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THE REAL REASON WHY GROUPS WANT TAX-EXEMPT STATUS

17 May 2013

THE REAL REASON WHY GROUPS WANT TAX-EXEMPT STATUS

The Fix writes, “Amid all the brouhaha over the IRS’s decision to single out conservative groups for special scrutiny as they sought tax-exempt status, one issue has gotten a little lost: Why these groups sought the status in the first place. They weren’t petitioning to become recognized as “social welfare” groups because they were hoping to save on costs. They wanted to keep the identities of their contributors secret. Under IRS law, 501(c)(4) groups, which is what the IRS’ tax-exempt arm was scrutinizing, don’t have to disclose their donors or how much they gave.  In exchange for that anonymity, these groups must prove that their primary goal is non-political — a hazy line that has long concerned campaign finance advocates. WHAT ARE 501(c)(4)’s  AND WHAT DO THEY DO check out this explainer. (Sidebar: While these groups are tax exempt, donations to them are not. So donors are paying taxes on the money they donate.) By contrast, a super PAC can do far more direct political communicating but has to file with the FEC and must disclose not only its donors’ identity but also how much they gave. All worthy points. And none having anything to do with the tax savings from qualifying as a 501(c)(4) — which tells you something about why these groups do it.”

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