WFAE: Influencing Elections: Now Tax Deductible

Both 501(c)3s and (c)4s can take unlimited amounts of money and keep their donors lists secret. For years 501(c)3s have held a coveted spot in the world of non-profits says Larry Noble, general council at the non-partisan Campaign Legal Center. "Contributions to the organization are tax deductible by the donor. So that’s, in a sense, the highest level of charitable organization."

And Larry Noble notes the IRS has a facts and circumstance test to determine if a group has gone too far. "It’s basically a ruling that lists 11 facts and circumstances they can look at to determine if something is political." It sounds robust, but Noble adds it’s kind of a mess. "This is one of my favorite parts of it, it says at the end that you may have all or none of these factors and be seen as political or not political." How’s that for clarity?

There’s another way these groups can get their money into politics says Republican political consultant Larry Shaheen. "The 501(c)3 money can go to 501(c)4 activities if they give it to the 501(c)4."

But Larry Noble says there are other ways a (c)3 can effectively subsidize the activities of the (c)4. "If the (c)3 pays for the rent and the overhead of the (c)4, it frees up money for the (c)4 to use for political activity and that’s a problem."

A problem Noble says the IRS is not likely to catch. "Is that audited? Probably not that often. Is the IRS aggressive about it? Not these days."

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