The Sec. 501(c)(4) Story: Program Notes – Part 5 – Controversy #4 & Resolution

iStock_nonprofitXSmallSocial welfare, inappropriateness, resignations, hearings, and complexity—the Sec. 501(c)(4) story has it all…

This blog post is written in five parts:

1.  The Sec. 501(c)(4) Story: Program Notes – Part 1
2.  The Sec. 501(c)(4) Story: Program Notes – Part 2-Plot & Controversy #1
3.  The Sec. 501(c)(4) Story: Program Notes – Part 3-Controversy #2
4.  The Sec. 501(c)(4) Story: Program Notes – Part 4-Controversy #3
5.  The Sec. 501(c)(4) Story: Program Notes – Part 5-Controversy #4 & Resolution

Controversy #4

Is reform needed for Sec. 501 on exempt organizations and Sec. 527 political organizations? The controversies noted above, along with the reality that Sec. 501(c) lists 29 types of nonprofit organizations, indicates the need for simplification and greater certainty. Concern about the political nature of some Sec. 501(c)(4) organizations raises the issue of whether they should be treated as Sec. 527 political organizations or required to publicly disclose donor names (as is required for Sec. 527 donations).

Resolution (Looking Forward)

Certainly, there is much work ahead for Congress and the IRS to complete this story. Likely, Congress will gain a more complete picture of the events at the IRS. Then taxpayers may get “The Section 501(c)(4) Story: Part II.” Stay tuned.

Exhibit 1

IRS Organization Chart for Exempt Organizations (EO)

Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.

Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.

Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.

Prior to joining SJSU, Annette was with Ernst & Young and the IRS.

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