501 C 4's - What the Scandal is About
The scandal surrounding the Internal Revenue Service is centered on the scrutiny of a group of organizations better known as “nonprofits.” Section 501 of the Internal Revenue code provides special tax treatment for these organizations. All of these organizations are "tax exempt" which means they pay no income tax, but they have to be formed for specific purposes and approved by the IRS. Most folks are familiar with 501(C) 3 organizations. These are groups like the Cancer Society or the Symphony or various foundations. Not only do these groups pay no income tax, if you make a donation your contribution is tax deductible. These are set up for educational or charitable purposes and can only engage in minimal political activity. But there are other types of 501 (C) organizations. Those in the news today are known as 501 (C) 4’s. Traditionally, they are defined as civic leagues, local employee associations, and groups that promote the social welfare. 501 (C)