
proposed
or final revocabon have been issued
since
January 1
2007? If the IRS has issued 10
or
less such leer
rulings please provide
copies
of all such letters.
We have issued 42 revocation nonces to seion
501((4) oanations
since
Janua
1 2007.
These
oanations
were
revoked for
failing
to meet the
requiremen
under
sen
501((4).
In addion to the 42
revocations
we issued 18
oanations
wden
advisories
noting iEegurities
which le
unchanged posed
a dsk to the
oanations
of
possible
loss of their
taexempt
atus under seion
501((4).
b. Since
January
1 2007
how
many 501(c)(4) organizaons
have been
examined
by
the IRS to determine if
they
a
engaged
in
pc acUvity
in amounts which exceed IRS
guidelines?
As discussed in
phor responses
when
we examine a
section
501)(4) oanation
the
oee
of the aud
is to determine whether that
oanation quales
for
taexempt
atus as a soal welfare
oanation.
As dcussed in our June
4 2012
response
we
have taken
no
posion
on a
fixed
peeage
or
any
one
favor in
precedential guanc
To
determe whether
an
oanation operates pdmad
for the
promotion
of social
weffare
the coups and the IRS conder a the fac and
umances
inuding
but not
limed
to
the
oanation
ated
purposes
expendus prinpal
souse of
venue
number of
empyees
and
volunteeR
and me and effo.
3

Tmasu Regulation
secon
1.501(c)1(a)(2) (No peenge

eahed).
Rev. Rul.
6845 1968-
1
C.B. 259
(Pdnp
souse
of income does n dermine an
oanatioWs pdma aNi
under section
501(c));
all e s and umances
are
consed). Se genemlly
Haswe# United
S
500
From
Janua 1 2007
mugh Seember 2012
we have examined 643 secon
501(c)H)
oanations
to dermine wheer
they
are
pdmad engaged
in social weffare actities.
We
analyzed
a
vade
of issues
dudng
these
examinations
duding
where
mleva
the
level of
pcal a.
Of the 643
oanations
examined
the
Pdnp
Issue Codes
(PIC codes)
in
our
syem
indicate
polcal aivi
was one
of the issues
explored
in the examination of 22 secon
501
((4)
oanations.
We
use
PIC codes to
capture
the issues on which
an
IRS
aged
spent
time
dudng
an
examinaon
or that resumed in
a
change
and we enter them
as
pa
of the
closing
process
of
a case.
Ahough current
96 PIC codes
exit
agen
may only
repo
the
top
four PIC codes. The
determn of which PIC codes am
appcab
to a
pacular
case is
a
judgment
the
agent
makes. Please note that
ahough
PIC codes are a
tool to
idei
issues and
trends
PIC codes do not
cover
all issues in
a case. Therefore
wiout
a manual review of the case
files
we cannot
definve
conclude whether
we
examined
an
oanation
to determine the level of
polal aity.
I
hope
this inrmn is
helpful.
If
you
have
questions please
contact me or
have
your
staff contact Catherine
Ba Dimo
Leglate
Affaim
at
(202)
622-3720.
Sincem
Steven T. Miller
Depu
Commsner
r Sewices and Enmeme
Enosums
(10)
F.2d
1133 1142
1147
(Cl.
C[
1974)A pemenge
test
...
is not
appropriate
Such a te obscures the
compxy
of
banning
the
oanations
actives in relaon to i
oees
and rcumances in the
con of the
totally
of e
oanation..
Se
Contracting
Plumbers United
Ste
488 F.2d
684
686
(2d
Cir.
1973) (mup
factors relevant in
applng
this
anda
udg
rmative
hiow
ated
purposes
and actual
operation.
See
generally Seasongood

Commissione
227 F.2d
907 909
912
(6th
Cir.
1955) (expenditure emoyee
and
oanation
time and effo
condered).
Oca}bcr 23.20] 2
VIA U.S. MAll & EMAIL
{Calherine.M.fkirre@lRS a.
The
Honomble
t}ouglas
tt. Shulman
Cmnmissioner
lmernal Revenue Service
U. S.
Depament
oflhe
Fvasury
1 Ill Conitmion Avenue
Washingtom
D.C. 20224
Dear Commissioner Shuhnan:
I
am
i
cei
oflhc Oclober
I7 2{}12
mNmnse
lix m ME Millerto mv !c{ler of
Seember
27 201_2
In the June
4 202.
ISl}{mse
thail vcciwd Ih}m flc IRS
your agency
provided
the
tMlowing guidance:
"The
tin}motion
of social vlIh" does
not include direcl
or
indirem
panicipalion
or
inmrvention in
political campaigns
on behalf of
or
in
opposition
IO ally cm]didatc tbr
public
oicm
Ncvenhdes a
seclion 501
{c4)
social \elt2re
{}rganialion
can
engage
in
political
aoivitics
as
long
as
it is
primarily engaged
in activilles thai
pmmolc
social
wdtrc. he
regulations
do
not
impose
a
complete
ban
on
political acdviy
by sccIion
501
{oR4) organizalions
Whether an
organizalion
ncets the
requirements
of section 501
{oR4) depends
uFon
all of the lhcts mid ckcmnstanccs of file
particular appficmu
and
m}
one
limmr is detenninmiv<"
[6/4/12
IRS
response pg 8]
t have indicated
pvviously
Ihat I believe dfis
guidance misinterprets
Ihc law because the
law
says
lhat Ihc
organization
mus be
operated "exclusively"
lbr the
pmmmion
of social
we!ihrc t
lmvevc
acceFling
the IRS
interpvtmim
as accurate tbr the
purposes
ofhis lctc>
please provide
Ihe
Iblloving
inikmnmion:
The {}c[ober t7. 2012. lcuer tk m fle 1RS indicates at it i unable
to locate the
applicmion
suNniued
by
Americans for
lmspcfi t }br
tux
exempt
--(b)(3)/26
USC 6103
status under Section
501{c)(4}.
tlas the tRS asked Amedcmm lot
Pnmpefity
}r
a
cop}
ofi
applicatitm7
If
so.
please ve
a
c{py
of the
response
liom Americans
liar
Pmsperi5
Has lhe IRS examined whether
or not the
Ibllowing 5011c}{4)
organizations
;e
engaged pOmarily
in the
prommion
ofsociat ellhrc? Please indicme
yes
or no. and.
ifyc
whether the examination il!
pending.
b
Americans iBr
Pnspcrity
Patriot
Mziority
USA
In
my
letter of March 30 2012. I asked the IRS to indicate how
many
letter
rulings
have been issued
by
the IRS since
lanuary
1 2007 to
deny
or revoke the
tax-exmnpt
status
otma
organization
under Section
501(cR4)
duc to involvement with
polhical
activity
i linher
requemed
that iflhe IRS had issued 10
or
less such lelter
rulings
the IRS
provide copies
of all such letters. Mr Miller
vsponded
that. "The
application
process
lbr
taxexcmpt
status does not involve the revocation of
tax
exemption:
rather it
only
concerns
the denial
ofapplicmions."
fie did not
provi&
copies
of the denials of
applications
he rel?rred
to.
Please
provide
the
documenmtn
mquesd
in
my
March
30 2012. letter.
In
Augnst
2012. I asked tile IRS to indatc "qlo\v
many
501(c)(4)
otNanizations
hich
appear
to be
primarily engaged
in
political activity
have bccn notified
by
tile
IRS within the last 6
momhs that they
may
be in violation ofthe la." Mr. Miller
respmldcd
that
"During
the
past
six months no
notices of
proposed
or
final
revocation
were issued to
section
501(c)(4) organizations."
a.
How
many
notices of
proposed
or
final revocation have
been issued since
Janua
U
I 20077 If the tRS has issued 10
or
less such tetmr
rulings please
provide copies
of fll such lamrs.
b. Since
January
I. 2007
how
many 50I{c)(4)
organizmions
have been
examined
by
the IRS
to determine if
they
are
engaged
in
political activity
in
amoums
which exceed IRS
guidelines?
?ank
you
R)r
your
assistance. If
you
have
any qucions please
cmmct me or
hac
your
stall" contact
Kaye
Meier
o
f
my
staff"
at kave
meicr@lc
n.scnate.uov or
202/224-9110.
Please
provide
this inlbmlation
by
November 9 2012.
lhe t Ionorable [m Cobu M D
Ranking Minoriu
Member
termancnt Subcommite on
lnvcigions
Sincely
Carl Lcvin
Chairman
Permanent Subcommitme
on
In\stigions
From:
To:
Suect:
Date:
Aachments:
Flax Nikole C
Pa e Christo her M"
FW: Annual
Report/Work
Plan-- wh additions
Monday February 04
2013 3:10:42 PM
r ia
From: Lerner Lois G
Sent:
Fdda
December
02
2011 4:55 PM
To: Flax Nikole C
Cc: Grant
Joseph H;
Letourneau Diane L
Subject:
FW: Annual
Report/Work
Plan-- with additions
Just two small chan
es
to the work
in
both hi hted
I
am
gone
all next
week
but if
we can
put
time
on
Steves calendar the week
aer
Id love to
finalize this. You
can
work with Diane
on
scheduling.
thanks
Director of
Exempt Oanaflons
From:
Sent:
Fdda
December
02
2011 3:51 PM
To: Lerner Lois G
Cc: Smith
Philip A;
Partner
Melaney J;
Letourneau Diane L
Subject:
Annual
Report/Work
Plan-- with addions
Hi Lois:
The aEached work
plan
includes the revisions discussed toda
Additions have been
highlighd
in
yellow.
Please review and if
you
are
comfoRable with the
changes
rwa
Steve Milles office.
Thanks.
Customer Education and Outreach
IRS
Exempt Organizations
202-283-
(p)
202-283-8858
(
From:
To:
Suect:
Date:
Aachments:
Flax Nikole C
Pa e Christo her M"
FW: 2012
WorkplanFINALDRAFT.v.2
Monday February 04
2013 3:10:04 PM
For FOIA
From: Lerner Lois G
Sent:
Monday
December
19
2011 5:04 PM
To: Flax Nikole
C;
Miller Steven T
Cc: Grant
Joseph
H
Subject:
FW: 2012
WorkpnRNALDRAFT.2
ou
wanted chan
Thanks
Director of
Exempt Oanaflons
From:
Light
Sharon P
Sent:
Monday
December
19
2011 4:56 PM
To: Lerner Lois G
Subject:
2012
WorkpnNALDRAFv.2