Prohibition against Political Activities by Tax-Exempt Organizations

Posted on 10.03.12

Politically, 2012 promises to be a very interesting year. The stakes are high for all political parties. Further, with the economy, jobless rate, uncertain tax future, looming healthcare and Medicare issues, mounting federal deficit, etc., many citizens and groups, including tax-exempt organizations, are most eager to engage in the political process to promote their various interests. In this melee, a very important tax issue is often overlooked (or not understood) – charitable and educational tax-exempt organizations are prohibited from engaging in any partisan political activity—period.

The penalty for violating the political activity rule is simple but deadly—loss of exempt status. Also, the organization and its mangers may be subject to excise taxes on the political expenditures. Prohibition against Political Activities by Tax-Exempt Organizations