The IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention. Ineffective management: 1) allowed inappropriate criteria to be developed and stay in place for more than 18 months, 2) resulted in substantial delays in processing certain applications, and 3) allowed unnecessary information requests to be issued.The report is meant to provide “an initial set of conclusions and action steps, along with an explanation of the additional review and investigatory activities underway.” Interestingly, the report establishes a new voluntary process for organizations that have been subject to a backlog for more than 120 days to gain expedited approval to operate as a 501(c)(4) through self-certifying to certain thresholds and limits to political and social welfare activities. Specifically, organizations can self-certify if:
- The organization has spent and anticipates that it will spend less than 40% of both the organization’s total expenditures and its total time (measured by employee and volunteer hours) on direct or indirect participation or intervention in any political campaign on behalf of (or in opposition to) any candidate for public office (within the meaning of the regulations under Section 501(c)(4)); and
- The organization has spent and anticipates that it will spend 60% or more of both the organization’s total expenditures and its total time (measured by employee and volunteer hours) on activities that promote the social welfare (within the meaning of Section 501(c)(4) and the regulations thereunder).
- Any public communication within 60 days prior to a general election or 30 days prior to a primary election that identifies a candidate in the election.
- Conducting an event at which only one candidate is, or candidates of only one party are, invited to speak; and
- Any grant to an organization described in Section 501(c) if the recipient of the grant engages in political campaign intervention.