Norton Introduces Bill to Increase Transparency in 501(c)(4) Organizations

Feb 13, 2020
Press Release

WASHINGTON, D.C. – Congresswoman Eleanor Holmes Norton (D-DC) introduced the Increased Transparency in 501(c)(4) Organizations Act of 2020 this week, which would require the Internal Revenue Service (IRS) to make publicly available the forms organizations that self-declare under Section 501(c)(4) of the Internal Revenue Code (IRC) file with the IRS.  Norton says Americans have the right to know which organizations are operating under this section of the IRC.

To be eligible for tax-exempt status under 501(c)(4), organizations, often referred to as “social welfare organizations,” must be “devoted exclusively to charitable, educational, or recreational purposes.”  They can choose to apply for 501(c)(4) status from the IRS, or they can simply self-declare.  Previously, organizations seeking to self-declare their 501(c)(4) status were not required even to notify the IRS of their existence.  In 2015, however, the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) was enacted into law.  Under that law, an organization seeking to self-declare their 501(c)(4) status now must file a notice with the IRS that it is operating under this section.  The PATH Act did not make the filed notices, Form 8976, subject to public disclosure.  Norton’s bill would correct this oversight and mandate that the IRS publicly disclose any filed Form 8976 upon request, thus allowing the public to know which organizations operate under 501(c)(4), as they do with 501(c)(3) organizations.

Norton’s full statement is below.

Statement of Congresswoman Eleanor Holmes Norton on the Introduction of the

Increased Transparency in 501(c)(4) Organizations Act of 2020

Today, I introduce the Increased Transparency in 501(c)(4) Organizations Act of 2020.  This bill would require the Internal Revenue Service (IRS) to make publicly available the forms organizations that self-declare under Section 501(c)(4) of the Internal Revenue Code (IRC) file with the IRS.  Americans have the right to know which organizations are operating under this section of the IRC.

To be eligible for tax-exempt status under 501(c)(4), organizations, often referred to as “social welfare organizations,” must be “devoted exclusively to charitable, educational, or recreational purposes.”  They can choose to apply for 501(c)(4) status from the IRS, or they can simply self-declare.  Previously, organizations seeking to self-declare their 501(c)(4) status were not required even to notify the IRS of their existence.  In 2015, however, the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) was enacted into law.  Under that law, an organization seeking to self-declare their 501(c)(4) status now must file a notice with the IRS that it is operating under this section.  The PATH Act did not, however, make the filed notices, Form 8976, subject to public disclosure.

The IRS has opined that Form 8976 cannot be made available under the Freedom of Information Act or other disclosure laws.  This opinion creates a discrepancy between those organizations for which the IRS must make publicly available information – all Section 501(c)(3) organizations and 501(c)(4) organizations that applied that for status – and self-declared 501(c)(4) organizations.  This discrepancy appears to have been inadvertently created by the PATH Act.

My bill would correct this oversight and mandate that the IRS publicly disclose any filed Form 8976 upon request, thus allowing the public to know which organizations operate under 501(c)(4), as they do with 501(c)(3) organizations.  In the aftermath of the Citizens United Supreme Court decision, which allows for unlimited expenditure in political campaigns from these “social welfare” groups, this bill is especially important to allow for greater transparency.  I urge my colleagues to support this bill.

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