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Higher Ed Groups Ask IRS Not To Change Political Activity Rules

February 28, 2014

A coalition of higher education associations on Thursday urged the Obama administration not to apply to colleges and universities its proposed rules on political activity by certain tax-exempt nonprofit organizations.

The Treasury Department and the Internal Revenue Service have been seeking public comments on their proposal to more clearly define what constitutes political campaign-related activity at “social welfare” nonprofits, which are organized under section 501(c)4 of the tax code. Those organizations are permitted to engage in some campaign activity, but government watchdogs say the blurred lines are allowing an influx of secret money into politics that has a corrupting effect.

In proposing new standards at those 501(c)4 organizations, the Treasury Department and IRS also asked for input on whether they should apply the same definition of political campaign activity to 501(c)3 organizations, which include most nonprofit colleges and universities. Colleges and universities, like all 501(c)3 nonprofits, are completely prohibited from engaging in any "political campaign intervention" as a condition of their tax-exempt status.

The IRS doesn't have hard and fast rules for what constitutes such political activity for colleges and universities. Rather, the agency takes a more subjective approach that weights the facts and circumstances of individual situations. But, if the IRS were to expand its new 501(c)4 standards to colleges and universities, it would “fundamentally damage the role that colleges and universities have played for hundreds of years in encouraging civic learning and democratic engagement,” the American Council on Education said in a letter Thursday. 

Colleges, for instance, would be prohibited from hosting presidential debates, or other speeches, forums or panels too close to an election. They would, in addition, face myriad restrictions in their public communications about election-related issues.

Steven M. Bloom, director of federal relations at the American Council on Education, said in an interview that although the administration was merely seeking input, not proposing changes, it is a “worrisome” issue for college leaders. “The IRS doesn't do this as an academic exercise,” he said. “They must be seriously contemplating what they view as problems.”

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