IRS Says Charity Web Site Crossed Line Into Prohibited Activity

The IRS has ruled that a local chapter of a national nonprofit group violated the prohibition against politicking by including the political-campaign materials of an affiliated advocacy group on its Web site, even though the materials appeared on discrete pages and the advocacy group paid all associated costs.

Marcus S. Owens, a Washington lawyer specializing in nonprofit issues, says the ruling ignores critical Supreme Court and appeals-court decisions that say charities can wall off the political activities of their related advocacy groups through such means as cost-sharing.

“The IRS set out a sweeping position here, and provides no boundaries for its analysis,” says Mr. Owens, who is the former chief of the IRS’s tax-exempt division.

He says, for example, that if the IRS bars the sharing of Web space between charities and related advocacy groups, what’s to stop the service from ending the long-standing practice of office sharing where the affiliated group pays for its portion of the costs.

At issue in the ruling was whether the organization improperly intervened in a political campaign because its Web site contained the group’s banner, logo, and other indications of ownership on Web pages that included the advocacy group’s endorsements of candidates for political office.

As is its policy, the IRS did not identify the organizations involved (Technical Advice Memorandum 200908050).

The ruling said that the local organization and the advocacy group shared some board members, employees, and office space, with the advocacy group reimbursing the chapter for its costs.

It said that the advocacy group had maintained a separate Web site for several years, but that after repeated technical troubles, the local group’s Web-site manager said the best corrective action was for the local group to house the advocacy group’s Web pages on its Web site. The pages were designed as a subset of the local group’s site, and the advocacy group paid for its share of the space.

But the IRS determined that the Web pages of the two groups were “virtually indistinguishable” from one another, and thus the local organization was considered to have itself distributed the political materials contained on the advocacy group’s pages.

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