The ban on political campaign activity is a requirement imposed by Congress for organizations recognized as exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code. To maintain their tax-exempt status, these organizations cannot participate in, or intervene in, any political campaign on behalf of, or in opposition to, any candidate for public office. This includes the publishing or distributing of statements.
The legal basis for this prohibition is found in section 501(c)(3) of the Internal Revenue Code, which states that organizations must be organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, and no substantial part of their activities may involve carrying on propaganda or otherwise attempting to influence legislation. Additionally, these organizations must not participate in, or intervene in, any political campaign on behalf of, or in opposition to, any candidate for public office.
The regulations further clarify that an organization is not operated exclusively for exempt purposes if it is an "action" organization, which includes those that participate or intervene, directly or indirectly, in any political campaign on behalf of or in opposition to any candidate for public office. Activities that constitute participation or intervention in a political campaign include, but are not limited to, the publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to such a candidate.
Violations of this prohibition can result in the denial or revocation of tax-exempt status and the imposition of excise taxes. The IRS provides detailed guidance and examples in Revenue Ruling 2007-41 to help organizations understand and comply with this prohibition.
Sources:
§ 501. Exemption from tax on corporations, certain trusts, etc.
Rev. Rul. 2007-41
Publication 1828 (8/2015)
TAM 200446033
Publication 4221-PC (3/2018)
