Page1 of 1

Flax Nikole C

From: Lerner Lois G

Sent:Wednesday Janua� 04

2012 12:06 PM

To: Flax Nikole C

Ce: Miler SEvenT;

Marx Dawn R

Subjec�RE: Work Plan

Thanks so much-�’mgood

with allyour changes--� takes a

village!I assume we

can startgetting ready for our usual

pressconferencelrelease? As to the random

sample piece I’ll check.

Director ofExem� �n�ons

From: Flax Nikole C

Sent:Tuesday January 03

2012 3:42 PH

To: Lerner Lo� G

Cc: Hil�r StevenT;

Harx Dawn R

Subject:RE: Work Plan

Lois -I am

�en I hear mo� re timing Thanks

From: Lerner Lois G

Sent: Thu�da% December 2� 2011 4:39 PH

To: Rax Nikole C

Cc: Hil�r StevenT;

Harx Dawn R

Subject: Work Plan

I assumeyou

are gone but

justwanted to ask if we can resolve the final

language

ASAP after we come back-J� like to s�rtsetting up

thepress

conference as we

have been asked already when it will be. Thanks and Happy Holidays!

P.S. dawn Marx will bemy new Execu�ve Ass�tant and

RegeinaHall

my new

Manager ProgramStaff a�er

January 1 so if

you’re tryingto find

me Ws a good

idea to cc one of them.

Director of Exem� �n�ons

2/4/20 ] 3

Page1 of 1

Flax Nikole C

From:

Sent:

To:

Cc:

Su�e�:

ARachme�s:

Sorry for thelateness-meeting

is in themorning.

Lemer Lois G

Wednesday O�ober 31 2012 4:38 PM

Ho�on Wmonna F

Flax NikoleC;

Miller S�ven T

FW: Dual t�ck m�ed�s �r STM me�ing

Dual T�ckSumma�

�r STM 1�23�012.do� MemoDu�-T�ck.pd�

Du�-T�ck

Pmcedu�spd� Dual T�ckApproach Diag�m 7Q-12.p�;

Dua�T�ckInven� Weekly T�c�ng

�012-10�.xlE Dual T�ck Summa� �3.doc

But the storm inte�ered

Director of Exem� O�an�ons

From: Lowe 3us�n

Sent: Wednesday October31

2012 4:36 PH

To: Lerner Lois G

Subje�: FW: Dual track mateda� for STHmeeting

From:Downing

Nane�e H

Sent: Fnda% October26

2012 8:26 AN

To: Lerner Lois G

Cc: Lowe3us�n;

�ndell 3udRhE;

Narx DawnR; Downing Nane�e H

Subject:Dual track mateda� for STH

meeting

Several docs �rmeeting

with Steve I have a�ached:

Afteryour �view let me know ff

youneed

any�ingelse or 0

=

’

Nan

Page1 of 1

Flax Nikole C

From: Lerner Lois G

Sent:Monday

November28

2011 11:52 AM

To: Flax Nikole C

Cc: GrantJoseph

H

Subject:Work Plan

An movement? I have another s

it.

out. Thanks

W�dnesda and was ho to �lk about

=ckfus is�ready ragging

about)e�ng

Die.or of Exem� O�a�z�ons

2/1/2013

Page1 of 1

Flax Nikole C

From:

Sent:

To:

Cc:

Su�ect:

Tuesday November 2� 2011 4:27 PM

Flax Nikole C

Lerner Lois G; Letoumeau DianeL;

SmithPhilip A;

Pa�ner Me�ney J

EO Work P�n- ARached

A�achment$: 2012 Workplan�NALDRAF�doc

Hi Nikole:

Per Lois’reque�

I am aRaching the most current version of EO� AnnualRepot

and Work Plan...

Let me know if

youneed

an�hingelse.

�ndOutreach

IRSExempt Organizations

202-283-1�(p)

202-283-8858(f!

2/1/2013

Page1 of 1

Miller Steven T v

�

From:

Sent:

To:

Cc:

Su�ecb

Lerner Lois G

Tuesday November 08 2011 11:34 AM

Flax NikoleC;

Miler Steven T

Grant JosephH

WishfulThin�ng

A�achme� 2012 WorkplanFINALDRAF

A�ached is the final "Dra�" of m plan.�I know we are meegng with the

Comm�s�ner on that next Tuesday.I am scheduled to speak

at Loyola on

Thursdayand would love to be able to issue the work that so I can

talk about it.

Thanks

Dire�or of Exem� O�an�ions

1/29/2013

G�gs:

FY 2011 was a busy and demanding a year�r Exem� O�an�ations (EO) as it was �r

most of the exem� se�or. EO faced sh�s in �adersh� began � move much of our work

from proje� toprocess

and im�emen�d new federal �qui�me�s that affe�many

�ousands of exem� o�anEafions. It was impo�a� � us to accompl�h those goals while

continu�g to deliver the same level of se�es and produce the resul� that our exem�

stakeholders exped from us.

Thatexperience

will beput

to good use in FY201�Budg� con�in� �su�ng from the

econom� downturn continue to test federal agencies and exem� o�an�a�ons a�ke. EO

i�k�a� i�t� �i�grnq��tl�j�’�łst

exem � ł�a n�ns’

we a re

We areshifting

frompdnt publ�ionstoe�mnic versions that can be down�aded by

anyłne’are

�l�nganywh�e’more

onanYthe �n�r’n����i�t�do�amn�n�C�l�gWs �

wo�shopsfor small andme�um-size o�an�ations expending �wer �sou�es while

ach�ng g�a�r geographical �ive� and commun�y �voWemen�

We also have wo�ed to smooth the �an�on �rsmall exem� o�an�ns who now

must meetfiling �quimments asena�ed

by Cong�ss. The Pennon P�ion A�

�g�t�n automatically�vokes

exemptstatus for

o�an�ationsthat have not filed �r throe

FY 2011 a�oma�ed the end of �eth�myear phasmin of the �des�ned Form 990

Return ofOrganization Exempt

From �come Tax. Recei� and ass� levels that define who

must file the ful/Form 990 990-EZ or 990-N are now set. For EO this means Me lead-up

time isover and the �ede�gn has begun �

payoff

by p�viding us with more in�rma�on

about exem� o�aniza�ons. Th� al�ws us to use data ana�s and build risk mode� that

�llguide our work andg� improve our

abili�to

suppo� highs�nda�s of

tmnspa�ncy

and �ewa�ship among exem� o�an�ations.

Asalways we look �rward to

wo�ingwith our pa�ne� and

�akeho�ers in theyear

ahead.

S�ce�

Lois G. Lerner

�or Exem� O�an�afions

OrganizationalInformation

EOStaffing

The EORulings

and Agreements office (R&A) processes ap�icationsfor tax

exemptionand

pro�des direct�nthrough pdvate

�er rul�g� tech�c� advice memoranda and formal and

informalgu�ance.

�_�._�_�

The EO Examinations office (Exam) pmmo�s commence by analyzing operation�and

finan� activit�s of exem� o�an�ns. Examdevelops processes

� ide�i� a�as of

noncompliance developscoEe�ive

str�egies and coordin�es with other EO �n�ions to

ensu� compliance.

The EO Cu�omer Educ�n and O�ach office (CE&O) coordinates assistsand suppo�s the

dev�opme�� internal and e�emal commun�c�n� �rms and pu�ations

and e�emal

education and outreach effo�s.

Figu� A: Table of EO on-roll employees over a 3wear pedod

Rulings &

Agmemen�

2009 366

2010" 337

2011 332

Examina�ons

525

�538

�-�31.

-- Customer

Education &

�_ 13

12

�re�oYs

Office

11

12

14

To�I

910

9O0

889

�010a�u�ed figu�s.

Figu�B: O�� c�d�RS E�m�O�an�ons

IAgr�n�&A)l

�[ö

Cus�mer

Educ�noutmach(CE&O)�

&l

D�erm�ns

1

E�MPT O�l�S

"�Manageme�Pmg�m

1

I

I

Examinations

DeterminatiłnSAssu ranceQUality

1 I

E�min�on Pmg�m & Renew�PR)

1

5 Exa�n�on �e� Areas

Gu�ance

Compliance

In add�on to our reg�ar commence wo� in FY 2011

EO dedic�ed resou�es to two s�n�ca� effo�s--

wo�ing to resoNe FICA refund �aims forquailed

medical re�de�s andin�ating hosp�al commun�y

benefit renews as mand�edby the P� Prote�bn

and Affordab� Care A� (ACA). Inspite

of �ese

addit�nalrespon�lities EO co�inued to maintain a

�rong com#iance presence as the cha� below

illustrates.

18000-

16000-

14000-

Rgum C: T�al �m�r � retums m�ew�

10000-

8000-

6000-

4000-

2000-

0-

FY04 (Basel(ne FY09 FY10 FY11

ß Traditional Examina�ons[]Comgliance Checks

EO Examinations

Over �e pa� coupleof

yea�were

beentaking a flesh look at Cu�omer

Sat�fac�onsuwey

resul�

andcons�edng things we can do �

make the examprocess

less

bu�ensome for our taxpayer. Were

imp�me�ed severalimprovemen�

that we hopewill �su� in a more

posi�ve examinaSonexperience.

I�

like to share a couple of them with

you.In addition to the Fast Track

Setfleme�process

discussed in the

box bebw we have a new EQ

Examina�ons unit bcated at theOgden

Sew�e Center that is dedicated to

resoMng pro�em& like m�ap#�d

paymen� or inco�e�imposition

of

pena�e& adsingfrom examina�ons of

exempt o�an�ations. Also we have

been gMng "plain �nguage" updates

to some of our examina�on le�e� and

adding co�ad �formation for the

exam agenfs group managerin case

organ�ations or their�presentatives

w�h to elevate their que�ns or

concerns. EO Exam�ations will

continue to focus on

cu�omer seHice

improvements in

FY 2012.

NanDowning

Dim�or Examina�ons

EO continued topilot

the Fa� Track Se�eme�(FTS) program.

FTS is admini�eredby

Tax

Exem� and Governme� Entries(TE/GE) and

Appeals andprovides an

expedffed process

for the IRS and taxpaye� to resoledispu�s at an eady stage using an Appea� offi�al as

a neu#al pady. By resting d�putes before a formalappeal

is filed or thepa�es go

to

couP FTSrepresen� a s�n�cant

�me and costsavings to all EO �akeho�e�.

Rulings andAgreemen

In FY 2011 much of EORulings

and

Ag�emen�’ �cus was on imp�mentingand

p�ding guidance on twosgn�cant pieces of

�gislation:the Affo�able Care Act

affe�ing

exem� o�an�ations and the a�om�

�voc�n �in�eme�p�cess

c�ed bythe

Pension Protection Act of 2006 (PPA).*

*Additional �rmation on �ese twoprojec� can

be �und on pages6 and �

In add�ion EO updated consol�ated and

final�edguidance

thatpro�des

vital informa�on

to �akeho�e�. EO wo�ed with Chief Counsel

and T�asu� on thefolbwing:

Regula�ons

ß Notice of P�posed Ru�maMng (P�p. Reg.

ı301.6104(�-1) which �vised the rules on

d�dosu� to state chari� �gul�o� reflecting

changesmade to sec�on

6104(� bythe PPA.

EO coo�in�ed e�ensNe� with the Na�ona�

Assod�bn of Sta� Chad� O�als� �duce

barders to �es’ pa�dpation in the

i�ormatiomsharing ping m; and-

ß F�ng the�g�ations imp�menting the

�vised Form 990 �as. Reg. 1.170A4� and

1.509(a)4J. Among other measu�s �e

�gulations�imina� the b�densome

two4�p

processfor a new o�an�a�on to be

�cogn�ed

as apublicly supposed chadW.

EORulings

and AgRemen

Aspa�

of our ongoing effo� to

�reamHne the determ�nsprocess

we have shifted frompaper proces�ng

of

applications� an e�ron� case

pmces�ng sy�em.This

sy�em was

in�ial�te�ed on small

groupsof

determin�ns cases. Based on the

success of these tes� we deeded the

sy�em was �adyfor use with a broader

cross-se�n of EO D�erminafions

cu�ome�. In FY 2011 this sy�em was

rolled out to all EO Determ�ations

cases. As is often the case with new

�e�n�sy�ems we have

experienced

gli�hesthat slowed our

process but we are

confident that those will

be resolved and the

sys�m will have a

posffive impa� on the

determinatbnsprocess.

David Fish

Acting Directo Rulingsand

Agreements

Revenue Procedures

ß Rev. Prec. 2011-10 which upda�d a 35-yeaFo� revenue procedure on how to o�ain a

d�ermin�n on public chadW �ass�catbn and conve�ed it to an annual revenue pmcedu� in

o�er toprovide a mechan�m �r more �gular upda�s;

Rev. P�c. 2011-33 which upda�d a 29-yeaFo� revenue procedure thatpro�des gm�om and

con�bu� with reliance on PuN�afion78 Curnu�ve L�t of Organ�ations adds

provk�ns

perm�ingreliance on the EO Business Ma�er

File and incorpo�tes the new automat�

revocation prov�bns and;

ß Rev. Proc. 2011-15 which increased the Form 990filing

�sho� from $25 000 to $50 000 and

consol�atedmany

of the exce�ns fromfiling

Form 990 into a single revenue procedure.

EO a�o deve�ped a new form Form 8940 Request for Miscellaneous De�rmmation which

makes the subm�s�n of ninecategories

of�dividually

wdttenreque�s for m�c�neous

d�erminations more exped�ious and theproces�ng of such reques� more effic�.

4

Education

EO maintained Ks core educational ac�t�s whi�

continu�g to produce targetedoutreach

produ�s.

In FY2011 EO’s Cu�omer Educat�n and

Outreach office:

Completed the fir� two �ages of a research

effo� � learn more about cu�omer needs

in�uding a survey of mo� than 1 200 small

�exem� organ�ations.

Offend new in�B�e educational m�edal �

helpthe

publicunder�and the au�m�

revoca�onprocess

and worked with other IRS

offices to make sure that the most current list

of o�an�ns au�m�al� revoked is

av�b� onIRS.gov.

C�a�d a landing pagefor the Affo�able

Ca� A�(ACA) on the �ha�s and

Nonprofit’ pagesof IRS.gov that cons�ated

all EO-�d ACA in�rmation.

Launched the Academic InsUlins In�e

Summer 2011 GBdua� StudentI�emsh�

pil� p�gmm induing so citingand

�ceNing mo� than 30 ap�ns.and

c�ation of a 10-week i�ems�p programin

EO’sRulings

and Ag�emen� office.

Int�duced a seminar at the 2011 N�nw�e

Tax Forums ent�led ADay

� �e Life of an

Exempt Organ�ation� Audit that walks

ßmugh

the pa�cu� � EO exams.

Figu�D: EO educa#on and outreach effods

O�achFY 2009 FY 2010 FY 2011

Efforts

EO Upda�

subscdbe�

101 730 130 176 183 516

�ndees at

speeches Tax

Fo�ms

we�na� and47 483 32 111 41 252

wo�shops

IRS.�oWeo

Wesib

� v�ws

4 994 022 �33�380 5 242 943

Customer Education

and Outreach

I’mpleased

and excited to be the new

director of Customer Education and

Outreach. It’s a wondedul oppo�un�y to

work with Lois and all ofmy c�agues to

serve the exempt commun�y. Using

CE&O’s microsite stayexempLirs.goK

and other media we’re

goingto push hard in

FY 2012 to do more of

what we do best -

inform explainand

educate.

Melaney Pa�ner

Die or Cu�omer Education and O�ach

ßSta�ing Out Righ� What New

501(c)(3)

Organizations Need to Know(November

18 2010)

ßS�ing Out

Right:What New NO�

501(c)(3) O�an�a�ons Need � Know

(Februaw 11 2011)

ß M�rna�onal Ac�wties of Domes�c

Chari�b�Organ@a�ons (August 4

20�1)

Mo# web�a� a� posed on �e IRS Video

Po#� www. i�deos.�ov

FY 2012 WORK PLAN

L iLegislati#elmplemb tation ....

In FY 201� EO will continue � imp�ment He Pens�n Pro�ction Act and He

Affordab� Cam AcL

Auto-Revoca on for Non-Filers

The Pension Protect�n Act of 2006(PPA) required

that almost alltax-exempt

organ�ationsfile an annual return or nonce wRh the IRS

every

....

year and

providedthat

any organ�ation that does not file a requiredreturn or notice for three consecu�ve

yearSand ma�tainaUtłmaticallYa

list

oflłSeSrevoked

�s

tax-exemptorgan�ations

status" The PPA requiredthe_IRS to

publish

EO worked hard toprepare

for imp�mentatio�of the automatic revocatio�

....

requirements.On June

8 2011 the IRS published the first Hst of revoked organ�ations.

The list isupdated month� as organ�ations

w�h di nt fiscalyeaFends fail to file for

a third consecu�veyear.

The list also isupdated as needed to remove organ�ations

listed in error. As of November 2011

�thelist

totaled

about 380 000

organ�at�ns.

The list is ava�ab� on the IRS website in three formats.There

are two searchab�

formats (Adobe Acrobat and ExceOfor each state the

District

of C�um�a and all

others �ntemationaO andaASCII text file of all

organizations.The

list in all

formats includes eachorganization’s name emp#yer �en�ficat�n number

(EIN) last

known address subsectbn ofexemption effect�e date of automa�c revocation and the

date � was added to the list. --__

�Yeci�t��i �e�eSł!l�l!!

�t� e�v� b�rt� �

on-l in

eandwil I

includes a wea� of that information. This includesguidance to assist revoked

organ�ations that want to reinstate theirtax-exempt status. No8ce 2011-44

provides the

generalrules for

a#plyingforreinstatement of

tax-exempt status0nduding requests for

retroactivereinstatemenO

untilregulations under the new PPA

prov�ions are enacted.

Nonce 2011-43 and Rev. Proc. 2011-36provide

#ans�on relief for cedain small tax-

exempt organ�ations which allows them to

pay a reduced appl�ation fee of $100 and

regaintheir

tax-exempt status retroactive to the date of revocation.

EO is

already p�ces�ng min�eme� ap�ations and as of thebeginning � fiscal

year 2012 more than 5 000 o�anEations have takenadvan�ge of the #ans�on relief

�r smallo�an�bns.

The IRS con�nues to send noOces toorgan�ations to remind them of their

filing

respons�ilitie&In

add�ion EO co�inues toupdate

its cu�omer outreach and

educa�onal materials to offerongoing

informalguidance and address new issues

�ting to the automat� revoca�onprogram

such as updating ap�ab� FAQs on the

IRS websffe(www.i�.gov).

Implementationof the Affordable Care Act

(ACA)

The Affo�ab� CamA� of 2010(ACA)

added new �qui�me�s nat �exem�

hospffalsmust meet to mai�ain their �exem� status. It also created new Wpes of

nonprofit o�an�ation& in�ud�g �exem� o�an�ations.In addffion many

of the

p�sbns in the law �cus on �sponsi�es of em#oye� including �exem�

empbye�.

The ACA�quims �e IRS to �view the communiW benefit a�es of

hospi�l

o�an�ns at least once eve�thee

yea�. Acco�ingly EOExam �rmed and

t�ined a Review ofOperations group

dedicated � compl�g the �u�d� required

communffybenefit �views which

beganin Mamh 2011. These rev�ws a� not

examinations and thegroup

does not expe� to conta� hospita�while conductingthe

m�ews. As we move �rwa� EO will use the information g�hemdffom the �v�ws for

mseamh �po�ng and com#�nce purposes as weHas� iden� a�as whe�

add�on� guidance education or Form 990changes a� needed. The IRS issued

Nonce 2011-52 in

July 2011 to add�ss the CommuniW Heaffh Needs Assessme�

�qui�me�s and �l�ed excise �x and�po�ingobligations ap�ab� to �exem�

hospffa�.We con�nue to work with T�asu� and Counsel to

develop guidance on the

new Se�ion 501(0 mqui�me�s.

EO isworking closely

wffh otherpa�s

of theSewice the Office of TaxPolicy

at

Tmasu� and HHS � imp�me� �her ACAprovisions.

The IRS issued N�ice 2011-23

in Mamh 2011 toprovide guidance on the mq�mme�s for tax exem�n under

Se�ion 501(�9) whichcm�ed a new Wpeof

exempt o�an�ion and annualfiling

�quimmen� foro�a�za�onsdescribed

in that se�ion. EO is wo�ing on guidance

�ga�g �eapplica�on p�cess

�r �cogn�on ofexemption

under Se�ion 501(�9).

In Ma�h 2011 the IRS �sued No� 2011� which summar�ed how the IRSexpels

in�rm�ion�r cha�ab� o�an�s thatmay wish � paN�p�e in the Shard

SavingsPm�am�

EO impleme�dchang’ est0

Form 990 to accommodme new �poRing �qui�me�s

under the ACA �r �m�hosp�alsand 501(�9) Qu�ed N�p�t Heath

Insu�nce Issue�. Inadd�ion Schedule H

(Form 990) was revised to add new Pa�

V(b) to address the new 501(� mq�men� �r �x�xem� hosp�a�. Form 990-T �s

�vised to alloweligible �exem� emp�ye� to claim the small

employerheath care

�x c�dit under 45R.

The Form 990redes�&

wh�h �ok effe� � �xyear 200& was done with a goal

of

promoting compliance. Us�g me weal� of �formation me new formprovide&

EO �

deve�p�g risk mode� �improve case se�bn. The

followingFY 2012

projec�will

use da� colle�ed from He revised Form 990 to assess He risk fornoncompliance.

(c)(4) (5)and

(6)self-declarers

Thesegroups

- social welfa�o�an�ations; labor ag�cu�u�l and ho�cu�u�l

groups

and businessleagues such as a chamber of commeme -

can declare �emse�es �

exempt withoutseeking a determina�on �om �e IRS. Risk ana�sis of information �om

theexpanded Form 990

sugge�s however that some o�an�ations maynot have

�ass�ed �emse�escorrectl�

andthey may

not be fol�wing �e r�es that apply to

them. In FY 2012 EO will d�bute a comprehen�vequestionQaire

to assess pin.ices

and will take measures to improve compliancewhere

necessary: �

Płl�ica(IoptionA_LonagC�VitvYemion)

�

In FY 2012 EO �11 use a dual�a� app�h to review com�n� w�h �e�ws

governing pol�cal campaign i�e�enfion byall

�pes�

exem� o�anizafions.As in the

pa� al�g�ons of impermiss�p�cal �mpaign is�ention�11 be �ewed

by a

comm�ee of career civil se�an�. On a second tmc� EO will use in�rma�on from �e

�des�ned For� 990 todevelop ris#b�ı#d

models to ide� p�e� ��s.

Cases iden�fiedby these mode� also

wilt�oto the �mmittee�r evalua�on. Cases

enable EO to �cus i�

exam�a�o_

_

resources on modus al�g�on&

Dataga�e�d from the new For� 990 plays an impo�a�

ro� in thisprocess allowing

���2�omplian% �ing

risk-baseda�lNi�.

In FY 2012�EO will be Ioo�ng at o�an�o� that �po� unrela�d business income

on their

Form��90but have n� filed a 990�. or that

con�en�y file a 990� but

de are no �ue.

Governance........

In FY 2012 EO �11 use da� �om the �des�ned Form 990 todevelop risk models that

analyze issues related tocompos�on of boa�s �cusing spec�cal� on o�an�ons

that have�mily

boards or one-pe�onboa�s. Add�on� a�as �r eva�a�on are

�la�do�an�ons mater�l d�e�n and excess benefit.

M�h of EO3 wo� � �bomfive revolving�m� sta�holdem as weft as o�

�agu� and ��a#s elsewhere � He �& ��a� we will bu� on �g

�bom#� projec� �cluding He �ma�lproje� me Na�l Re arch

Prog�m3 �u� � Employm�t �x Ream& and �e A�m� �s�u� �a#�.

We a�o will wo� � o�e� m our �vis�n on a �w proje� � stream�e �e

�amma� �rma�n on �e �harities andNon.fits’ page

� �&go�

I nterna�onal

G�bal�ation affects all pa�sof our

economy �uding theexempt sector. Many tax-

exempt organ�ations in order to accom�h their charitab�

purposes are moving

money people andgoods across U.S. borders. EO’s concern is whether assets of

exempt organ�a�onsthat are dedicated for charitab�

purposes internation� are

being dive�ed for non-charitab�purposes.

To look atthis EO has c�borated with our

counterpa�slRS

e�ewhere in the TE/GEdivision as well as other

b�siness

un�s of the

In FY 2011 EO formal�ed itspa�nersh�s

with outside entities togather

international

data and informatbn. We worked with the Joint International Tax She�er Information

Center’informationtheexchanges.Canadian

RevenUewealsoAgenCYsuppo�edand �l�nłtt�łsU �tnric�d�gt�e

Large

Business and International dM�on on the Global High WealthIndustry

endeavo

In FY 2012 we will con�nue to examine exempt �rgan�ations that operate overseas to

ensure that those ac�es are cons�tent with theircharitabl�

�

purposes.This will

include a number oflarge pr�ate foundat�ns that have international ac�es w�h

assets or total annual revenuegreater

than $500 million_We will belooking

at

com#�nce issuesunique to pr�ate founea�eaS _____�

such as self-dealing failure to

distdbuteexpend�ures.income

excess businessholdings �dy

!n�estments

and taxabN

Inadd�ion we will con�nue to�ok at

organizationsthat

repo� ownershipof a foreign

bank account to

determine:�

.....

’��

ß Whether the organizationmaintains adequate books and records to ensure

ß

�f� �b�d

properdiscre�on and con�ol over

funds that havele� the United States

- "Whether the orgaai�ationhasmet all

filing req�rements and

ßHo�fore�n

operationsor grantma�ng fu�hers the

organ�ation’s exempt

purpose.� ��

foreignand domesticcharities w�h interna�onal actM�es.

Academic Ins�tu�ons Ini�ative

In 2009 EO establ�hed the Academ� Insti�tions In�at�e to c�bor�e w�h

educ�nal entries that educate and develop pm�ss�na� who willshape the

nonprofit

sectoF Ourgoal

is tohelp pmpa� the

nonprofit�adem of the future by p�v�ing

con�e��aining

about �de�l tax law �spons�i�es.

In FY 2011 EOp�duced i� wo�shop p�g�m �r small and medium4�ed

(SMS)

nonp� o�an�a�ons and c�bo�d with nine un�e�s to host the p�g�m&

These in�u�ons -�nging from communi� colleges to law schools to un�e�based

profess�nal deve�pme� prog�ms- offered SMS wo�shops to their �culW students

andnonpro�

andpractitioner

commun�e� The col�borative approach- with schools

providingthe venues and

handling �gistics- was overwh�ming�

successful and in FY

2012 all SMS wo�shops will be assorted with academic in�u�ons.

In FY 2012 EO also will continue proje�s sta�ed in FY 2011 including a summer

i�emsh� prog�m�r g�dua� �uden� i�e�ed in ca�e� in the

nonprofit sector

and an EducatoKs Resou�ePage

�r the "Char�es and Nonpro�s

ł

sec�on on IRS.gov.

National Research Program

The IR$-wide Na�onal Resea�h Program (NRP) looks at emp�yme� �x ma�em

invokingtaxable and �exem� o�an�ations la�e

and smaH bu�nesses and the

govemme� se�or. The resuRs of thisproje�

will in�rmimpmveme�s to IRS

procedures �r aud�ng p�ces�ngand mso�ng employment

tax return cases. EO’s

potion of the proje� involvesexam�ing

theemployment tax returns of 1 500

o�an�ations w�h 500 selected �ndom� each

yearovera three-year pe�od.

E� will

continue to work on NRP in F¾ 2012 the thirdan�fina/year

of theproject �cusing on

completingall mm�ng exams and

proddingdata �r the overall IRS

repot.

EO Examina�ons Resource Page on IRS.gov

In FY 2012 EO Cu�omer Education and O�mach will work with EO Examina�ons to

provide a ce�ml resourcepage

�r exem� o�an�ionson IRS.gov.Posted content

willhelp o�an�ations undem�nd what

they can expe� cluing a comp�ance check or

an examina�onby �arifying

theva�ousstepsin the

processand

prodding dim� links

to �l�ed msoumes � are ava�able e�ewhem onthe web re.

EO a�o will be working on �ese projec�� FY 201�

ii��!�

�1�;h�l�t’�

findingseXaminafiłnSdrawnłfffomSele�edthe

questionnaire

cłlleges

anddata

Disaster Relief�mmunications

D�asters at home and abroad o�enpromN an immediate effo� �om the

exempt

commun�y to raise and d�#�ute �nds for rel�LUnfo�unately

d�aste� also prese�

oppo�un�es foro�an�ations to abuse the tax law. In FY 2012 EO CE&O will

coordinate with EO Examina�ons and R&A toidenti� spedfic compliance issues that

are most common� associated with disaster reliefeffo�s and will

develop a

commun�a�onsplan to

helpeducate new and

existing o�an�ations about the rules

andrespons�il�es

in this area. We want to help groups providerelief to those in need

w�houtengaging

in activ�es thatmay cause them to be penalEed or jeopa�e their

exem�ion.

]0

Group Rulings

TheAdviso� Comm�ee on Tax Exem� and Govemme� EntRies

(ACT) issued a

�po� ongroup exemptions in June 2011. EO will continue the

analysisof the

group

exemption issuebegun by the ACT

by dev�o�ng a ques�onnai� � be sent to a cross-

section ofgroup �ling

holders. Thequestionnaire

will

explo�the

p�ices usedby

the

central or paint o�an�n to meet the �qui�men� of Rev. P�c. 80-27 and will

include questions about the me�ods used to s�is� annualfiling �qui�me� In

addRion based on our experience wRh the auto-revoca�onprocess

EOplans

to expand educa�onal effo�s �rg�up ruling

member.

Mortgage Foreclosure Assistance

As res�enti� fore�osures have mounted the IRS has seen the number of exempt

determinecomplying

withwhetherth

erequireme�sthey

are

fuNIlingof sectiontheir exempt501(q)pUrpoSe of the Code.

and whet�er they are

State-Sponsored Workers Compensation Organizations-

(c)(27)s

In FY 2012 EO will review the a�es of a number of �a�ponsored groupsthat

provide wo�e� compensation �su�nce and claim exem� �us under Se�ion

501(�. We will send a ques�onnaire to theseo�aniza�ons to de�rmine wh�her

they areme�ing

the c�teria �rexemption are corre�ass�ed as exem�

and are

paying any emp�yme� taxes due.

EO Services and Assistance

In 2010 EO launched a resea�hproje� to �arn how small �exempt o�an�ations

receiVeoutreach�X-�latedan

d educat�ninfłrmatiłn.andprogramsforhłWthem.EO � dr�h�l�

�hffr�t�ci_e�cus

groups a te�phone suwey

anda cos�benefit an�ys�-

among o�an�ationsdrawn

�om the EO Maser File. Pan pants includedrepresentatives

from 501(c)(3)

o�anizationswith less than$20�000 in

gross �ceip� and less than $500 000 in

assets (based onTax Year 2Ot0’sfiling �resho�.

determinethe topics

andquestions

forsubsequent telephone

surveys.The

phone

su�eysconducted in March and

April2011

gaveEO quan�fiv� statistical�

projectab� information. The third and final resea�h�age a cost-benefit

analys�in FY

2012 will correlatetaxpayer preferences

and EO outreach effo�s and measure cost

effec�veness.

]!

COMM�ONER

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

WASHINGTON D.C. 20224

May 3t 2011

The Honorab� O�in G. Ha�h

Ran�ng Member

Committee on Finance

Uni�d Sta�s Sena�

Wash�on DC 20510

Dear Senator Hatch:

Thankyou

foryour

letter ofMay 18 2011

regalingthe tax treatment of contributions to

o�an�ations governed by Section 501 (4(4)of me Internal Revenue Code.

Your le�er raises megeneral que�ion rega�g whether IRS en�eme�

policy as it

pe�ains � 501(�H) o�an�ations� �fluenced by pol�c� cons�emtions. As head of

theagency

I can assure youmat me answer � an emphatic

"no." Th�agency

is

apol�cal and non-pa�san.That is a core value of the

agency and one which I take

very sedousl�

As the head of theagency

and meonly pol�cal appoin�e

at �e IRS in the dim�

manageme�chain of the pemonnel who in�a�d the a�mmen�oned a�ns I can

assureyou

that them was no �v�vementby any poli�cal app�n� inside or ounce

theagency

in the �a�on of these lettem. I can �her assureyou

that i have had no

conve�ations withanyone

ounce of the IRS �ga�ing anyen�eme� �gy for

thisca�gory

of cases.

The IRS has the �sk of adm�tedng a set of �ws that often touch on sens�e issues

�ud�g �e pol�cal process.I am commi�ed to

ensudngthat we do so in a �i� non-

pa�an manne�

Final� I have asked �e appmpda� IRS offidals � con� me Comm�e s�ff �

addressany open questions.

Sincerer

Dou Shulman

COMMIS�ONER

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

WASHINGTON D C. 20224

May 31 2011

The Hono�b� Jon K�

United Sta�s Sena�

Washington DC 20510

Dear SenatorKyl:

Thankyou

foryour

le�er of May 18 2011

regard�gthe tax treatment of co�dbutions �

organ�ations governed bySe�n 501(�) of the Internal Revenue Code.

Your letter raises the genes! que�n regardingwhether IRS enforceme�

policyas it

pe�ainsto 501(�(4) o�an�ations

is influencedby pol�cal

con�derafions. As head of

theagency

I can assure youthat the answer is an emphatic

"no." Thisagency

is

apol�caland non-pa�san.

That is a core value of theagenc�

and one which I take

very sedous�.

As the head of theagency

and the on� p�cal appointeeat the IRS in the direct

management chain of the peBonnelwho in�ated �e aforementioned actions I can

assure youthat there was no �vo�ement by any political appointee inside or outs�e

theagency

in the in�ation of these �ers. I can fu�her assureyou

that I have had no

conveBations wRhanyone

ounce of the IRSregarding any

enforcementstrategy

for

thiscategory

of cases.

The IRS has the task of administering a set of �ws that often touch on sens�ve issues

�u�ng the pol�cal process.I am commiRed to ensudng

that we do so in a �i� non-

pa�isan manner.

Finally I have asked the appropriate

IRS offida� � conta� the Comm�ee �aff to

addressany open questions.

Sincerely

isH. Shulman

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

WASHINGTON D.C. 20224

May 31 2011

The Honorab� Pat Robe s

Un�ed Sta�s Senate

Wash�gton DC 20510

Dear Senator Robe s:

Thankyou

foryour

letter of May 18 201 !regaling

the tax t�atment of con�butions to

o�an�ations governed bySec�on 501�)(4) of the In real Revenue Code.

Your �tter ra�es the gene�l question regalingwhe�er IRS enforcement

policy as it

pe�ainsto 501(�(4) o�an�ations

is influenced by p�al con�derations. As head of

theagency

I can assure youthat the answer is an emph�ic

"no." Thisagency

is

apo�al and non-pa�san.That is a corn value of the

agency and one wh�h I take

very sedous�.

As the head of theagency

and the only p�cal appointeeat �e IRS in the dire�

management cha� of the peBonn�who �ated �e aforemen�oned actions I can

assureyou

that there was no �voNementby any pol�cai app�nte�

inside or ou�ide

theagency

in �e in�ation of �ese �e�. I can �her assureyou

that I have had no

conversations withanyone

ou�ide of the IRS regaling anyenfomeme� �ra�gy for

thisca�gory

of cases.

The IRS has the task of administeringa set of laws that often touch on sens�ive issues

including�e pol�cal process.

I am committed to ensudng that we do so in a �ir non-

pa�an manne�

Finally I have asked the appmpda�

IRS offida� � con�ct the Commi�ee �aff �

addressany open question�

Sincerely

Do� �s H. Shulman

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

WASHINGTON D.C. 20224

May 31 2011

The Hono�b� John Comyn

Uni�d S�s Sena�

Wash�g�n DC 20510

Dear Sena�r Cornyn:

Thankyou

foryour

�er of May 18 2011 �ga�ing the tax treatment of contdbu�ons to

organEa�ons governed bySe�ion

501(c)(4)of the In real Revenue Code.

Your �tter raises thegene�l question rega�g

whe�er IRS enforcementpolicy

as it

pe�ains to 501(�(4) o�an�at�nsis �fluenced by p�cal cons�emfions. As head of

theagency

I can assu�you

that �e answer is an emphatic"no." This

agencyis

apol�caland

non-pa�san.That is a core value of the

agency and one which I take

ve� sedous�.

As �e head of theagency

and the on� p�cal appointeeat �e IRS in the dire�

manageme�chain of the

pe�onnelwho �a�d the aforemen�oned a�ns I can

assureyou

�at there was no invoNeme� by any political appointee inside or ounce

theagency

in the in�t�n of these �e�. I can �her assure youthat I have had no

conveBa�ons wi�anyone

outside of the IRSregaling any

enforceme� �tegy for

ß is

catego�of cases.

The IRS has the �sk ofadministering

a set of �ws that often �uch on sen�ve issues

includingthe

pol�cal process.I am comm�d to ensudng

that we do so in a fair non-

pa�isan manner.

Finally I have asked the app�pda�

IRS offida� to con� �e Comm�ee s�ff to

addressany open questions.

Sincerely

Dou is H. Shulman

COMM�ONER

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

WASHINGTON D.C 20224

May 31 2011

The Honorable John Thune

Uni�d Sta�s Sena�

Wash�g�n DC 20510

Dear Senator Thune:

Thankyou

foryour

�tter of May 18 2011 regalingthe tax t�atme� of contdbu�ons to

o�an�ations governed by Section 501(c)�)of the In real Revenue Code.

Your �tter raises the gene�l question regalingwhe�er IRS enforcement

policy as �

pe�ainsto

501(�(4) orga�zations� �fluenced by pol�cal

cons�era�ons. As head of

theagency

! can assure youthat the answer is an emphatic

"no." Th�agency

is

apol�caland non-pa�san.

That is a core value of theagency

and one which ! take

ve� seriously.

As the head of theagency

and the on� p�cal app�nteeat the IRS in the dim�

managementchain of the pe�onnei

who �ated the aforementioned a�ns I can

assure you� there was no invoNement by any poi�cal app�nte�

inside or outside

theagency

in the in�on of these �e�. I can fu�her assu� youthat I have had no

conve�a�ons withanyone

ounce of the IRSregaling any

e�orcement �tegy for

thiscatego�

of cases.

The IRS has the task of administering a set of laws that o�en touch on sensitive issues

�ud�g the p�c� process.I am committed to ensudng

�at we do so in a fai� non-

pa�isan manne�

Finally I have asked the appropda�

IRS officials to con� the Comm�ee �aff to

add�ssany open que�ns.

Sincerer

H. Shulman

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

WASHINGTON D.C 20224

May 31 2011

The Honomb� R�ha� Burr

United Sta�s Sena�

Wash�on DC 20510

Dear Sena�r Burr:

Thankyou

foryour

�t�r of May 18 2011regaling

the tax t�atme� of con�bu�ons to

organ�ations governed bySection

501(�(4) of the Internal Revenue Code.

Your le�er raises thegeneral que�ion regaling

whe�er IRS en�rcementpolicy as �

pe�ainsto 501(�H) o�an�ations

is influencedby pol�cal con�demtions. As head of

theagency

I can assureyou

that the answer is an empha�c"no." This

agencyis

apol�caland non-pa�san. That � a co� value of �e

agency and one which I take

very sedous�.

As the head of theagency

and theonly pol�cal appoi�ee at the IRS in the dire�

management chain of �e pemonn� who in�ated the aforementioned a�ns I can

assureyou

that �ere was no �voNement by any pol�cal app�ee in de or outs�e

theagency

in the initiat�n of these le�ers. I can fu�her assure youthat I have had no

convemations withanyone

outs�e of the IRSregaling any

enfomement �gy for

thiscatego�

of cases.

The IRS has the task of admin�dng a set of �ws that o�en touch on sen�t�e issues

in�ud�gthe p�c� process.

I am comm�ed �ensudng

that we do so in a �ir non-

pa�isan manne[

Finally I have asked the

appropriateIRS offi�als � contact the Comm�ee s�ff to

addressany open questions.

Sincerely

CHARLES W. BOUSTAN� JR LOU�NA

SUBCOMMITTEE CHAIRMAN

�ANE BLAC� �NNESSEE

JiM GERLAC� PENNSY�A�A

VERN BUCHANAN �OR�A

AARON SCHOC� �UN�S

LYNN �N�H� KANSAS

KENNY MARCHAN� �XAS

SUBCOMMIT[EE RAN�NG MEMBER

JiM McDERMOtT WAS�NGTON

COMMITTEE ON WAYS AND MEANS

WAS�NGTO� DC 20515

DA� CAM� �CH�AN CH�RMAN

SANDER M. � �CH�A� RAN�NG MEMBER

COMMI� ON WAYS AND MEANS

CONG. CORR. BR

CL:LA

SUBCOMMITT� ON OVER�GHT

The HonorableDouOas

H. Shulman

Commissioner

Intern� Revenue Serv�e

1111 Constitution Ave. NW

Washington D.C. 20004

De� Comm�sionw Sh�m�:

June 3 2011

Rec�vedby �e

Comml�lone�s

Correspondence

O�ce

JUN 8ZOII

As Ch�rman of�e C0mmiaee OnWays

and Means I find �e hck of IRS

transparency deep� �oubling. Taxpayer� �ady stmggEto comp� wi� a Tax Code

th� is too com�ex. Now wi� no wam�g �e IRSappe�s

� havese�ctiv�y t�g�ed

ce�aintaxpaye�

who are engaged� p�c� speec�

N� o�ydoes t�s threa�n

pol� speech � ca�s doubt on �e IRS’ �e�liu as an imparti�

enfo� of �e

nation’s tax law. The IRS’sa�liU to

effective�enfo�e �x law and work wi�

taxpayersto ensure comOiance

� not servedby auditing unsuspecting taxpayers

for

v�l�g mx laws the IRS has not acknowledged�r decades.

There are appro�m�e� 120 000 ı501(c)(4) organiz�ions operating across the

United States. For decade� donors m these organ�ationsand the donee

organizations

have relied on the IRS for ce�nU � this area of �x law. Now theycan no �nger do

so.All IRC ı501(c�4) organizations

must now ad�se dono� th� thor cone�utions

mayresult in a targ�ed audit despi� uncertainty

in this area of mx law. Donor � turn

must then de�rm�e whether a donjon to aı501(c)(4) organization

willtrigger an IRS

aunt based on thep�iticM

activities of theorgan�ation.

Committeehas an obl�ation m conduct

oversig�.ofthe IRS and Rs enfo�emem of our

country’stax hws. Because of the serious

nature of the IRS’s audit acfivRies in t�s area of� tax I

�que� th� the IRS answer

�e fol�wing questions� an effo� �

prom�e transp�encyand reassure taxpay�s

�

�k and con�ent enfo�ement of thecountry’s

tax laws � �e norm. Please �spond no

l�er �an June 1 � 2011.

The names tifle�and div�ions and/or offices of

anyand �1 �du�s who were

�voNed orcong�uted � the deccan � �ve�e whether

taxpayer

contributions toı501(c)(4) organizations

shoed be su�e� to the�fi

tax ru�s.

All IRS rul�gsand �m� memoranda �lat�g

� theap�aNliry

of �e�fi �x

to ı501 (c)(4) organizations.Please

pro�de copesof �1 �cord�

intem�

working documents and co�espondence �l�g to �e same.

Pro�de a d�d ex�anationand rdevant documents �h�d � lhe fol�wing

issues:

� How �e �e empl�ees� wo� � �e and �R �s �gani�d

wi�n

�e Sm� B�Sdf-Employ�DN�

b. Wh�e �e emp�y�s� won on �t�e and

�fi�x �es phyNcN�

�c�ed?

How many em�oy�s � �e IRS wo� on e�e �d�fl

t� i�u�?

Pmv�e an �gan�oml � � �e�s � employee�t�n �e

o�an�� st�c�

do Does the e�e and � tax officeprep�e

an annu� work �an �mil� �

the armu� work Nanrdea�d by �e Tax ExempffGovernment

Emities

Di�on? Ifso prov�e a

copyof the last five

ye�s’annu� �po�

If

noL how does �e IRS ove�ee the office’s work�ad and alloc�e

�sou�es � this office?

e. Howmany

�tate and � tax audits were �nducted � 200� 2008 and

20!0 rda�d to�fis

made to501(c)(4) �ganization�

How do em�oyeesth� work on est�e and

gifttax �sues within �e Sm�l

Bufines�Sel�Emp�yedDiction g�n access m �e Form 990s �r

501(c)(4) organizations?

goHow �d

employees� �e

Exempt �ganizati�sDN� � � t�

shrug of �e Form 990 �rm��o� IRSemployees?

Is t�s a

�mmon France?If

m �w

many�am�ons have ori�nat�

from

sh�ed Form 990s to o�er IRS �on�

h. �ovide the names)of the in�du�(� who decided after 35

ye�s m

l�e� contributions m a 501(c)(4) �ganizationas �e� m �e g� rex?

i. Criteria that are used to selecttaxpaye�

forgiR

tax examination.

j.

Provide all information thatanalyzed

thelegal

orpolitical consequences

of-

auditing gifttax returns for contributions to

501(c)(4) organizations

4. How are tax�m� �ganizations �neral��c�d �r �dk?

Howmany ı501(c)(4) audi� are usuMly

conducedevery

taxyear?

Provide a

breakdown of the �tal number of ı501(c�4) examinations conducted annuM�

over the la� fiveyears

andidentify

the tax issues invoNed.

Wh�pe�en�ge

of�fi and e�e tax office examinations

typic�ly origin�e

�om an intem� re�? Please describe IRSprotocol

formaking

in�m�

re�s and how mfe�s areprocessed.

Pro�deany co�e�ondence

and records shared wi� theDepartmem

of the

Tre�ury regarding�e

apN�ation of�fl tax toı501(c)(4) o�anizat�m.

D�fil

H1 communications (wriaen � venal) between �e IRS and �e Departmem of�e

Tre�ury on �is �c fince 2004.

Hease note � �rpurposes

�res�ndi�

m thismque�

the �rms ’�Ms7

’�ommunic�Mn "�lMing7should be in�d con�ent wi� the aaached

Definitio� � �rms.

�aankyou

foryour prompt

a�enfion to this ma�er.

Sincerely

�DAVE CAMP

Ch�rman

DEFINITIONS OF TERMS

The term "record" meansany

wr�te� recorded or graphicmaRer of

any

nature whatsoeve� regardlessof how recorded and whether

originalor

cop� indudin�but not limited to

thefollowing:

memorand� report�

expense report� book� manu� instruc�on� financialreports wor�ng

papers records

notes �er� notices confirma�ons telegram� receipt�

appr�s� pamp�et� magazines newspaper� prospectuse�interoffice and

intra office communica�on� �e�ronic m�l(e-mail) contract� cable�

notations ofany type

of conversa�o� telephone call meetingor other

communicatio� bulletin� printed ma�e� computer p�ntouts te�types

invoice� �ansc�pts diaries an�yse� returns summa�e� minute� bill�

accounts es�mate� pr�ec�on� compa�son� message� correspondenc�

pressr�ease� drc�ar� finand� statement� re�ew� opi�on� offer�

studies and invesflga�on� questionna�esand

surveys and work sheets

(and

all draff� preliminary version� �tera�on� modifica�on� re�on� change�

and amendmen� ofany

of the foreg�n� as well asany

aRachmen� or

appendices thereto�and

graphic or oral records or representa�onsof

any

�nd0n�uding

without limitaflo� photograph� chart� graphs microfich�

microfilm �deotap� recordings and mo�on pictures) and electroniq

mechanical and �e�c records or representa�onsof

anykind

0ndudin�

without limitaflo� tape� casseRe� disk� and recording�and other w�e�

p�nte� type� or other graphic or recorded ma�er ofany

�nd or natur�

howeverproduced or reproduce�

and whetherpreserved

in w�n& film

tap� dis� �deotape or otherwise. A record bea�ng anynota�on not a part

of the o�onal text is to be considered a separaterecord. A draft or non-

iden�c�copy

is a separaterecord within the

meaningof this term.

The �rm �ommu�ca�on" means each manner or means of d�dosure or

exchangeof in�rma�o� regardless

of means u�ize� whether oral

�ecWoni� bydocument or otherwis� and wh�her �ce�o-�c� in a mee�n�

by �phon� mail t�exe� d�cus�onK r�ease� personal delivery or

otherwise.

The term "relating"with

respectto

any �ven subjecL means anythingthat

cons�tute� cont�n� embo�e� reflect� iden�fie� state� rearsto

dens

with or is inany manner wha�oever

pertinentto that su�ec�

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE IERVICE

WASHINGTON D C. �O�24

Ju� 1 2011

The Honorabb DaveCamp

Ch�rman

Comm�ee onWays and Means

U.S. House ofRepresen�tivse

Wash�gton DC 20515

Dear Mn Ch�rman:

applicatiłnThe�

!

am�elRSrespondinglRWs�

apol�ical

łf

g�a�ns�taxYOUrand�con�butions

of

JUneno�pad�an.area wem3 A8�Section201nOdecis�nsWay

influenced

1

�501(c)(4)Cłmmiss�nermadeO�anizatlonS.andbY

actionspOliticaiShulman�kenCOns�em�on�i

assure

the

dutieS.onreSpeCt�esecases.No�

�eonematterWemoutside of

�ePeffłrmedlRs

provided

by

career�p�emp�yeeSrega�ing

the

�

thee�orceme�

normal

cou�edec�nsof

�r

T�ms�nses� �urspec� r�ue$� am �low. Because of t� m� num�r of

otherłUr�veredaCcom�n��atedUndmdocumen�nSeCt�nmP�61�

�urof

�epmviou$��rlnternaldated�R�en�Junebeen�pmvid�201C�e.1

’

r�ue��Unredacted�ur

staff.�fo�on�se

fi�s and

T��onreS�nse�ver�th�und�q�nsectJ�s

81�beenprov�mlated

�particu�rOUr rep�g�tax aud�.

y�rr�st �r

�tax�l�

�01��8�.ngSo�aniza�orm.and

inlarnal memomn�taming � the

app�affili� � the g�

Them�forrnationlnforma�onth

e

processhaVecoveredresponsivebeenof

pefformJngnłunderrUlingSto �sectionOnanreqUe�electron��6103issUehaSrelated�nCesearchbeenthe

issuance

OftoPrOv�edo

f

filesParticU�rof�theOurg�dividua�RevenUetaxrep�

tOaudits.yourRUfinginvolvedTherequest82. 216.1RS�fo

r

2

� ma�F � d�ussed with �ur s�ff �e r�u� � that �arch �11 � some �me

� pr�uce.

3. De�.ed �a�on and ��t d�um� ro�tad �:

a. How am emp�yees�M wo� on � and g� �x� o�anlzed �in �e

Small Business/Serf Emp�y� �s�n (S�S�?

Comm�oner and Depu� Comm�on� � S�SE

�ro�or Specia�Tax

Chief Es� and G�(E&G)

Te�w Managem E&G

Group Managem E&G

E�a� Tax A�ome� (ETA) �.e. �e fie� exa�nem in E&G)

The Chief E&G also has linea�hofi�

over an E&GP�icy

staff and a Planningand

Spec�l Programs (PSP)=aft who prov�e

technical and case ass�nme� assistance

for the fle� examiner =affs.

b. Whero aro �e em�e�� wo� on �=� and gi�=x� �ysical�

�ca�d?

See Endosuro A �r �epost-of�uty listing.

c. Howmany emp�yees in the IRS work on e�=� and giR =x i�ues? Prov�e

an organizaffonalcha�

�en�fyingeach em�oyee

in the structure.

As of June 2011 thero aro 361 emp�yees in the E&Gprogram.

See Endosuro B �r

theo�anizational

chad.

d. Does the E&G officepreparo

an annual work �ansimi�r to the annual work

�an releasedby

the TE/GE Divi�on? Pin.de acopy

of the �st fiveyears’

annual

reports.

The E&Gprogram proparos

an annual wo�p�n

based on return c�suros. The E&G

programdoes not

proparoa wo�

�ansimilar � �e annual wo�

planro�ased

by

TE/GE d�cus�ng projec��r the

coming yea�

3

Workstream

.....

�state Under $5M - FLP

Estate Under $5M - Non FLP

�Stare �M and

.Ov�:FLP

Estate $5M and Over - Non FLP

G�- FLP

G�- Non FLP

....

Total

3�

2 �1

2�

1�5

1 �0

2�

6 263

1 640

1 370

1 �032

2�

1 503

1 4�4_

�9

81

1 850

2�

1 �1

1 831

1 7�_

25

� 155

Es�te Under �M

E�tate �M a� Ova""

Es�te To�

G� Total

’

2�.�161 766

�.74s

_

�823.

3 761 �589

!482 1 09(]

I

1 974 1 889

�...045_ � 2�7�._

1 604 2 169

e. Howmany es=� and g� =xaudi= were conducted in 2006 2008 and 2010

�d ��fts

made � ı 501� o�aniza�ons?

The E&G �rm=�n manageme� systemsdo n�

classify g� �x returnsby �pe of

enti� mcei�ngthe dona�on; howeve� employees

� the E&G �n�ion do not recallany

other such audits other �an �e�xpayem cu�ently being exam�e�

fi How do em�oyeee �at wo� on es=� and g� =x �suee wi�in �e SBISE

D�isiongain access to �e Form 990s �r

ı 501(c)(4) organiza�ons?

E�ate and G� �x exam�em do not have direct access to Forms 990 �mugh any

inmmalsystem (an

in�malsystem

e�s �prov�e access � exem� =gan�ation

r�umsupon tuque=

� necessi�tedby a bus�ess

reason b� E&G

emp�yees have

n�requested access � th=

system). When EO Examina�on m�m an o�an�n �r

potenti� examination �any

o� pad � the IRS pe�ne� documen� are senk �ese

m�rra� m�includecopes

� Forms 990 depending on �e �sue �vo�ed. Note �at

Forms 990 am availab� on a vade�of

publ� website� such as Gu�e=a� or

Foundation Ce�en Forms 990 �501(�(4) o�a�zations �und on pubic

websites do

not �dude con�b� I�ts.

g.How did em�oyeee in the Exempt Organizafons Di�s�n asset in the

sharing

of the Form 990 �forma6on with other IRS em�oyees? � th� common p�cUce?

ff s� howmany

exam�affone have odgina�d �om shard Form 990s to other

IRS divi�ons?

Information with respe� to the spec�c E&G cases has beenprodded

� our rep� to

your request for �formation covered under se�ion 6103 related to pa�cu�r g� tax

aud�s.

4

Morn gene� Form 990 inform� can � included � s�portß

refe�a�� other

opem� un�. Whe� � include � in�rma�n � deterrn�ed � a case-by-ca�

b� depe�g on the m�va� �cts �d dmums�n�s. Some refe�a�provide

en�gh inform� on �e re.wedentity

wtt�o� �e need �r Form 9� informa�n

whi� o�em m� requireForm 990 i�o�ation � super �e referral. Shadng � Form

990 info�� does not occur �eve� re�rral b� � ß n� unusu� � sham

�rm�on w� o�er Bu�ne� O�m�ngDMs�ns wh� needed. (As

noted above

ß e� majority� in�rma�on on Form 990 for section �1�) org�izations

�

pu�c w� �e ex�p�n � �e �n�tor �.)

Sha�ng� information can occur in several

ways.Referral � =her un� � triggered

when EO personnelsubm� Form 5666 �GE Refe�al Information Repod) or o�er

equ�a� in�rmation mpod � EO Ciass�cation �r processing.Form 5666 �il �dude

�rmation suppo�ng�e subm�ed refe�al based on the

Agent’sexamination �

review fin�ngsthat address �sues ounce �e

scope� Exem�O�aniza�ons.

Submiffed inform=ionmay

include d=a �und on Form 990�ong

w�h da� ga�ered

duringthe examination and/or rev�w

process.EO C�ssification �rwards referrals �

other un� based on the procedures speckedin IRM 4.75.5.5

(1� which s�s �at

EO C�cation �11 �rwa� Forms 5666 (mequ�a� information mpo� n�

�v�ng exem� o�an�ation� � �ann�g and Spedal Programs (PS� �r �e

�wito� sewing�e princ� p�ce � bu�ness � �e �xpaye� i.� Sm�l Bus�ess

and Se� Emp�yed �BS� Wage and Investment(W&�

and La�e Bu�ness &

In�ma�onal�B&I).

EO pemonn��so can r�er

�xpayemoth� than exem� o�aniza�ons u�ng the

on�neSpedalist

Refe�System (SR�.

SRS au�mates the request process�r LB&I

SBSE W&I and TEGE fie�specia�s�.

SRS can be used � mfe� or mo� oRen �

request�e a�nce � a speciali= �. an economist)

�r an ongd�g examina�on.

Agen� can genem�a reque=on�ne �= �g au�m�ica� n� �e

appmp�a�

Speci� Managm � �e mce�ng bu�ness un� as weg as the refe�ng agent’s

manage�� the mque�. U�ng the SR� one can generate

refe�a� � or mque�

as�s�nce from a Compu�rAud�

Sped=ist Economist Emp�yee P�ns

Em�oyme� Ta� Engineering Exdse Tax Exem�O�an�ations Federal �a� &

Local Government Rnand� Products ind�n Tdbal Govemment �ma�on= and

Ta�Exem� Bords.

SBSE’s E=a� and G�(E&G)

Tax un� has � own referralprocedures �r other

operatingun�s � �llow. The

procedures�dude

con�ing�e E&G PSP Referral

Coo�ina�r andcompeting a referral�rm which is �en emaged m mailed � �e E&G

PSP Referral Coo�in=oF

In add�on to �e above case-spedficrefe�al

process EO Examination shams Form

990 �formation w�h a var�tyof IRS �nctions depending on �e circumstances. They

in�ude thefollowing:

5

ß SBS�s� Oevelopme�Center

- In acco�an� with a Memom�um �

UnderaCting �ere are m�ne exchan�s� inform�on rega�i� pmmotem

a�

promote.

ß Semite-wide Com�an� Strateg�sEx�u�e St�ng Comm�ee (SCS ESC)

-

T� SCS ESC �es � �e �Nm � �lop a unified cro�Msional IRS

approa� � complian� str�egi� needi��l�bomSon. The SCS ESC ensures

thoroughcoo�ina� � �forcement activ� a� re�ur� i�ues �r �ce-wide

tech�l �su� eme� i�u� o�r=�nal proceduresand promo�m investom

��n� a� �a�m �ed � �e tax a�� transactions.

= Fm� Wo�ing Gm�- SBSE � a mem�r � T�G�s Fm� Wo�ing Group a�

SBSE �d Tech�l Ad�m wo� with T�GE Fm� Coo�a�m �d Fm�

Specialistas wa�ant� � ass� w�h � developme�

= H�h Income H�hWeaRh - EO E�m�=�n �cip=es on � SBSE �am �

was �rm� � develop strateg�s�= addre� �mp�n� �sues � the h�h

incorne�ighweaRh

population.

ß Offi� � Se�cew�e Pena� �BS�-EO E�m�on e�� � w�

SBSE � de�rm�e ��nalties

am b�ng appli� consiste� in appmpfiam�=ual

dmum�an�s and � add�onal empha�s� n�d� in pa�cu�r areas.

The IRS does not track �e number of examina�ons that haveori�nated

from shadng

Forms 990s with other d�ns.

h. Provide �e name�)of �e ind�dua�(s) who decked � tin= conffibuUons �

a ı �01(c)(4) o�ani�on as su�e� � �e �fl�

Theresponse

to this questionhas been prov�ed

� our relyto

your reque=for

informat�n covered under sect�n 6103 re ted to pa�cular g� tax aud�s.

A vade�of cd�da am used in selecting

r�ums �r examination. R�ums are se�ed

ßmugh

�e c�ss�ca�onprocess

� from a relatedopen

exam�ation�.g.

the

examina�on � an estate for which g� �xr�ums are required).

Returns are se� �

E&G c�ss�cation from a number � odg�s.�1 filed returns �= meet ce�ain screening

�iteria are sent � dass�catio� In add�on returns maybe se� � class�cat�n as a

msu� of an inmmal re�ffal or from efforts � �entifynon�em.

During das�fication the

das�fiem �ok forpotential

issue� A return can be s�ected � co�ect an error on �e

�ce � the ream. The �suesmay

invoke e�herlegal

or vacation �sues. A�gai

�sue is one � does n� �r appeam� not) satisfy

�e req�remen�� �e I�nal

Revenue Code and�r Treasuw Regu�Eons or that � n� consiste� wRh re�vant case

�w. Th� �udes pum�ngnon led returns wh�h are required � be �ed. A valua�on

issue is one where �e gi�edass� either appeam

undewa�ed or an approval� �e

ass� was not providedwi� �e retum as filed. Class�em may

also utilize a g� tax

dass�ca�on check sheet when there � a filed g� tax re�rn.

6

J.

Provide a �� �at anal� �e I� � �l�c� consequenc��

aud�ng g� tax ro�ms�r con�bu�ons �ı �1�)(4) o�i�ons.

Info� ros�e� � r��� �specific

examina� h� b�n

prov� in �r rop�� �mr��r �a�n �vered u�er section 61��

� ��rg� t� aud�. � a�is was perfo� on �e pd�l �nsequen�s.

The IRS is in theprocess

� �do�g an electmn� �ar� � fi�s � �d�ua�

i�o� in th� roarer. As disc�sed w��ur staff

�e rosu� �� �a�h �11 �

�me� � produ�.

ß How are tax-exempt organizaUons genemflyselected for audit?

Thero are two pdman/categoriesof audits (1) compliance projects

and(2) casework

consistingof refe�a� c�ims for refund

andgeneral

casework.

Compliance Pmj�ts: Com�p�e�s �rect ro�urces � areas � �own �

�e�ed n�m�n�. P�ts aro d�gu�h� �om�n�al �sework

because �ey ha� a �ed �ose and may in�l� moro than one fun�on or

a� (e.g. e�n�s mm�ance �ec� e�c�al outrea� �c.).

The

�rateg� P�nn�g Wo�ng Group (SPWG) whi� � m�e

up� emp�es acm�

�n�s �in �e E�m� O�=�ons (E�d� �t� Ta�Exem� a�

Go�mme�E�es �s�n �EG� � responsible for des�N� �e �m�n�

proje�s� bemme pad

� the EOWorkp�n

�r each �1yean

As pad� �e

pro�ss �eir a�v�es �dude reque� and

reviewing �p� from a �de� � soumes

analyz�g m�d� ropo� de�rmining p�ects � be �=ed or �n�d and

ma� ro�mmend� � EO e��s onproposed �ects a� on �e s�pe a�

diro�on of the EOworkplan.

Commenceproje� a�o can�dude �sue Manageme�

Team(IMT) proje�s.

An IMT

is�pical� cross �n�ionaL integrated

with o�er Bu�nessOperating Divi�ons (BOD�

and includes IRS Chief Couns� pemonnel. Mo= IMTs aro �rmed �rosponse ffi Me

�e�ca�on of an Abus�e Tax Av�dance Tmnsa�n(ATAT).

An IMT P�YS a key

ro� increa�ng

alternative ros�u�on=rategies mon�o�ng fi�d

pa�cipanUpromoter

inve�odes and coo�ating w�hcampus

a�t�s.

Re�rra� (IRM 4.75.�:Refe�a� (in�rmation �ems) can be e�he�

E�emal - A d�um�t � �r �mm�ica�n �du�ng an �e�mn�

�mmunication rece� � EO C�ca�n from a �ur� o�side t�

In�mal Rev� Sew�e wh�hal�ges p�s� �n�mp�ewith a �x

7

�w on �e � � an e�m� o�iza�n pditical o�iza�n �b�

entity � �dN�u�; �

Intem� -A d�ume� pm�r� � � InUre= Re�n� Se�i� em�oy�

a� �a� � EO Clas�catio� whi� iden� �ne� � pote�=

�n�mp� disco�red dung e� �e proce�i�� � �s�n� �

� �any

oth� 6me in �e �� � offidal du�.

Refe�a�may

come from a vadetyof sources �duding:

ß EOemployees co�u� examin�s � proce�ing

dete�ina�

= O�m IRS �n�n= areas

ß �her f�eralagende�

�

e.g. Departme�� �bo� De�rtrnent

� Hou�ng

a� U�an Developme� or Departme�

� Justi�

ß S�te and localgovernment �c�s �d offida�

ß Mem� � �eexempt o�ation �mmun�

ß The general pubi�

ß Membem � Congm�

C��tion staff determine wh�her an �rm�on �m has examination po�al no

exam�a�on potent shou� be co�emd � a �tumyea�

needs add�on�

information to make a ded�on or shou� be referred � an EO Referral Commi�ee.

Procedures e� � ensure that no sing��d�u� makes case se�on

d�erminations when sens�ve �es am po�� i�ved. Certain a�g�ons m�t

be referred to an EO Refe�ai Committee madeup� career managem.

These �dude

a�gations:�

pol�cal � �bbying a�iv�s; co�n�g �ence � �legations�

finandal tm�a�o� w� known msuspe�ed�od� connections; invo�g a �urch;

�voWing h�impa� or sensR�e i�ues�.g.

�e de�onmay

msuR in med�

affe�n or the in�rm=�n was subm�edby an elected offidaL o�er �an

Congressor

Exec�ve Bmnc�; sub�ffed � a Memb� � Congm� .(or Congm�nal s�; or

invoking �h� �omindica�ng

that rev�wby

the EO Referral Commiffee wou� be

deskab� �r masons � �irne� or �mgri�.In

cons�edngwh�her a referral has

examination pote�l �e membem � �e EO RefeKal Commiffee de.rinse wh�her

�e �rmation �m estab�hes a reasonab� belief �= �rthm a�onby

the Se�ce �

warra�ed.

Claims for Re�nd (IRM �7�7): Clams am received andprocessed by

�eOgden

Se�ice Cen�r (OSC). All dams� cannot be processed in the OSC am forwa�ed to

EO C�ss�ca�on. A alas=tier determines whether �e claim isc�ady

agowab� or

shou� be se� � a fie�group.

General Casewo�: Gene� ca�wo� �d�es aud� s�ected u�ng esta�ed

queHes (for examp� �rta� Form 990 �ne �emmsponses or comb�a�on �

�on�

�

)RC secbon 7217 pin bits influence ovm �xpay� aud� and other �vestigations byceda� executive

branch offic�.

8

& How mat ı S01(c)(4)audi� am usually

îonductedeve�

tax yea� Pin de a

bmkdow � �e �1 number �ı S01� enminatlorm conducted annu�

over �e lastfiveyearn

andIdentify

�e tax Issues invoked.

Be�w � a �b�showing

�e number � section 501(c)(4) o�anizationsexam�ed �r

the la� �e fiscalyearn

as reco�ed in EO Exam’s Re�ms �ventowand Class�cation

Sy�emThe numbe� below am based on the �cal

�ar�e exam was con�uded. An

orga�tion maybe included twice �

separateexami�tions closed �

sepam�fiscal

yearn.For examp� ff an emp�yme� �x

exam�at�n � an o�anizat�nc�sed �

2010 after the 2008 �osum � a Form 990 exa�nat�n �r �at �me organ�at�n �

wou� be cons�ered two separateclosures.

177 158 118 127 200

Whi� them am I�ns � the inform�on th= our c�ing s�mpin des we am �

the pm�ss� dete� the mo= �mmon �ue codes u�d.

6. What pe�en�ge � g� and es=� tax office enmina�ons �p� odg�a�

from an �mal �al? �ease describe �S pro�c� f� maMng �rnal

�rra� and how m�rra� a� processed.

No �rm� �atistics am ke� on the percentage� E&G exam�ations

�pical�

orig�atingfrom �m�m�a� The E&G formal referral

procedures am m�ve�

new;in Augu� 2010 E&G �rm�zed referral procedures �r �her o�anizations �thin

the IRS to make mferra� � �. �nce theprocedures were �rm�zed E&G has

received 112 referm�(from

all IRSorganiza�on�.

If an exam�er from another �n�ion encoun�m a po�nti� esta� or g� tax issue

dudngthe course of an examination �e examiner � � con� the Esta� &G� Tax

ProgramPSP RMerml Coordina�r � determine ff a refeff� � wa�an�d if a referral �

warran�d �e exam�er will complete �e E=ate & G� TaxProgram

Referral Form and

ema� the �rm and a m�va� suppo�ng�rm�n and documen�tion � �e PSP

Re�rml Coo�or.

When �e PSP RefeKal Coo�ator receives a referral he rev�ws the referral �rm and

suppo�ng �rmation and documen�on and then de�rmines � an exam�n �

warmn�d ff an exam�ation � warranted �e PSP Referral Coordina�r con�cts �e

appmp�a� Terdtow Manage� expels �e �cts of �ecase

and asks � wh�hgroup

ß e referral shou� beass�ned.

The PSP Referral Coordinator sends the refe�al

in�rmation� a PSPParalegal

�r case bui�g �.e. �du�ngm�va� in�rm=�n in

the case fi�)and to e�a�h the case � our �ven� management

�rmat�n

9

systems.Once the case � b�R and �1� es�shed the PSP Pamleg� m��e case

� the ass�ned groupand not�es �e PSP Referral Coordina�r � �e case has been

shaped � thegroup.

� Pin deany correspondence

and reco�s shared wiffi �eDepartment

of �e

T�asuw rega�i.g�e

applicaUon� g� tax � �01�)(4) o�anizaUon�

DeVil

�1 commuNcaUons between �e �S and �eDepartment

�Treasuw on � �c

�nce 2004.

TheDepartment

ofTreasury

had noinput regard�g

the enforcement dec�ns made

withrespect to

any giRtax exam�a�on�

W�respe�

� me broad� r�Me IRS � in Reproce.

� ��irg an

e�mn� �arch � fil� � �d�ua� involved in t�s maffer. � discu� wi�your

staff me msu� �� seamh � �ke some �me �

proud.

My �aff � avai�b� � meet w��ur

staff � answer a� questions � wovide�dher

in�rm�on mga�g your mque� Shou�you

ha� add�onalqu�tio� p�ase

co�a� m� � ha�your

s�ff �n� F� Williams �m�o� Office ��g�lative

Affa� = �02) 622�720.

En�osums(2)

P�e 1 of 1

Hawkins Ann K

From:

Sent:

To:

Su�ect:

Hinton Irma D

Monday Ju� 30 2012 12:35 PM

Haw�ns Ann K

FW: Le�er from Sen. Cad Le�n � IRS Comm. Shulman�uly

272012)

A�achmen�: How � UN�P.�ml; SecureZIPA�achments.zip

pls process

F�m: �rre Ca� M

$�n� Fdda� July 2� 2012 4:35 PM

To: Hin�n IrmaD; Gmdn� Steve; O�ez Cumbu� I;

G�s D�ne M

Su�:: Fw: Le�er from �n. �d Levin � IRS Comm. Shulman �u� 272012)

Sentusing �ackBe�y

From:Robertson Mary (HSGAC) [mailto:Mary_Robertson@hsgac.senate.gov]

ß ent:Fr�a� Ju� 2� 2012 02:51 PN

To: Barre Catherine N

î�: N�eb Kaye (Le�n) <Kaye_Neier@levin.senate.gov>; Bean Elise

(HSGAC)

<B�e_Bean@hsgac.senate�ov>; Barkley Chris (HSGAC) <Chds_Barkley@hsgac.senate.gov>;

Robertso� Nary (HSGAC) <Na�_Robertson@hsgac.senate.gov>

Subje�f::Le�er from Sen. Cad Levin to �RS Comm. Shaman �u� 27

2012)

JUL 3 0 2012

CONG. CORR. BR

CL:LA

A�ached p�ase find a �t�r �r IRS Comm�oner Shulman �om Senator Call Le�m Chmrman of

the Senate Permanent Subcommi�ee on Inves�ga�ons. The o�nal will be dropped in the ma� this

afternoon.

It would be appre�ated ffyou could make sure that Ms. Lois Lerne� Director ofExempt

Organiza�ons also receives acopy

of this letter.

PLEASE ACKNOWLEDGE RECEIPT OF THIS MESSAGE &ATTACHMENT. Thank

you.

Ma� D. Robe�n

Chief Clerk

U.S. Senate Permane� Su�ommittee onInvesti�tions

199 Rus�H SenSe Offi� BmMmg

Wash�gton D.C. 20510

20�224-9868-

Direct

20�224-9505-

M�n

20�224-7042-

�ix

RECEIVED

7/30/2012

COMMI�EE ON

HOMELAND SECURITY AND GOVERNMENTAL AFF�RS

WASH�GTO� DC �51�62�

July 2Z 2012

VIA U S. MAIL & EMAIL(Cmherine M Ba�er�irs�ov)

The HonorableDou�as

H. Shulman

Commi�ner

In�rnal Revenue Service

10

’�’

Street andPennsylvania Avenu� NW

Washin�on D.C. 20004

JUL & 0 Z�Z

CONG.CORR.

BR

CL:LA

Dear Comm�on� Shuiman:

I mn writingto

exp� my concern abom how �e IRSinfarcts

the law�g�ding

�e ex�nt to

which501(c)(4)

"soci� wd�re"organizat�ns can

engagein

pa�isan p�c� adiviU.The

July13

2012�sponse by

Lois G. Leme� Dive or ofExem� O�anizations to my

June 13 2012 letter was

unsmis�c�.

In the�sponse

Ms. Lerner �med �m "The IRS rakess�ps

m eonfinu�inform

organizzdonsoffer

�spon�Mlit�s as sociM wdfareorganization to

helpthem avoid

jeopardifing

ß eirmx�xem� �mu�" and "activdy educates section

501(c)(4) organizationsat muld#c states in

theirdeve�pmem

about thormspon�lit�s under �e tax �w."

[Emphas� added]

Her �scussion does not describe an IRS inifimive m "continuM� intbrm’" or ’�cfively

educa�." RatheL it shows �e IRS is

oassively making some �formation avMlable once a 501(c�4)

entiUis

al�adyin exi�enc� Fu�heL her �scuss�n of the

explanatoryma�fiMs available to the

pu�E and �e mmefiMs themselve� a� con�s� This leadsto a p�dictabM �sult:

organizations

are usingInternM Revenue Code Section

501(�(4) to gain mxexem� �atus while

engagingin

pa�isan p�iticM campMgnm"Iq�ere is an absurd mngM of

vagueand

contradictorymmeria� thin the

IRSprovides. Making �e

problem wo�e is thin �e IRS knows the� is a problembecause oCthe

publicnature of the

acti�ty but has �iled to address it.

Fir� �e law.

26 U.S.C. ı501(cX4) stmes �m "C�icleagues or �ganiz�t�ns not o�a�zed

�r�o

fit bm

operated exdus�dy�r the

promotion of sodM wd�r� or local a�oci�ions ofmnployee� the

membe�h� ofwh�h is limi�d to �eem�oye� ofa

d�ignmed personor

p�sonsin a paoicul�

mu�pMity and �e nm earningsofwh�h a� dev�ed exdu�vdy to chafimMm educm�nal or

�cmion�pu�o�s’" �e exem�

from taxmion.t[En�has� added]

Me�ia�mWebst� defines

"’exclufivdf" � ’�ngle soM; whoM; un�v�ed7 The� it wouldappe�

� the lawp�ve�s

entities thino�an�e

under Section 501�4) from� a�ivity�at is not

operated exdufively�r the

p�mm�n of social welfare or an associm�nofemployeem

1

26 U S.C. ı501�X#L

Co�istent wi� �e law is s�tus to a:

Onepart

� Intem� Re�n� Se�i� P�l�on �7 in i�g�d�ce sm� �nsistem �M the

law M�:

�fyour �g�i�tion � not o�ani�dfor

profitand will be

operated on� to pmmo� soc�

welf�e � �nefit �e commu� youshoed fi� Form 1024 � apOy

�r�cog�t�n

ofexemption

�om f�eml �come tax under �ct�n 501 (c)�).

�

[Emphas� added]

A�p� of I�mM R� �e �blk� 557 s�s off� a�Mg wiM t� I�

�u�y�d�� in �e� � � t� "� wel�" �� d� not i�

c�� �r or� a�di� or c��

So f� so good- - until that same Publication 557 �a�s: "However if

yousubmit pmofMm

yo� organi�tion�

�gani�d exc�vdy � pmm�e so� welfare it can ob�in an exem�n [�om

taxe�r

pu� offi�

even if it

� sarticipates

kgMly in mine p�c� a�iviW on behalf of or � opposit�n � cand�a�s

Th� l�g� seems inconsistent wiM Me �h���parts

� Publkation 557 (� well �

beingim�s� wiM law and

preceden0 �k� it me�s that Me

exemptioni�’t �1� �r the

p�ificM act� � funded by 501(c)(4) r�pts.

So � IRS �g� s�sthe law� �mm��l�� �l� means "#m�ly)’

somethi�� $fferem �m%��

The IRS web� �s an �emal�ining

�k� which s�es:

�i� �lf�’ � i�e�m� �a� �n� Mm �nues � de� p�i� �fi�fi�.

C�leas�a� an� �d �judgmen� � �ill

�qui�d.

’a

[Emphas� added.]

F�renougk

4�

s�

�

T�ury R�u�o� �haptcr A S�.i.501(cX4�1.

v

�to:l/www.i�.eov/ch�;�nonm.ofi�icle/0..M=i

56372.�.�ml.

followingfactors indicate th� an advocacy communication � politic� campaign activity:

ß The commun�ation identifies a can�da� for pu� office;

ß Thetiming

of the communication c�ncides with an elec�ralcarnp�g�

ß The communicationtarge�

voters in aparticular �ection;

ß The communication identifies the candidate�position on the pu� polly issue th� � the

su�ectof the communication;

ß Thepo�t�n

ofthe candida� on thepublic p�icy

�sue has been raised asdisting�shing

the

candidate from othem in thecampaign

either in the commu�cmion i�elf or in other pu�

communication� and

ß The communication � notpart

of an ongo�g se6esofsubstantial�

simil�advocacy

commu�cat�ns by theorganization on the same �soe.

Theguide

furtherlays

out the factors that indicate when an advocacy communication b notpolitical

campaign activity:

ß The absenceofany one or mo� ofthe factors listed above;

ß The communication identifiesspe�fic kgid�ion or a specific event ou�ide the con�ol of the

organization th� theorganization hopes to �fluenc�

ß Thetiming

of the communication c&nc�es with aspecific

event o�de the control ofthe

organizationthat the

organization hopesm influenc� such as a legi�ive vote or other major

legislativeaction

(for example a hearingbe� a legi�ative

committee on the issue th� is the

su�e�of �e

communication);

ß The commun�ation identifies the candidatesolely as a

governmentoffi� who � in a position

to act on the pu� polky issue � connexion with thespecific event �uch as a legi�ator

who

is e�e to vo� on theleg�lation);

and

ß The communication �entifies the candidatesol�y

� the li� of key orpdncipal sponso�

ofthe

legislationthin is the su�e� of the communicatio�

� is c� fromt�appleton of those factors thin w�t is

going on � the U.S. with certain

501(c)(4) o�anizations� the� television �ve�semenm �e p� campaign a�m

B�ow are twotranscripts

of adve�isemen� � were put on telev�ionby

501(c)(4)

organizations.As

youcan

see the

su�ectof Adve�isement #1 is a Democratic

Senator and the

su�ect of Adve�isement #2 � a Repu�an Senator. This � not apartisan

issue.

Te�on Adveniseme� #I :

�s time � Oay:Who � the

bigge� supporterof the Obama agenda � OHo. h’s She�od

Brown. Brown backed Obam�s agenda a whopping95

pesetaofthe time. He voted �r

budget bustingObamaCare th� adds $700 �llion W the defich. For Obama’s $453 �[[ion tax

in�eas� And even supposed cap-and�rade which cou� have co� O�o over 100�00 jobs.

Tefi She�od Brown for realjob growth stop spending

and c� the debt.Support

�e new

majo�ty agenda �newraaj0�tyagenda.org."

s

Compfi� Guide forTax-Exempt O�i�t�n� pgs.

�5.

3

Te�on Adve�mem #2:

"Be� W�[ S�eet � him $20�000 in campai� c�h....

Be� be voted to

� bank CEOs take �llious intax.yet

funded bonuses.... Dean H�r w� a

sto�bro� No wond� he votedagain�

W�I Street �form; again� holdi�

ß e bigbanks acco�tabl� Heller even vo�d to � �S� Secu� be�

� �e �ock m�k� Dean H� he votes I�e be �ll wo�s �r Wall �rcet

and �afs �d �r �"

�ose � �d �many

like �e� cl�lyfit the� the IRS has �d out in �s g� �r

what �n�m�s a �c� c�gn acti� �e �venisemen� m�e no p�tense�

�isan�; � � �a�fly �d agg�vely partisancomm�ications.

Entities � fi� under Section501(c)(4) of�e Intem� Revenue Code and take

advan�ge of

� tax exemption benefi� should have � make a ch�ce: �er Jose �rexem�

status(and pay

tax�) or dimple �epa�san pol�cai activity.

The IRS needs �immediate�

rev�w �e acfivhies of 501(c)(4)

emh�senga�ng

�runn�g

partisan poli6c$ ads or �ng �nds � Sec�on 527organizat�ns

� run such ads The IRS needs to

ad�se501(c)(4)

entities ofthe law in t�s area and �e facto� h will �ok m��v�wing 501(c)(4)

status and taxexem�ion �sues.

Pleaseprovide me with the

following�formation no later than

August1 � 2012:

How can the IRSinterpret

theexplicit language

in 26 U.S.C.ı501 (cX4)

whichprovides

that510(c)(4)

entities mustoperate "exclusively"

for thepromotion

of social welfare to

allowany

taxexempt partisan political activity by 501(c)(4) organizations?

Sincepartisan pol�c� a�ity does n� meet the IRS deflation

of"promoting so�

welfare " how can anorganization

thatpart�ipates

inany partisan pol�c� activity

be

"organized exclusively � prom�eso� welfare?"

TheExempt Organizations

2011 Annu�Repo�

and 2012 Work Plan sm�s: "As inany

election

yea�EO will continue i� work to enforce the ru�s

rel�ing topolitic� campaigns

andcampaign expenditu�s.

In FY 201� EO will combine what h has �arned frompast

projec� on politicalacti�ties with new information

gleanedfrom the

redesignedForm 990

to focus i� examination resources on se�ousallegations

ofimpermissi�e politic�

in�rvent�m

"�

a. Typ�ly how

longafter a comO�m to �e IRS does a comOiance review

b�in?

� Whmapproximate time does h take m rev�w the

comp�nt?

c. Howmany persons

are involved in �e enforcement ofthe501(c)(4)

roles7

The Exem� Organizations2011 Annual

Repo� and 2012 We& �an states �501(c)(�

organizations "can decide themselvestax-exem�

withoutseeking a de�rmination from the

�

Exempt Organizations2011 Annual

Reponand 2012 Work Plan

pg.ß

Why does �e [RS fl�w501(c)(4) o�anizations � �lf-dedare?

When anorganization

�fdedare� as a501(c)(4) organization

how does the IRSget

notice and howlong

does � take the IRS � condu� �e review � ensure that �at

�ganizationhas dasfified itself correct?

5. The IRSComplian�

Guide �rTax-Exem� Orga�zations s�s:

"When a 501�(4) (5) or (6) organization��mm�� �tly�� the

�t�n or �f�t of� �d�l to � o� �e �mmu�c�on is considered

�li�al cam�ign a�U. Atax-exem� organization

t�t m�es �M�ures �rp�l

campaign �fi�fi� shill besubject � t� in mamount

equflm � i� net i�e�m�t income

�e���s�s��

te amłunt �M� łn p� campaign actions �g the

� How does �e IRS keep track of these �R �mm�ic�s and ensure � �e

organization p�s�s tax?

� Wh� is t� reason for �er�ui�ment

that �e tax �ll� based on "whichever is les�

b�w�n i� �t i�emi�ome �r �e � or the�gregate

amount ex� on

pol�l camp� �fi�t�

� Wh� tax world � o�anizationhave m �y

if it s�Msall � income on �lificfl

Mve�fi� �here�re � has NO n� investmem �comO?

6. M� Lemer’s le�erquotes

the IRS webpage on Social WelfareOrganizations:

"Thepromotion of social welfare does not include direct or indirect

participationor

�tervention �politick campaigns on beha�ofor in

oppofifionm

anycand�ate �r pu�

offic� Howeve� a section501(c)(4)

so�al welfareorganization may engage

� some

pofiticfl acfi�fi� so long as that is not i�primary acti�. Howeve� any expenditure

it

mak� �rpolitical

acti�fiesmay

besu�ect

� tax under section 52�" [Emphas�

adde�]

a. Whm � �estatuto�

bas� �the lm�a� that fliows 501� organizations�

enga�

� somepolificfl

acfivit�

� How does t� IRS k�p track of�e� p�cfl acfiv�es and ensure that the

org�ization p�sthe t� under section 52�?

% � herJuly 13 let� M� Lemer states �m �e IRS flso addresses the issue

ofpoliticfl

acfi�fies � �e Forms 990 and 990-EZ.

Are Forms 990 and 990-F..Z madepublic7

Ifso

where can theybe accessed7

Intemfl Revenue Service Publication 557 statesthat

ira501(c)(4) entity can "submR

proof

thatOhe] organization

isorganized exclusively to

promotesocial welfare k can obtain an

t0

11

ComOi� Guide for Ta�em� Org�i�lions p�.3�.

5

exem�ion even if it

paaicipates �gal�in some p�c� a�ivity on behalf of or in

oppo�t�nm candid� �rpu� office.

"�2

Have Re�llowing 501(c)O) organizations � applied �r; and if

so b)received Re

de�fibedexemption

�r p�E� activiu�om the IRS?

9. Haveyou

reminded 501(c)(4)s

whichpu�idy seem to be

operatingin the

paaisan political

a�na as to the �cto�you

will consider in determi�ng whe�erthey are engaging

in

pa�isan politic� activity? IfnoL why n�?

I have enclo�d acopy

of Ms. Lem�’s leben Ifyou

haveany que�ion� please

conmo me or

haveyour

�affcomaO Kaye Meier ofmy

�aff�kaye_meier@levimsenate.gov or 202/224-9110.

Ag�n � is

u�e��m I �cdve

youranswe� by Augu� 10

2012.

cc: D� Tom Cobum

Ms. Lois G. Lerner

Cad Le�n

Ch�rm�

Permanent Subcommi�ee on �vemigations

Pu�afion 557 (Re� October 2011L p�51o

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

WASHINGTON D C. 20224

DEPUTY COMM�ONER

Augu� 24 2012

The HonoraNe Cad Levin

Chairman

Permanent SubcommAee onInvestigations

Senate Comm�ee on HomelandSecurity

and Governme� Affai�

United States Senate

Washington D.C. 20515

Dear Senator Levin:

I am respondingto

yourle�er to Comm�oner Shulman dated

July 27 2012

requestingadd�on� information about section 501(�(4) o�an�ation&

Thisresponse

supp�me�s theprevious responses

dated June 4 2012 and

July 13 2012 and

addresses the add�on�questions

�ised inyour

recent te�er.

Ques�on 1. How can the iRSinterpret

theexplicit language

in 26 U.S.C.

ı501(c)(4) which provides that

510(c)(4)entices must

operate "exclusively" for

the promo�on of social welfare to allowany

tax exempt pa�isan political ac�vity

by 501(c)(4) organiza�ons?

We no� that the cu�ent�gulation

has been inplace

for over 50yea�: Mo�oveg

unlike Internal Revenue Code sec�on501(�(3)

whichspecifica!� p�vides

that

o�an�ations may"n� pa�dp�e in or in�wene in...

any po@cal campaign on

behaff of(or

inoppos�on to) any

cand�ate forpublic o�ce.� se�ion 501(�) does

not con�in a specificrule or limi�tion on p�cal campaign

i�e�en�on bysocial

wel�o�an�ation&

Question 2. Sincepa�isan poli�cal acuity

does not meet the IRS defini�on of

"promo�ng social wel�re " how can an organ�a�onthat

pa�icipatesin

any

pa�isan political activitybe

"organ�ed exclusivelyto

promotesocial w�re?"

As �ated above long �anding T�asu� Regulationshave

inte�reted "exdus�ely" as

used in seGion501(c)(4)

to mean pdmadl� Treasu� Regulation ı 1.501(�(4)-

1(a)(2)� promu�atedin 1959 p�des: "An

o�an�ationis opera�d exdus�e� for

thepromotion

of social welfare ff � �primad� engaged

inpromoting

the common good

andgene�l wel� of the

peopleof the communiW." Applying

this T�asu�

Reg�ation Revenue

Ruling 81-95 1981-1 C.B. 332 concluded that "ano�an�ation

may car�on �wful

pol�c�a�s and remain exempt

under sec�on501(�(4) as

long as it isprimarily engaged

in activ�es that p�motesocial weffa�."

2

Question 3. The Exempt Organ�ations2011 Annual Repo� and 2012 Work Plan

states: "As inany

elec�onyea�

EO will continue its work � enforce the rules

relatingto

poli�cal camp�gns andcampaign expend�ures in FY 2012 EO will

combine what it has learned �om past projects on p�c� ac�vi�es with new

informa�ongleaned

�om therede�gned Form 990 to focus its examina�on

resou�es on serousailega�ons

ofimperm�sib� poli�cal

interven�on."

a.Typically

how longa�er a complaint to the IRS does a compliance

review

begin?

b. What appro�ma� time does it �ke to review the comment?

The IRSroutin�y

receives examina�on referrals from a vadetyof sources including

thepublic media Membem of

Congress or theirstaff

and has a long standing

processfor

handlingrefe�a� so that

theyreceive an impa�al independent

review

from career empbyees.When the IRS receives a refe�al about a paRicu�r

organ�ation � isprompt�

forwa�ed to the C�ss�ca�on unit of the Exempt

Organizat�ns (EO)Examina�on office in

Dallas Texas. Pumuant to IRM

4.75.5.4(1) within 30

daysof

receMngthe referral the C�ss�ca�on staff

begins

evalua�ng whether the referral has examinationpotential

should be conMdered in a

futureyear

needs add�ional information to make a decision or falls within the

categoriesof ma�em that are refe�ed for EO Refe�al Commi�ee review.

�

A�hough

IRM4.75.5.4(1)

sets a goalof 90

daysto

completerenews of refe�a� the time it

takes tofully

review a pa�cu�r referral vades depending on such factors as the

issues involved and theavailabil�y

of relevant informa�on(i.e. organ�ation�

Forms

990 e�ernal sources such as mediarepoRs

internet searches etc.).

In those cases in which the IRS needs add�onal information about the su�e� of a

re�al that is not�adily aviaN& such as i� Form 990 th� has not been filed

yet

for the taxyear

at issue C�ss�ca�onmay suspend dassi�ing the refer�l and

placesit in the

follow-up catego� until the add�on� information is avm�N& Once

the add�on� information isreceived reviewed and

suppo�s the refe�albeing

dass�ed as havingexamina�on

potential the refer�t is sent tounasMgned

inven�ry ungl a revenue agent

wi� theappropriate

level ofexperience

for the

issues involved in the ma�er is av�b� to condu� an examination.

Once in�ve�o�

the� are numerous fa�om that can affeG howlong

it takes to

completethe examina�on

process.While it is difficu� to p�diG

howlong any single

examina�on will take for cases closed in FY 2011 theaverage

time it took to close

a case was 210days.

c. Howmany persons

are involved in the enforcement of the501(c)(4)

rules?

�

Pursuant IRM47&5(4) cases forwarded for Comm�ee review include those: cont�n�g

evidence or �gations ofpoti�cal

orlobbying activ�es; invo�g sens�ve information submi�ed

by an elected offici� or a Member ofCongress (or Congres�onal staff);

or �v�ng other factors

ind�atingthat renew

bythe EO Refe�al Commi�ee would be des�aNe for reasons of fairness or

integrity.

The Exem� O�aniza�ons (EO) �n�ion is �spon�b� Dr the e�omeme� �

section 501(�) �u�@ roles and�gutations as well as those

app�cab�to all

other�pes

� �exem� o�an�ations.

For FY 2011 the total number of EO staff was 889. Other than the 14 empbyees in

the Directo‰soffice

the three EO offices are staffed as follows:

Rulingsand Ag�eme�s (R &A� wh�h includes EO Determina�ons and EO

Technical ensues o�an�ations meet �ga! requi�me�s dudngthe

appl�ation or privatele�er

ruling process and

�rough guidance.In FY 2011

R&A had 332empbyees.

EO Examina�ons(Exam)

iscomprised

of vadous uni�. includingthe

Clas�fica�onunit �e EO

Compl�nce Unit and the Renew of

Operations

un�. Examdevelops processes

to�enfify areas of noncompliance develops

co�ect�estrateg�s

and cool ares with other EO fun�ions to ensure

com#�nce so that o�an�ations maintain their exempt status. In FY 2011

Exam had 531 empbyees.

EO Cu�omer Educa�on and O�ach (CE&O) coo�ates ass� and

suppoRsthe devebpme� of educa�onal mateda� and o�ach effoRs for

o�arl�ations to unde�tand therrespon�b�es

under �e tax law. In

FY 2011 CE&O had a �aff of 12emp�yees.

Theemployees

in �ese Nncl:ions are �sponsib�for the

reg�ationof all

Wpesof

ta�exempt o�an�ation& includingsec�on

501(c)(4) o�an�ations.

Ques�on & The Exempt O�an�aSons 2011 Annual Repo� and 2012 Work Plan

s�tes that501(c)(4) organizations

"can decla� �emse�es tax4xempt wi�out

seeking a de�rminaSon #ore �e IRS. EO will �ew organ�a�ons to ensu� that

theyhave classified �emse�es

cor�ctly and that they a� compi�ng w�h

ap�ab� rules�

a. Why does the IRS allow501(c�4) organiza�ons to s�#declare?

The Internal Revenue Codeexpress� pro�des

that ceRain tax-exempt

o�an mustgive

notice to theIRS by filing

an appl�ationfor exemption

in o�er to claimtax-exempt

status. The Internal Revenue Code does notrequire

an o�an�ationto

pro�denonce to the IRS to be treated as described in sec�on

501(c)(4). By contrast for examp� Section 508

generai� req�res an

o�anizat#nto

proNdenotice to the IRS before it will be treated as described in

se�ion501(�(3).

When an organ�a�on "self dec�s" as a 501(c)(4) organiza�on how does

the IRSget nonce and how

longdoes � �ke the IRS to conduct the �view to

ensure that the o�an�a�on has classified i�elf cormc�y?

� �th �her �x �em� o��o� o��o� claiming� � �em�

under section501(c)(4) general� are

requiredto file a Form 9902 on an annual

basis.

3

The Exempt Organ�ationsoffice of the IRS is �spon�b� for the compliance of over

one millionorgan�ations

with dNersegoals

andpurpose&

In older to ensure the

highest degreeof com#�nce with tax taw while wo�ing w�h lim�ed resources EO

mai�ains a robu� and multi4acetedpost-filing compl�nce program

that conduc�

renews ofexempt organ�ations

in vadousways

such as:

Renew of Operations �views: Because a ROO �view is not an

aud� the ROO cames o� Kspost-filing com#�nce wo� w�hout

co.acting �xpaye�. In�ead the ROO looks at an o�amzation�Form

99& webM� and otherpublicly

av�lab� i�ormation to see what � is

doing and whether � continues to be o�a�zed and operatedfor ta�

exem� pu�oses.If �

appea�f�m a ROO �ew that an o�an�ation

mayn� be

compliant the

organizationis refe�ed for examin�n.

Commence checks: In a compl�nce check IRS con�s taxpayem by

le�er when we d�cover an appa�nt e�or on a �xpayeKsreturn or wish to

obta� fudher information or dar�catbn. A com#�nce check is an

effident and effe�Neway

to mai�ain a com#�nce presencew�hout an

examination. We also use compliance check que�ionnairesto

study

spec�c pa�sof �e ta�exempt community or spec�c cross-se�or

pra�ices.

Examinations: Examin�ns a�o known as aud�s are a�hofized under

Se�ion 7602 of the Code. Forexem� o�an�ations an examination

d�ermines an o�an�ion’s co�inued qual�c�nfor �exem� �atus.

We condu� �#o diffe� �pes d examinations: correspondenceand

field.

Because theI RS cannot renew

eve� exi�ing organ�ationin

everytax

yearwe

use the renewtechn�ues

described above to ma�mize ourcoverage

of the tax

exemptse�or in bo� our general program

wo� and our proje� wo�. The

proje� work which resu�s from our strateg� p�nning process is designed to

focus on spec�c areasaffecting

the EO sector and to dire� more effectNe use of

our resources in �e effo� tostrengthen comp�ance

and improve tax

administratio� Described in the EO 2012Wo�Plan

the se�ions501(c)(4) (5)

and(6)

Self-Dec�rem � one suchproject.

Th�proje�

focuses on organ�ations

that hold thems�ves out as being tax-exemptrather �an seeking

IRS

recogn�on of their exempt status.

Question 5. The IRSCompliance

Guide for Ta�Exempt Organ�ations states:

=

Re�rence � �e Form 990 in�udes �e entire appl�ab� Form 9g0-sedes annual in�rmation

returns such as Forms 99& 990-E� 990-PF and 990-N

e-postal.

�

Treas.Reg. ı 1.6033-1�1).

"When a 501�)(4) �5)or

(6) orga�za�on’scommunica�on

ex�icityadvoca�s

the election or de�atof an �dividu� to public office the communica�on �

con�de�d poi�calcampaign activity.A tax�xempt organization

that makes

expense s for p�cal campaign activities shall be su�ect to tax in an amount

equalto i� net investment income for the

yearor the aggRgate

amount

expended on poli�cal campaignac�vi�es du�ng the

year whichever is less."

a. How does the IRSkeep

�ack of theseexplicit

commun�a�ons and ensure that

the organization paysthis tax?

Ta�exem� o�an�ations �ingForms 990 or 990-EZ are �qui�d

to �poR p�c�

activ�ies.O�an�ations

thatengage

in dire� or indire�pol�cal campaign ac�v�ies

are also�quired

to compile Schedule C of Form 990 or 990-EZ. O�an�ns

su�e� to �x under se�ion 527(0 a� �qui�d tocomply

with the �uto� �poRing

andpayme� rules. The IRS a�o receives re�a�

regalingsuch a�iv�es from a

vad�y of sources that a� handledthrough an impa� independent

�view. See

the�sponse

toque�ion

3 for thedescription

on the IRS re�alp�cess.

What is the reason fo� the �quiRment that the tax will be based on

"whichever is less" between i� net investment income for theyear

or the

agg�ga� amount expended on political campaign ac�ties?

The statute under section527(0 explicitly

states that a 50t(c) organ�ationis

su�e�

to �s tax based on "an amountequal

to the lesser of-(A)

the net investment income

of suchorgan�ation for the taxable

yea�or (B)

theaggregate

amount expended

dudngthe taxable

yearfor such an exempt

function."

c. What tax would an organizationhave to

payif it spends a# i� income on

political adve�isi#� #he�fo�� has NO net investment income)?

Under the �atute c�ed above an o�an�ationthat othep�ise mee� the

req�reme�s of se�ion501(c)�)

social welfa�tax-exempt status which

spends all

i� income onpolitical adve�ng and has no net inve�me� income would not owe

any�x under se�ion

527(0.It

may however throughsuch

spending (and

depending on the �herwise ap#�ab� fa�s of thecase) no longer qualiN as an

o�an�ationthat is

ta�exemptunder section 501

(c)(4).

Question 6. Ms. LerneCs le�erquotes

the IRSwebpage on Soc�l Welkin

Organiza�ons:

"Thepromotion

of social welkin does not include direct or indirect

pa�icipa�on or in�wenton inpolitical campaigns on behalf of or in

opposit�n toany

candidate for public office. Howeve� a sec�on 501 (�(�

social wel�reorgan�ation may engage

in some p�cai activ�ies so long as

that is not i� p#ma� acti�. Howeve� any expend�ureit makes for p�c�

acS�tesmay be su�ect to �x under section

527(f). [Emphas� adde�]

a.What is the s�tory basis of the

languagemat allows 501

(c)(4) organiza�ons

toengage

in some politicalac�vi6es?

Please seeresponses

toquestions

1 and2

above.

b. How does the IRSkeep #ack of these poli�cal ac�vi6es and ensure that the

organ�ation paysthe �x under secSon

527(8?

Se�ion501(@�) o�an�ations filing

Forms 990 or 990-EZ are �qui�d to�poR

p@�cal acflv�ies. O�an�ations thatengage

in direG or indireGpoli�cal campaign

activ�es are also �qui�d tocomplete

Schedule C of Form 990 or 990-EZ.

O�an�ations su�eG to tax under seGion527(0 are requi�d

tocomply

w�h the

s�tu� �poRingand

paymentrules. The IRS also �ceives rear Is �ga�ing

such acflv�ies from a vade� of souses that are handledthough an

impaRial

independe� �view. See theresponse

toquesOon

3 for thedescription

on the IRS

�fe�alprocess.

Ques6on 7. in her July 13 le�e� Ms. Lerner s�s that the IRS also addresses

the issue ofpoli�cal ac�vi6es in me Forms 990 and 990-EZ.

Are Forms 990 and 990-EZ madepublic?

Ifso

where can mey be accessed?

Yes Forms 990 and 990-EZ are madepublic. Ta�exempt o�an�ations are required

to make their returnswidely

available forpublic inspection� O�an�ations are

required

to allow thepublic

toinspeG

the Forms 990 990-EZ 990-N and 990-PFthey

have filed

w�h the IRS for their three mo� recent taxyea�.

s

Exempt o�an�ationsalso are

requiredto

provide copiesof these informa�on returns when

reque�ed or make them

available on the Intemet� The annual information returns also are av�b� from the

IRS

7

as well as fromthi�-paRy sources that po� them on their webs�es.

QuesSon 8. internal Revenue Sewices Publica6on 557 s�tes tha� if a 501(c)(4)

entry can "submitproof that #h� organiza�on is organized exclusively to

pmmo� social wel� it can ob�in an exemp6on even if it pa�cip�es legallyin

some political a�ivi� on behalf of or inopposi6on

to candida�s forpublic

o�ce."

Have thefollowing 501� o�an�ations a) applied for;

and ifso b)

received

the describedexemption

forpolitical ac�vity

#ore the IRS?

4

IRCı 6104(d);

Treas.Reg. ıı 301.6104(d)-1

and -2.

�

IRCı 6104(d)(2);

T�as.Reg. ı 301.6104(d�l(a).

6

IRCı 6104(d)(1);

Treas.Reg. ı 301.6104(d�2.

7

IRCı 6104(b);

Treas.Reg. ı 301.6104(b)-1.

Due to d�dosu� law& an o�an�ationmu�

subm� Form4506-A Reque#

�r Public�spection or Copy

ofExempt or Po�ticd

Organ�ation

IRSForm � the IRS o�ce indicted on the �rm or accompan�ng

in�G�ns.

In�l� to

c�rify sedan

501(c)(4) o�an�ationsdo not receive "exemption

�r

pol�cal adwity� Rathe� o�an�bns are recognizedunder sedion 50!(�) as

�exem� whenthey

demons#�e thatthey plan

to bepdmadly engaged

in

acti�es that pmmo� social wel�r& If

they meet that �anda� the fad thatthey

engagein other a�M�es th� do not pmm�e social wel� such as political

campaign i�emention will notp�clude mcogn�on

of their �exem� status.

Wh�her an o�an�ationme�s the �u� and �gul�o� �qui�me�s of sec�on

501(c)(4) depends uponall of the fads and �mum�ances and no one fador is

determinative.

As discussed in ourresponse

toyou

dated June 4 2012 sec�on 6103 of the

In real Revenue Code prohib�s the disclosure of informatbn about specific

taxpaye�unless the d�dosure is authorized

by some pro�on in the Internal

Revenue Code. The IRS cannotlegally

disclose whe�er the o�an�ations onyour

list haveapplied

for tax exemption (unless and until suchapplication

is approved).

Se�ion6!04(a) of the Code

permi� publ�d�dosure of an appl�ation

for

recogn�onof tax exempt �atus

onlya�er the o�an�ation

has been recogn�ed as

exempt.

Seamhingthe names exadly as prodded our reco�s show that �e

following

o�an�ations have been �cogn�ed bythe IRS as tax exempt

under sect�n

Americans ForP�sperity

Amer�an Future Fund

60 Plus Asso�a�on

Patriot M�ofiW USA

C�izens �r a WoAing America Inc.

Withresped

to the othero�an�ations

for whichyou inquired we will be able to

determine if

theyhave been

recogn�ed bythe IRS as tax-exempt

with add�on�

information such as an address or EIN that

specifical�iden�fies the

o�an�ation. Organ�ationsoften have similar names or maintain mul�ple

chapters with vafia�ons of the same name. Withrespect

tomany

of the other

o�an�ations youiden�fied numerous organ�ations

in our records havevery

�milar names. IRS �aff can work w�hyour

staff in�entifying

the spec�c

organ�afionsfor which

you are interested. IRS staff is also avm�b� to assist

yourstaff to

navigate searchable databases on the IRSpublic

webs�e� As

pre�ou�y discussed information on organ�ationswith

ap#�ations currently

pending legallycannot be

prov�ed unless and until the ap#�ationis

approved.

Please note thatorgan�ations that hold themseNes out as tax-exempt w�hout

IRSrecogn�on

andorgan�ations

that havepending appl�ations

forrecogn�on

arerequired

to file annual returnslno�ces.

Ques�on 9. Haveyou

reminded 50t(c)(4)swhich

publicly seem to be

opera�ngin the�a�an pol�cal arena as to the factors

youwill consider in

determining whetherthey are engaging

inpa�isan political ac�vity? if not

why not?

As described in theJuly 13 2012

response the IRS takes several steps

to

continu� educate o�an�a�ons of therequi�men�

under the tax law and

inform them of their �spon�bi!�es to avoid �opa�i�ng their ta�exempt status.

We believe these s�ps ensure the IRS admin�te� the na�on’s tax laws in a fair

andimpa�al manner.

I

hopethis in�rmation is

helpful.If

youhave

questions please contact me or have

yourstaff contact Catherine Barre at

(202)622-3720.

Sincerely

Steven T. Miller

Depu� Comm�Moner

for Se�ices and E�o�eme�

September 27 2012

VIA U.S. MAIL & EMA��ath�ne.M.Barre@i�.go�

The HonomNeDouglas

H. Shulman

Commis�oner

ln�mM Revenue Service

11 l 1 Constitut�n Avenue N.W.

Washington D.C. 20224

I

RByEE�xeEcultiVveEsDecretariat

at12:36pm Sep 2� 20121

Dear CmnmisNoner Shulman:

[

appmdae�e

SeNemb� 14 2012

response bySteven T.

Miller DepmyCommis�on� �r

Ser�ees andEnforcement to

lnyletter of

Augu� 31 2012.

As afollow-up

to � leReg please pro�de me with the*bllowing:

1. Que�n #15 on the IRSAppl�ation for

RecogNfionof

Exemption Under Se�n 501(�

states:

"Has Ne orgm�ation spentor does �

planto

spend may money attempt�g to �fluence the

se� nom�m election or appo�tmentof

any personm

any Feder� �am or �cM

punic office to an office in a pdNcN organization? lf"Ye�" exN�n in detail and li� �e

amountsspent

or to bespent

in each case."

m For thefollowing organizations please

forwardcopies

officeresponses

to Question#15:

3)Americans tbr

Prosperity

4)Patriot

M�orRy USA

b. Pleaseprovide

with each answer theexplanatory

"detaiP’ and the lists of the "mnounts

spentor to be

spentin each case" referred to in

Question#15.

In �e IRS�sponse

ofAugust 24 2012 Mr. Miler stmed thin an address wo�d be needed in

order �r the IRS to tell us whether or not an organizationhas been

recogt�zed by�e IRS as

rex-exempt.I have

proddedaddress �lbrmation on several

organ�ations bdow as wall as

verbatim �emm�sfi’om �eseorgaNzations’

webNms mg�Nng thek 501(c�4) stores.

Americans for

Pmsp�iU

2111 Wilson Blvd.

Sure 350

Arlington VA 22202

............................................................

P�fi� M�ori& USA 1

.........................

717 Rhode Island

.....

Avenue NW

WasNngton DC

20036

"Amef�ns �rP�ib’

is a 501{c) �) emi�

under the IRS codm

ConNbm� or giftsm

Am��r �fi�

�e n� �x �ductibleY

"Patriot M�i�" USA is

a501(c){4)

�N the

Nima� purposeof

encoura�ng a discussi�

of�onom� issues in fl�e

Unhed �ates."

Foryour

�rmation I �n endoNng acopy my

mce� Congress�nalRecord �emem

regarding�e �temM Revenue S�ce and �s t�amem of 501 organizationm

If

youhave

any

question� please comact me or haveyour

�aff con� KayeMeier of

mystaff a

kaye_mei�@k�n.sen�e.gov or 20�224�110. Nease pro‹de1hN in�rmation by October

9 2012.

Thm�kyou.

Si�e�

C� Lev�

�nnan

Pennan�a S�commi�ee on Invesfig�ons

Endo�

Dr Tom Cobum

R�Mng Memb�

Perm�em Sukommittee on �gations

Mr. S�ven T. Mi�

Depu�Commission� �r Se� �d Entbrcement

�mal R�ue S�v�e

$6428 CONGRES�ONAL RECORD� �NATE Seplember 1� 20t2

WM’e I

�u�perv (.he motive lmhlnd th�b:g�

�latlon and believe ensuing thesalty

of

stat� and loc� courthouses � a noble ge�l 1

belivve �he l�sponslbi�tY to addre�a this

issue lies with �m sta�e and localgovern-

ments l do not b�i�ve the �deral govern-

meat hms the authomty under tile CoImtltu-

�on to provide Lralnmg t�r local and state

law enforcement or to p�vtde security

equipment Vo state and local �ourthouses at

the �dm�l govsrnment� expense.Further. 1

b�!leve the training program this hill au-

tho�zes duplicates exiting federal traleing

program�

Firs� S. 2076 auOm�zes the D�ector of the

State Justice Institute (8JD tocarry out "�

trr�ining and techu�al a�s�tauce pr�am

designed to teach em�oyees of Stalin I�cal.

and tribal law en�rcement agencies how to

am�te and respond to violent encounters

cluing the course of their dut es invading

duties relating to s�murity at State county

and trial eom-thouses ’" TI� �rpose o� SJI 1�

to further the dev�opmen� nedadoption

of

improved judicial admln�traMon in state

courts in the United Sva�es which is net a

federal �sponsibi�ty under the Constitu-

tion. States are re�ponsible for the adminia-

tra�on o[ their courts. Adding an addl�onal

allowablepurpose

to SJI meI�ly bro�lens

thF eurtheU r.nCons�itu�łne�lventhough S. 2076 does

norI.

each of this

ageneypr.ovide

anyaddi�onM fun�ng for SJI the

agency

could use the authoH�Oon of addi�onal re-

spenaibi�ties aa a ba� for requesting future

appropriations �om Congret s.

Second the SJI training pl�gramauthor-

lzed in this biIlpotea�ally duplicates

ex�sv-

insgtale�d�ra alnd lootalraminl�gw prłgral�e�nforccm�t.vaflablTh

e

e

�lt?

for Judicial Secu r�ty Ofllce of Prot ec�ve ln-

t�ligenc� Shares threat information with

state and local law enfomement agonies and

providefoSrcement�rainholgfficet�tOwhSotat;r�a

dead lOCac lourbhouslcaw

en-

secumty. Al�o providea guidance and �u]>

fmrt to d�t�ct offices and Judicml Secu�y

[nspecto[� (JS1s} cemtuc�ng high threat pro-

ceedingsand

protec�ve resl�m�es

2. U.S. Marslml Smw*ce� National Center

lłprrovtdesJaUdicia�ht�monStheeUritY Fc�łwghtriPmntngprograPmrłgr�nfo;r

state local and ln�enla�oual "*court secu.

�ty managc=� "

3. FBI’s Unilorm Crime Reper�ng (UCR)

division and Law Enfold:smear Officers

KH�d and Assaulted {LEOKA) progr�n�

UCR and LEOKA collect data on law enforcs-

ment orficei� who have been killed or an-

saulted in the line vt" duty. The FBt then

conducts LEOKA tralnu� pn�gramst�r slate

and local law enforeemen� personn�based

on this dat�

4 FB!’s Law Enforcement Training for

Salty and Surv� (LETSS} prelim;

Trains FBI police officei� and inta �m�Onal

�w enlb�ement personnel i� stnwhłal tech-

nique�

5 FBI Field Police T�inlng proclaim;In-

eludes firearm training lot state and local

partners.

6 FBI� Law Enforcement Exec�ve Dev�-

opmen� Assocla�onprogram;

Trains heads

of stat� and local law enforcement agencies

with between 50 and 5�personnel.

7. Advanced LAW Enforcement RaMd Re-

s�ns� Training (ALERRT} pcogram:Trains

officers tn dealing w�h violent �t�atiom�.

ln�u(hng those they face outside of but�-

rags�nd in ur�tn uet�ng� Iucludes core

c�s�es such a� ;’Basic Ac�ve �hootcr Level

1 �d 1L" "’TerroAsm Res�nse Tac�s�Ad*

vanc�t P�oI " "Combat RifleT" "Combat

and "’DOD Sniped Course."

8� Communivy Oriented Policn�g Services

pmgr�ms (COPS�

% Depm%ment ef Hero.and Security’s Fed-

eral Law Ea�l�:ement Training Center

(FLETC) programs;and The Su�w� Shoo�

ing Tral�ng Program (8STP) under FLETC

� an eigllt and a half day training prug�m

that teaches law en�rcement olfice� iLEOsl

"ho� to empty sever� types ofweapon sy>

ten� �und in most polme ar�na� {�m �erv-

i{e handgun shotgml suhmae�ne g*m and

�e). The LEes will deve�p marksm�mhip

skills as well as allpertinent gun han�ing

5kills (drawing from the hMuteL t�load� im-

rapl� yet con�oHed pace. UIMmatM� the

SS2�presses

the LEOs to survive a deadly

foix:e con�on�tonthrough omnpe�nt de :i-

sign making an4 confidentgun hm�ng

skills" The Rcac�ve Shooting In�tructor

Tra�nig Preston (RSITP) �ndcr FLE�

t�ins law enl�)rt.:em�lL i�structors in han-

dling thor fire.ms to survive h�h�ess

�t�t�ons

10 Bu�au of Alcohol Tobacco aAd Fire-

ar� Na�onal Firearms �xaminer Academy

prom�ms� The training progr�nincludes

tra�ing that ena�es �tate and local law en-

fmx:ement officers to �enD� a�nedgunnum

and intrude thor �margln of �:�l y."

F�ly this hill givess�d e and local

courthouses pno�ty in obtaining exce�s �d-

er� security equipment �)1’ Roe �om tt�e

ci�s. The courthouse would only �y the

meat purchased by vhe �der� govel�ment-.

and thereby the Amer�an taxpaFer--shoold

be utilized by the �deralgovernmvn� i� at

allpessi�e.

II not Ddo�fl agonies may

have to pulx:�e equipment they otherwise

could have Obtalned �v �ee bat for �le �Late

aim localgove�nnen� taking it A�ngsLatea �d local�tle� the a�l�y to obtain

this equipment �r flee may lead to situs-

Hens where they acquire iho equtpnmnt sim-

!:�.2)�a�lse

iL I� �ee not becau e they tru y

Arti�e I Section 8 of the Oons�tuMon

enumerates �e limited power�of Congre�

and nowhere are we tasked wtth funding or

hecomlnglevered with State and local court

secuNty� I iirmly believe this issue � there-

�PoOv:�;�;�t; .i�:;�:;�i �$;�:�; �Ts�

althereds:"

’lłesaCttli��is�rea. we �hould evMuate �urr.nt PrO-

gram� determine any Meeds that may ex�g

and pr�ze those needs for funding by cup

tins �orn the �deral budget programs

frltught wir.tl wast� �aud. abase and duph�

catkin

Congress must start making tough deci-

gram �ther than continuing to k�k tim can

down the road lear rig our children mM

grandehildrmi t� cleanup

�he incus. It ia i�

responMbM Ibr Concuss to jeol�xr(llze tile fu-

ture standard of living �f our children by

tom.wing �om �ture generations. The U.S

na�onM debt is new over $16 �il�n. �at

means over �0 000 in debt for each man

woman and chiM in the Un�ed S� A

yea�

res�teagO � �bhenat�nalto �on�dehtwaSspe�nt

lng.$1t�

trll

Ileal....ledge�\VaM�

lagton adds hiliion� to the national dolt

� 8%. Wc c�nnov con�nue tosupport

�deral

funfli� forpregl�ms and ini�a�ves that are

not �doral respon�li�es am dicta� ed by

our Co�s�tuMom Otbel’w�e we wily never

get o�" �scal house in o�e�

Slnearely.

TOM A COBUt�h’. M.D

U.& &’hater

INTERNAL REVENUE SERVICE AND

5�R4) ORGANIZATIONS

Mr. LEVIN. Mr. Pre�d� o�r �p-

rcsenta�ive �rm of government is

based on thepl�mise

that citizens who

vote in our e�ctions are informed

about who is seeking �0 influence elec-

tions Sadly we ten hue to see �mt

lnlorm�ttion obscured by arganiza�ons

who are misusing our tax cod� Ibrpc*

litical gain.

AS wc have discussed on this floor

many times the Supreme Ctmrt opened

oar campaign financesystem �o a �or-

rent of unl�nlted and secret speciat�n-

forest money in Cit�m�s United. But

even �e Suoreme Court acknowledged

in CiMzens UniVed that disclosure is

important:

"[PJrOmpt dtscio:�nre of expenditures c�

pro�de Oiareholders and �L�ns with !.he

intkwmat�n needed t� holdcorporaMon�

and

elected �hcia� accountable l:or �heirpo�i-

�on� auduupporter� Share�Rde� �an de�

Lorraine whether it sir corl�ora�on� pelham

speech advances thecerpora�on’u interest in

mains profits and �zens c�m see whether

�ected olfl�s are in the pocket of so-

called moneyed interests)’ Cit�enu Um�ed v.

FEC �30 S. CL 876 �6 �0L

Yet.according to the Center fi)r Re-

sponsive PoliCes. as of Se�ember 13.

spending on politica� advertt�ing by

groupsthat either do no� disclose or

only put ally dispose O�eir donors

has incrot�sed fou>fold from $32 mil-

lion in fl�e 2008 election to more �han

$135 million at �he same �ointin the

current election

Thesegroups are exploi�ng our tax

code by organizing as tax-exempt "so-

cial welfare"creeps

and then spendlng

�ens of millions of undisclosed doliar�

on poli�cal campaign�

The InternM Revmme Service lIKe)--

theorganiza�on that gran�s these

groups�mir

tax-e�cmp� statu� in �hc

first place.-.should be prctec�ng �he

vobilig �ubli� h’om thesegroups

that

pret:ond to beacting in the social wel-

fare bu� are instead engaging in par-

tisanpMi�ic�

2�m law in �his area is clear. 26

U S.C.ı501�c�4) states �at "’Civic

leagues or mNaniza�ons no� organ�ed

�br�rofit

butoperated exclu�vely

fl)r

fl�epromotion

of social weliare or

local assoeia�ons ofemployees

the

membership o� �hi� is limited to the

einployet�s of a designated peraon or

persons in � particular municipality.

and the net eamdngs of which are de-

voted exclusively to charAabl� edu�

ca�on;� or recreationM purposes" are

exempt from taxation The wor� "’ex-

clusively" is in �he Lax code for a rea-

son. Congre� didn’tsay ’�partia�lyd

�

or

"prima�ly.

’�

We said bha� thesegroups

had to beoperated "�xchmively- �

�he promotion or social welfarm l�le

IRS. in wri�ng the im�emen�ng Pecu-

lations to the statute said tha� "An

organiza�on i80[Olated exclusiv�y lbr

O�e p:’omotion uf social welfare g it is

primarily e�gaged in promo�ng in

some way the common good and gen-

eral w�far�" [emphasis added] By sub-

sMtu�ng bho word"primarily’" in the

regula�on wi� �he word "e�clu�veiy"

� the statute the IRS ossen�ally rc-

de�ned wlla� Congress required a �ocia]

welt�i�organlza�on to be.

Mr. PreValent I a�ked �he I�S Ior an

explanation a� �o why theyhave not

September 19 2012

responded to the increasing growth of

groupsthat p�rade as social wel�re

groupsbut �re ob�ously organized for

poH�c�lly par�san purposes.In my

lette� I asked the IRS how theyinter-

pretthe exploit language in the tax

code whichsays

tl�t en�es must op-

erate "exclusivelY" for the promo�on

of soci� we�ar� to �lowally

�kX ex-

That the regulat�n has been in dace

�r over 50years.

T�at is not an excuse

if new abuses req�re a review of an

IRS regul�tion

I ako asked the IRS ffthey are rule

flll�g their enforcement func�on by

no�ln� thesegroups

that �rs oboe

ously engaged primarily in po�cal ac-

Uity that they are �a�on of the

law. Again �he IRSresponse was lnado

e�ua�. Durln� thepast 6 month� ac.

cord�g to the U�S �tteL no not�es of

proposed or final revocation h�ve been

i�ued to section 5� org�niza-

�on� None. So even Under the "p�-

m�rfly" test the IRS is not enforcing

the law in the face of the av�anchs of

o�dsncs that our laws are being flou�

ed.

The law is cle�. Even the watered-

down IRSregulation

is �sar. It is time

that the IR� enforces the law or at

]east i� own rog�ation.

I �k unanimous �onsent that the

correspondence with the � be printed

� the �COaD.

Theebeing no o�ec�on the mate-

� was ordered to be p�n�ed in the

l�cogD as fo�ows:

U�. �ENATE. �0MMrI�i� O� HOME-

W� ng�ono O�. July 27. �L

Hon. Doou�a� H. 8m�MA�.

W�h�on O�

D�Ag COMM�S�O�$R SHUbMAN: I am w�tin�

�ex�e� my concern about how the I� in-

terpre�the law �k�a�Ling the ex�nt to

w�ch �î�4) "es� welfare" o�anlza-

tlons can engage � partisan poH�cal ac�w

t�. The J�y 1� � rospOzme by LOlS O.

Lerfl�. Dlrec�r of Exempt 0rganiza�ons. �

my June 13 � let�r waS ttusa�sfac�ry.

� �erespons�

Ms. Lerner s�ted that

’�l�e IRS tak� e�ps �cunt�ually

inform

o�aniastions o� the� responeib� aS �.

ol� welfare organiza�on �help �em avid

Jeopard�J�g their �x�xempt s�tus." �nd

about�o�n�ea�t�p�:/�ł��hl�)(d�veOlor�a�n�a��e

� respo�tles under �e tax

law." �nphas� added.]

inlt�tiVe�ve�

�ucate.

’’Herdlscmmtłntł

"cłntinu�Ra�s�

dłes

nłtit

shows the

infłrm’’dasc�be

łrunl]tS"ac’IRSl�

paastv�y making �me �fornza�on av�lo

a�e on� a �1�4) en�ty � already� ex-

�tence Yur�e� her dl�uml�n of the exo

pluna�ry ma�s available to �e pu�l�

and the ma�a� �emaslvee �e îon�usin�.

�Fhis leads � a pred�o resul� organize.

�łas�on

�l(c)(/) � ga�

are �In�r�tax

exemptRev�nues�tuewhile

Cłde Soc-

en�asln� �l�rtisan pollMc� campais=s.

The� � -- a�urd t�ng� otvagus

and con-

r�lic�ry ma�Hak t!mt the IRS provides.

M�kin� �e p�blem worse Is that the l�tS

knows �e� k a pm�em because � the pu�

Hc natm-e of the a‰�o but b� f�led to

CONGRESSIONAL I�CORD-- $�NATE S�9

Flm� the �� U�. �Olic� s�tes that "�c

lon�u� or o�anlz�ons notorganized

for

of �ploy� �e membe�h� of w�ch Is

l�d � �e �ploye� � a d�d �r-

son or� � a �C�m�c�lt�

�d the nete� of w�l� � devoted ex-

deles "�clu�v�y

’’�lł�atiłn’(�Ph�P�"�d�

’�le.

sole;exemptMe�l�’We�terfmmwhole;

�"

un�d� �erefo�. It woul� ap� �at

�e law preven� en�es that o�a�e �der

Sec�on �l�)(4)�omany ao�ty t�t � not

o�ra�d exclusively �r the P�motion � s�

� welf�e or an �atton � em�oyee�

�nsis�nt wi� �e �w Is ß 1� iet�r

�om the �S den� �-exempt s�tus � a

�o� �l�d �e Na�on� Policy Fo�m. �e

�t�r �dl�s �at the �S brad l� deni�

on �e f�t �t �e o�on w� en-

ter "� p�] scU�ty do� not

�omo� s�i�l wel� � defied � s�tion

�c)(4�’ �d t�t �e �p�ant "�nefl�

sel�t indivld�s or �u�. l�tead of the

‰omm�i� � � whole.

One �t � �1 �v�ue Se�e Fu�

lication � � l� �uid�ce � co�is�nt

wl� the law �

p�flt

"�

Yłffd wfllł�[�łn�

opened

�

nłton�ł�ed� p�mo�

�r

�ocl�

file Fern

� �neflt �e co�u�

� app� �r m��on o� exemp�on �m �deml income �

ł"

ł""

�ra�ly

�d ��da�On �r�puN�

o�ce." �e �8 � �cu

-�łrs�t�

� � słme

�

łP�łn�a�s�t

t0 �Y

1� �t �i we�" �voc�y do�

not lnc�de �ng �r or �t a

c�did� or �dl�

So f� � �d--�til �t �e Publica-

tion � s�; "HoweveL Ifyou

submit

p�o �tyour �g�l� � o� ex-

�y � �omo� �i� w�. It c�

ob�n � exemptl� [�m �x�] even If It

�rt�l� ]�ly In some �H�I �v-

1� on beh� of or in o�ltion to c�-

ß �s for �blic e�at �esse� �co�s�nt wi� �e

o�er �n� p� of �bli�on � (�

w�l � �g �co�t wl� law �d

�entLtion

isn’t �v�e

�1�

it�rm�Spolitical

�tezem�

�lon �edby �1(c�4) �p�.

8�łntlonF�e�is

�1(c)(4)o�

�

�s�Sex�y

�gu�N�t’

that"�r �łr�-�e

pr�

g�go�

�dco�l�.

m0�0ninł� �omot� � �me way �e

�ded’]

welf� ff

o� �e �o�e of �e

� �rffy �-

q�ment. �m�ly....excl�vely. ł�me�"exclu�vel�’ve�

�ffe�nt

�Iy

me�S�Om

�l‰lewhich s�t�

st�e �n�p� that con�u� � de� p�cl�

cl� Ju�men� � still �Ui�." [Emp�-

O�nl�o� �e �S �lv� �m�n m-� how to m�e î o�a.by� evs]�-

�on w�th� s co�lca�on Is �1�.

�at Oulde � �t �e Ioi�wl� f�m

�HMc� c� acMvlty:

The commun�aMon ldenMflos a can�da�

�r public office;

T�e timing of the commtmlca�on cora-

cles wRh an electoral camp�;

The communication ta�e� vo�m � a

partlc�ar election;

The commtmlcatlon idon�fles the can-

�date� po�on on thepublic policy i�ue

that � the subject � the communication;

The position of the can�da� on the publ�

policy issue has bees raised as dlet�a�tshlng

the cand�ate �om othem in theeampaiffn

either in the communication It.ll or in

other public communications; and

The communica�on � notpart

of anon�o-

�g se�es of substan� similar advocacy

oommu�catlone by theorganiz�tlon on the

8�e iMue

The �ul�e further lays out the fao�o� that

indica� when an advocacy comm�ulicaMon

ie not political campaign acuity:

The absence o�anyone or more of the fac.

tora ii�d abov�

The communic�on identifiesspecl�o leE-

iela�on or a specific event ou�lde the con-

trol of the orsuniza�o� that the organlza-

�on hoI�m to �fluenc�

The timing o� the cornl�unicat�n coin-

cMee with a spe�flc event ou�lds the con-

�ol of the organlza�on that the erganiza-

�on hopes to influence such as a legislative

vote or other major legislative act�n Ifor

mlt�eexa�n�. onthea

hearing/s�u

e

�r� a�sl�ecV;//t�;

cłmmunicatlł�;The

communication �en�fles the can�

dida� sol�y as a �overnment official who �

in a po�on to act

an�

� a l�l&tor

whoinThecł�ectlłncommunlcatlonWlth

�the�i�Ne�enNfl�

epsci�cpubl�

po�

vo� on

theev�tth

e

(such�.

�da�solely

� the l�t of key or pgn�p&t

sponsomof

the

� c�ar Crom

leg/sla�łn that � the

subjeCt�he applica�on of those

factom that wh�t � g�ng on in the U.�

with certain 501(c)(� organiza�ons in their

�lev$ion advertieemen� are politi�ai c�m-

pa�n acacias

B�ow am twotranscrip� of adver�e�

men� that were put on te�vieion by �0�c�

organization& Ae you can ass. the eebJect o�

Adver�eemont #1 is a Democratic �enatoL

and the sub oct of Adve�ement #� � a P�e-

publican Senator. This is not a partisa�

i�u�

ß elevieion Adver�sement #1:

’�s �me to �a� Who is ths �a�mt eu�

�53 �llion

vOtedadds

�00 �Uion

�r

budgette� increaae tobUSMngth

e

deflci�&nd0bamaCareeven

supp

orted¾łr

Obama sthat

ca�and’tradedeb�alłVer

�bl00’000guppor

tgrowth.Jłb&tbewhlchetopTellnewCł�dspendingm�o� �SherrłdhaVeandBrłwn’asendaCłStcutOhlłthe�rat

newn�Jo� tya�enda.org.’"

"’Be�re Wall S�eet Kave h�m �0�.060 in

c�npst�n cash.... Be� he void to let

b�nk CEOs t�ke ndH�us �taxpayer funded

bonuses....

Dean Holler wa� a stockbroker.

No wonder he voted �ainst Wall Stoat r�

�rm; a�ainst ho�ln� the bis banks a�oun�

abl� H�ler even votsd to �sk your Soc�l

Se0tL dty here. � the stook marke� Dean

Holler: he votee like he sMH works Wail

S�as� and thaws bad �r yo�"

Those sds and so maJ�y �ke them. �asr�

fit the �actom the � has l�d out in l�

Kulde for wba‰ cons�tutes a poHMc �I cam-

p�n activitY. The advertisements n�ke no

pretense at nonpar‰�bip: they ame �&-

tantly and a�8�e�lvely partlasn communtca-

Mon�

S�0

the Intero� l�evenue Code and take advan-

te�o of It tax exemption benefl� should

h� to make a choic� �ther lose the� ex-

emptstatus (and I�Y taxes) or eliminate the

"l�e IRS needs to tmmed� renew the

�K paxtt�n poli�calads or �ving

fun� to Sso�on 6� organiza�ons that run

such ads. "the IRS need8 to adv�e �c)(4)

en�es of the law in th� ares and the fac.

tom � wl� look at � m�ewing �1(c�4) eta-

marion no later �an Aueust 1� �1�

L How can the IRS �terpr� theexpli�t

le�a�e in � U�.� �c� w�chpro-

�des that ??6�.�. �(4] entices mustoperate

"exclusively" �r the promo�on of eoci�

welfare � �lowany tax exempt p�r�san

po�Cal acuity by �1(c)(4) o�ons?

� Since partisan po�cal ac�vl� does not

m�t the IR8 defl�on of "promotta�social

weK�e0" how can an or6�uiz�tion that par-

�cip�tes�

any partisan political ac�vity

b�r�d ex�usive� topromote

socl�

w�fare�’

� TheExempt OrKanJzatione �11 Annu�

Repo� and �12 Work Plan eta� "As � any

�on yea� EO will con�nus lie work to

en�e the rules �tin� to poll�c� cam-

p�ns and campa�n expen�ture� In IVy

� EO will combine what it hes learned

�om past projects on p�l�c� activi�es

with new �formation �lcaned from the md�

ei�nsd Form 990 to focus 1� e�nin�t on re-

�urees on us�ous �le�s�ons of tmpermis-

the � does a comp�n�e �v�w beK�?

� What&pproxln�te time does It take to

review the compla4n�

� How many persons are �v�ved � the

enfo�ement of the �I(c)(4) rules?

� The Exempt Or�anlza�o - �! #mnu�

1� and � Work Plan sta�s tJ�t �!

�4) oi�84Lt�a�ons "oa n deolare Lhemselves

tax-exempt without 8sokln8 a detormln&tlon

from the I�. EO will �view or�an�on�

to ensure that thol have clarified them-

8�v� correctly and that they are com�

with app�cable rule�"

� Why does the IRe �w �) or�anl-

za�ons to self-declare?

a�I(cW� o’�a�%’�’�w’�e�/t�h�S�’8�no�ceand�

--� " �’�how

Ion8does it �ke the IRS to

conduct the �view to ensure that that org�

�zation has clmmifl0d Itself correctly?

� The n� Comp�anco O�do for Ta�-Ex-

erupt �L�atlons e�tes:

"When a �1(c�4� (� or �) o�anl�tion’8

comrrtunication expll�y advocates the

eleo�on or de at of an individual to public

offlc� the communication � considered poe

li�cal campaign ac�tyo Atax-exem� o�

Kanization that makes expen�res �rpo-

ll�l �Jup�l�l ac�es 8h�il be eu�ect

to tax In an amount oqtml to i� net inv�

ment �come for the Year or the �ate

amountexpended on po�c�l campaiSn ac�

�vlLies dttrinK the year. whlchev� � less."

� How does the �koop track of those ex-

�i�t communica�on8 and ensure tha� the

orK�nL�t�n pays� tax?

� What � the �eson � the req�ment

that the tax w�l be based on "whichever �

less" between its net �vestment �‰ome �r

the yoar or thes�K�oKa� 8�nount expended

co What tax wo�d an o�anlzat�n have to

pay ff � 8ponds �1 of lie �come on poritical

ndvertlsin� (there�re it has NO net �voe�

ment income)?

� Ms. Lornor� letter quotes the IRS

wsbPs�o on Soci� Welf8�o Ors�n�ons:

*"1"he promo�on � oo� welfare does not

�clude �rsct or �re�tpart �pat�o or

CONGRESSIONAL RECORD--SENATE September 1� 2012

that file under Set on �cR� of �te�en�on � �litic� campalg� on behalf tio� may "not p�ticipato � or �te�ens

of or in oppo�on to any candidate for pub.

I� office. Howeve� a 8ec�on 50�c)(� social

welfare orsanlz�on may en�agein �ome po-

l�ical ac�vities SO lon� Its that IS not its

p�ms� acuity. However. any expso�tttre

it n�kse for pedicel �c�Mes may be sub-

Ject to tax under 8so�on 6�(�?" [Eanphusie

added]

a What � the statutory bus� of l�ho lan-

guage that �lowe 601(cK4) organiz�ons to

engagein some pedicel ac�Ges?

� How does the I�S keep track of these

niz�onPOri�cal

artlviti� and ensure that the

orgaopays the U�x under section 5�(�?

�. In her July � lo�o� M� Imrner states

that the IRS also addresses the issue ofpc-

�tic�l activl�es in the Forr� 990 and �

Are Forms 990 and 990-F� made puMic? �

so.where can they be accessed?

� I�t�rl� Revenue Service Publie�tion 55�

state tha� if a �o� sn�ty can ’*submit

proo� �hat [the] organl�on � org�nl�d ex-

�us�y to promote soci� weUar� it can

obtain anexemption even If it

partlc�ateo

lelptllyin some political �c�ty on beh�f of

or � oppo�on to candidates for public o�

rice+"

Have the �ol�win� �)1� orsanL� tio�s

� appl�d � and if so b) �uslved the de-

sc�bed exemption for po�c� activity �om

the IRS?

� Croe�oade Grasaroo� Po�cy Strat�es

b. Prio�ties U.S A.

c. Americans Elect

� Ame�c�n Ac�on Network

e. Ame�cans for Pro�pe�ty

fl American Future Ftmd

� Americans for T�x Reform

� � Plus Aessoia�on

I. Patriot Majority USA

J. Club for Growth

� Citizens �r a Working Ame�ca Inc.

1. Susan B. Anthony L�t

� Have you retarded 501(c)(4� which pub-

�cly sosm to be operat� in the par�san po-

litical ar�n� as to the factomyou wl� con-

�der in determining whether they are ensa�-

In� in pa�dsan pol�ical activity? If not why

not?

I have enclosed acopy

of Ms. Lerner� le�

ter. �you

haveany questione� �sa� con-

tact me or have your staff contact Kaye

Meier of my staff at

Sincerely.

CAn� L�VIH.

Clm rman. Permanent Subcommft�e

on ln�st�gatlons.

D�P BTMSNT OF THE

Washington. DC.. Auou�t 24. 201�

Ho� C�Rb I�vm.

Ch�rman. Permanent �bcomm�e on �es.

DEAR SEMATOR L�VIN: I am respondin8 to

yourletter to Conuni�ner Shulman dated

July �. 20�. requ�t�u� ad�tion� in�rma-

�on about ssot�n 60�cX4) or�m�tlons.

Th� response eup�eme� the pr�v�us re-

sponses da�ed June � 20� and J�y I�. 201Z

and addre�es the �on�ques�ons raised

In your recent �t�eL

ques�on L Row can the IReinterpret the

expll�t la�neua�e in � U�.C. ı54]I(c)�

which pro�des that �c�4) entit�s must

oPera� "excluslve�" �r the promotion of

eocl� welfare to �lowa�v

t�xexempt p�r.

�!�n poetical acuity by �I� organize-

�ons?

We note t�tt the currentre�l&�on h�s

been in pI�ce for over 50 ye�r�. Mo�over. un-

like Int�a� Revenue Code set on�II(c)($).

which specLqcs�ly pro�des that organist-

in. . . any poH�c� campalg� on beha� of

�r in oppo�on to) any candidato �r public

office ’% s�on �cX� does not oontain a

spe�flc role or lirnitaGon on poHtlr�l cam.

paign inte�sotton by social we�are o�anl-

�atione.

Ques�on Z �nce part.4� pedicel ac�v-

lty does not meet the IRS deflnl�on of"pro-

meting eocl� welf�e� how can an organize-

Men thatimrtlcip�t�s

ina�y par�a�o POH�

c�ac�vlty be "orgsnlT�d excin�lvely to

promote social welfareS’

As elated above. �ngatandlng Trensury

Reg�a�ons have interp�d "exclusiveS"

as used in �ctlon �1�)�) � mean prl-

marl�. Treasury Reg�a�on ıL�1�4�

�a)(2Rl� promu�ated in19�9. prov�es: "An

organlz�Mon is o�r�tod exclus�y for the

promo�on � social welfare If It Isprimarl�

engased in promoting the common good and

general welfare of thepeop�

of the commu-

nity." Appl�ng this Treasury Relul&tlo�

Revenue Ruing 81-�. 1�1-1 � �3�. con-

cluded that "an organization may earry on

inw�lpolltlc� activities �nd remain exem�

under ecc�on �e� ns long � It Isp�-

ma�ly engaged in ac�es that promote

eo� welfare"

Question & The �xempt Organizations �11

An�u� P.eport and � Work Plea states:

"As inany eloc�en year. EO will son hue

lie work to enfo�e the ru�s rel�lng topo-

H�c�campaigns

and campa�n expendi-

ture� In FY �. R�3 will combine what it

ha� learned I�rompast projects on poB�cal

ac�es with new tnforma�on �eaned

�om the redesigned Form 990 to �cus it ex-

amination resources on s�ua alleg�tions of

the 11� does a compliance revlew be�?

� Whatappro�mate t4me dnse it take to

�ew thecomplaln�

The IR8 rout�n�y receives exa�tlna on

�fsrrals �rom a varlet�V of soure� includlns

the pubH� medi� Membem of�onero� or

their ete�f and hue a �S�tandln� precis

�rhan�tn8 �fo�8 so t�tt they re�ve an

hupaxtt�L independent �ew from career

emp�y�& When the IRS mce�. a �ferral

about a parttc�ar organl�on it is

promp�y �rwarded to the ClaasUlcatlon

unit of the Exempt OrganLv�ons (EO) Ex-

amino.on office � Dallas. Text. Pungent

to IP.M 4.?6.&�lL within � days � receiving

the �ferraL the Clnseification staffbegins

evalua�ng whether the referral hes erJ�mina-

�on poten�el shou� be considered � a �-

tureyear. needs additional Information te

make a dsokion or �lle with� the caF

egorles of marten that are referred �r EO

Referral Committee �ow. Althou�th UtM

ß ?5.&�l) ae� a go� of �days to complete

�vlews of referral& the time It takes to

�lly rev�w a particular �forral varies de-

pending on such �ctom as the lemnos in-

volved and theav�lshility � relevant info�

mutton (i.e. organtz�ttoWe Forms �0. exter-

nal sources such aa mesa reports. �tornet

In thee ca�ea in which the IRe nsmls addt-

�on� information about the su�ect � a r�

�t�l that � not readily av� inch as

lie Form 990 t�hat has not been filedyet for

the taxyear

at t�uo. Clmmlflca�on m�y sus-

pend îlaasl�tng the �ferr� andplaces it in

thefol�w-up category un�l the ad�onaJ

�formation is available. Once the ad�tional

�formatien is mc�ve� reviewed and su�

portethe re�rral being �aesified ns lining

examination potenCY the �ferml � mot to

unassigned inventory until a �venue asent

with the ap�op�ate level � expe�ence �r

the issues �vo�ed in the mater k av�ble

to Conduct an exsmlLu�tion.

Once �Inventory there are numerous f�î-

to� that cem affect howlong It takes to

$6431

R00 looks at an or�aniza�o�s Form 990.

web to and otherpubll�y

av�lab� infor-

mation to see what � � doin� and whether it

îon�nues to beor�anised

andopera�d for

tax-exempt purpose� � itappears �om a

RO0 review that an or�mizatlon may not be

complian� theorganizat�n � re�ed �r

ezam�a�on.

Compliancechecks: In a compliance check.

IRS contac�taxpayere by kttsr when we

�scover anapparent e�or on a

taxpayer’s

return or wish to obtain further information

or î�rlflca�on. Aîomplines

check � an �-

flcient and effec�ve way to maintain a com-

pliance presence without an examina�on.

We a�o use compliance check questionnaires

to study epe�flc partsof the

tax-exempt

community or specific crop-sector prectlces.

Examina�ons: Exam�a�ons. �so known

s� au�o are authorized under Sec�on �60�

of the Code. Forexempt prgenizatlons an

con�nnedexam�atiłnquallflca�onde�rmlneSforantaxoexemptłr�anizatlłn’Ssta.

tus. We conduct two different types of ez-

amlnatlons: corespondents and fl�d.

Because the IR� cannot review every o�s�

the

ing

łr6�nlza�łnre�e

w techniquse

�

everYdesc�bed

tax

Year’above

we

uSeto

maximize our coverageof the tax

exempt

ourSeOtor�projectbOth

our

�ener�work"

The project

program work

andwork’

which

resultein

�

des�ned

sector and

łurfłctm

on

ePe�ftce�ate�to �rectPlan�gareaSmorePrłcess’a�ec�effec.

�ve use of our reso� in the effort to

strengthen com�iance and improve tax ad-

mi�stra�o� Described in the EO �01� Work

Plan. the sec�ons 60�4� (5) and �) S�

Decistere � one such proJec�Tiffs

prelect

focuses on or�niza�ons that b�d them-

selves out as bein� tax�xemptrather than

ecekin�I�tS reco6�nlGon of tho� exempt sta-

tus.

Ques�onß The IRS Compliance Guido �r

cłmm�uicatiłn�ec�on

ordefeateX�lcit�of

anln�vldualadVłCateSto

public

the

ll�cel

łfflc�

thecampa�nCłmmunlca�łnac�ty

"

AlStax.axemp�

cłnsidsrod

Pł’or

"

ganlzation that makes expend�urss �rpo-

tolltlc�lt�

�c�pel�in

an amour t�.1 to l�

axN�se �l� ll

bene

tsu�t�v�

meet income �r the year or the a�gregate

pays this tax?

�lcit communications and ensure that the

or�anization

Tax-exampt organtza�ons fllin� Forms �90

or 990-F.Z are required to report political ac-

�vlGe� Organiza�ons that en�a�e in dkect

or ind�ect political campaign ac�es are

�so required tocompete

�chedule C of

Form 990 or 990-�Z. OrUaniza�ons su�oct to

tax under section �27(� am req�red to com-

fy with the statutory reportln� �ndpay-

lent rule. The IRS also �ce�es refe�s

re$ardin�such ac�G� �om a

va�etyof

sources that �re handled through an impar-

tial. �doPendent renew. See theresponse to

quce�on$ for the

dsecrlp�on on the ]�S re-

�rt�l proceed.

� W�t � the reason for the requirement

that the tax will be based on *’whichever �

�se" between lie net investment income �r

the Year or the a�ro�ato amountexpended

on political camp�l� n a�ttss?

The s�tute under sec�on 5�(� exp�y

etat� that a �Ol(c) or�aniza�on �eub�ect to

ite tax based on *’an s�nount equ� to the

�sser of--�A) the net �vestment �come of

such orl�mlzatlon for the ts�shleyear. or (B)

the �ggre�ato amount expended du�n� the

taxableyear

�r such an exempt [�m�lon�

c. What tax wo�d an organization have to

p�yif It spends all ite income on po�c�l

adver�sln� (therefore it ha� NO net Inves�

ment income)?

Under the etatu� el�d abov� � orga�i�-

lion that otherwise meste thereqnlremen�

Of eec�on 501(‰)(4) social we�are t�x-exsmpt

status wh�h spend6 �1 i� income on poli�

� advertlsin� and ha� no net investment

�come would not owe any t�x under sec�on

�7(�o It may however throuffh eu�hspend-

�ff (and dopendtn� on the otherwise ap�

�e facts of the caas� no longer qu�lfy as an

orSanlza�on that �tax-exempt m�dor coc-

Oon 50�

Question ß Ms. Lerner� letter quotes the

I�S webpe�e on �cl� W�fare Cr�za-

lions:

"Thepromo�on

of social welfare dose not

�cinde direct Or indirectp�r�cl�tion or

�tervsntion � pollt� campaigns on behalf

of or in opposition toany

can�date for pu�

l c offlc� However. a section 501(c� social

welfare or�anization may engagein some

po-

�tical ac�e� so lon� as that � not i�

p�mary� makesectlvity.�r

poilt�al ac�es

Hłwever’any

m�OXpen�turebe

sub-

�otto tax under sec�on 5�(�. [Emph�s�

added �

a. What � the statutory basis of the an-

nualsthat a�ws 501(o)(4) organizations to

enge�eFleaseinseeSOms

poli�î�

act�teS?rseponses to questions 1 and �

abłVe’b.

How does the ]�tS keep �sok of these

�za�on

paysPłlitlcalsec�on

activities and

ensuro�01(c)(4

) or�antza�ons

the t�x under sso�on

�/(f)?thatfil�theFormsłrga-

9�0 or 990-EZ are required to report political

ac�es. Organizations thatonge4�

in �-

rect or ind�ect poli�‰al campaign �vtivitise

are also req�red tocomp�te

Sche�hfle C of

Form 990 or 996-E�. Org�mias�ons sob)oct to

tax trader sec�on 52�(� are required to com-

fy with the statutory report� andpay-

ment rulo� The IP.S �so receives re�rrals

�gardingsuch acttvt�se �om a v�rioty of

sources that are handled through sa lmpar-

tl�. independent review. See theresponse

to

question 3 for the desc�p�on on the I�S re-

�rralprocess.

Ques�on 7. In her July 13 lot� M�

�erner sta�e that the IRS also addresses the

issue of political ac�es in the Forms 990

and 99�-�Z.

Are Forms 990 and 990-EZ made pnblic? �

e� where can they be accessed?

Yes Forms 990 and 990-EZ are made public.

�ax-exempt organizations are required to

make theft returns wid�y availabk tor pub-

licinspec�on. Organiz&�ons are reqn�ed to

allow the public to inspect the Forms 9�0.

990-EZ 990-N and 990-PF they hove flied

with the IRS for the� three most recent tax

years Exempt orffanizations also � r�

qu�ed to provide copies of these information

returns when requseto� or make them avafl-

ab� on the Intorne� The annual info�naticn

returns also are avafla�o from the I� as

well as �om third.arty sources thatpost

them on their website�

Question & Intorn� Revenue Servloe� Pu�

l�a�on � states tha� if a S01(c)(� entry

can "subm�proof that [the] or�aniz�tion �

organized ex�u�lvely to promote scowl wel-

fare it can obtain an exemp�on evau if it

participates legally in Some poH�cal activ-

ity on beha� of or In oppcel�on to can-

did�tos �r public office/’

Have the followin� 501�)�) organiza�oas

a) applied � and if s� b) receded the de-

so�bed exempt�n for political �ctivit� �om

the ]RS?

a Crossroads Grassroote Policy Strategies

� P�orl�se U.S.A.

� Amer�ans Elect

� American Action Network

o. Americans for Prcepe�ty

� American Future Fund

� Americans �r Tax Reform

� 60 Flus Aseec�on

L Pa�iotMajo�ty_US�A ..................

Sep�m�r 1��12 CONGRESSIONAL �CORD--�NATE $64�

Question � How many �1(c�4) o�aniza-

�ons wMchappear

� beprimarily e�a�ed

� polltic� a�tivl� have been no�fled by

the � within the last e months that they

may be in �a�on � the law?

When the IRS sxamln� a s�tlon �1�4)

or�aniza�on the o�ec�ve � the &ud� � �

de.trains whether that organization qual�

fl� fortax-exemp�status as & socl� welfare

organtza�on. As discussed In our June 4 �1�

response� your March � � �t� that

de�rminntlłnzatlon

Is primarily engaged

IO0�s �

wheth�ln ac� that

the organl-

promo� social

welfare.sra�d �r profl� and

nłt�hs łr�anlZednet

earn nee

łr

ł�of

w�‰h do not inure to the benefit of any prt-

va� sharoh�d� or in�vidu�. The exam�a-

tion looks at the activltl� sneaked � durl�

the comple�taxable year at l�u� Although

the pmmo�on of soci� wel�re does not ln-

�ude direct or indirect partl�pat�n or

�en�on � political campaigns on behalf

Of

oras�al�.�o

n csl� en�g �

�c

łfflce’loi�

�

as It

Op�tlOn � �c�da�a

�ctlon

PNmt�t.I¾

�l�tic�

�tlvltleeol� lt�l

słcl�l

welfare�

�r

Pu�l�i.ł�

� the lit8 b�v� that an o�anlza�on

do� not meet the requlremen� under se�

�on �l(c)(�). the IRS no ties the or�uniza-

Non � i� �n�on � revoke the o�aniza-

�o�sexempt status ex�aJJ�I� the law add

ronsłnslst�r�a�lzatlłn�rp�st

or appasl

has

proposed �vocatlon.

Thedays

itłrathe

determination

the da� of that

ł�

beam a final revocation later is l�ued to

the

łr�aniza�ł�Durin� thepast

�x month� no no�c� of

l�oposedor final �vocation we� issued to

sec�on �l(c)(� organizations. N�O that the

IRSI�u�

some of whloh

�i�lu�::

has

me.tholed

s whether the or-

t�" � ongoing ex-

ganiza�on �primart� entered � ac�

that promo� socl� wol�rs� It is �eo im-

portant to no� that the Service also main-

talus a de�rm�a�on process � �visw the

operationsof an organization to de.rinSe

whether it should be recognl�d as�x ex-

smp� In this area. we �so renew îompl�

an� with the leg� requirement m�udin�

whether an or�anl�tion � primary engaged

m ac�vl� that promo� socl� w�r�

Them are currency morn than L6�0 or�nl-

zations � the de�rm�atlon process �eklng

r�ognt�on as a sect�n M�cH4) organiza-

tion The lsv� of po�cal ac�vlty is an

issue in a numb� o� these de�rmination

case�

I hope th� lnfor�a�on is he�l Ifyou

have questions. �ease contact me or have

yourstaff contact Catherine BruTe.

S�ce�ly.

Depu� Comm�on� f� $�‰� and

EnforcemenL

TRIBUTE TO JUDGE BRUCE �

BI�ACK

M� BINGAMAN. M� P�den� I

want to �cog� the �stln�shed

se�ice of my friend Bruce �ack the

Chief Judge �r the U.� D�t Court

�r the District � New Mex�o.

Bruce has chosen � leave the Fed-

oral bench at the end of �is mont�

His ds�on � rstlro is a lo� �r our

Sta� and �r the Na�on. But he has

served our Na�on wi� greatdis�nc-

�on and ab�ty.

Bruce was appo�ted to be a �s�t

court Judge by PreValent Clinton In

1995. Durra the 1�yearn of h� se�e

in that po�on he has exemplified the

integ�ty and �gh standards of fatness

and impartiality which we st�ve for in

our Federal Ju�ary.

Throughout hisyears as a Feder�

judgehe has never lost �ght of the

re�i� effects of the court’s de�ons

on the lives of those who come be�re

the cour�

Bruce and his wi� Mary have exci�

lives. They are

ing planefor

thecloseneXtfrisndsshapterto

myOftheirwl

�

Ar�e and me. We wish them the very

best in futureyears.

TRIBUTE TO JONA OLSSON

M� BINGAMAN. Mr. Presiden�

todayI wish to

recognize Jona Olsson

fire chef of the Latir Volunteer F�e

V�teerDepartntentol�on

was recently

honoredFirelłc�tedchiefnearof

Questa’theasYearthe

NM’2012by

Fire Chief �r her t�eless work at the

hatir Volunteer Fire Department and

her efforM to increase divemity in the

loo� fire service. She was honored on

Aug�tst � 201� duringthe open�g se�

sion of the International A�ociation of

Conference

FIre

ChiefS’andFlre’RescueExh�itionlnterna�łnalin

Denve�

CO.

OlssonA�erwasmłvtngrecruitedtł NeWtoMe�cłj�n

theinLatir

1999"

Volunteer FireDepartment.

Shequick-

ly became integrated in the f�e depar�

ment’eventu�as

a trat�ng

rising

thrłughflreOfflce�an

d

EMsthSdeputyrankS’chiefch�Lserving�r

theand

department in �006. Olsson has facili-

tated �a�ln� to �di�dual depar�

ments and fire con�rences across

Noah Ame�c� as well as the �nited

Klnedom.

During tough economic times Oleson

and other volunteers have cont�ued to

expand the firedepartment increasing

trai�ng hours and the number of

qualified volunteem. All 18 of Lati�s

volunteer flref�htem are structure

traine� 13 are qu�lfledwith wildland

Red Cards. and nine have EMS Hcenses.

The Latir Volun�er Fire Department

also has an active Junior flreflghter

program.In addition the fire depar�

ment recency built a new &ddl�on to

the fire sta�on and purchased another

fire en�n�

I ask that my colleagues �in me in

heading Jona O]sson and the exc�nt

work of the Latir V�unteer Fire De-

partmen� The dedicat�n of Oleson and

the community volun�ers h�ps ensure

the delivery of vital services to New

Me co re dents.

HONORING OUR ARMED FORCES

M� I�AUTENBERG. M� Pre�den�

over 2years have passed since I last in-

cluded the names of our troopswho

have lost their lives serving in support

of opera.Gas inIr&q

and Afghanistan.

IrlflceWlShbytł

lncludin�

błnłr

theirth�rServiCenamesandin sac’th

e

CONOR�SlONA� P�OORD.

Since I last included the names of

our fallentroops on July I� 201� the

Pentagon announced the deaths of 1.020

�oops inIraq

and in Opera on Endu�

ing Freedom. which includes A�hani-

stan. They will not be �rgotte� and

todayI ask unanimous consent that

their names be p�nted in the RECORD.

There being no ob�ctio� the mate-

rial was ordered to be p�nted in the

I�. OORD as �llow�

CW2 Jose � Mon�n�ro J� of Houston

TX: CW2 Thalia � Ram�e� of San Anton �

TX: PFC Shuns W. Cant� � Corunna. MI;

LC� Alec �. Terw�ke. of Dubo�. IN; SSG

ß eremie � Bo�e� of Me�ul�. ’IX: SSG

Jona� � Schm� � Pe�mb�u�. VA;

SPC Kyle � Rooke� of Osw� NY: SSG

Jesaica M. W� � Alexandria. VA: SOT

Christoph� J. Btrdwe� � W�or. CO; SPC

Mabry � Andes. � Baker�tyo O�; PFC Pa-

tina � Horn� of Oreenwood. M� SOT

Louis � Torre� � Oberl�. OH; SGT Da�d

� Williams. of Fre�c� MD; SIW� CoaSt

� Debose. of Sta� Line. M� SGT Richard

A. Essex. of Kelssyvll]� CA; SGT L�s A.

Oilv� Oa b�ath. of San Joan. PR; SO2

Dav� � Wamen. � Kentwood. MI; �O1 Pa�

rick � Fesks. of Edgewa�r. MD; FO1 Seen

� Cano� � Des Mo�e� WA; CV� Bureah N.

A. Krauss. � Cathedral �ty. C�

CW3 E�an D. HorDsb¾. � Melbourn� F�

POI Darrel � End. � Colorado Sprtu�. CO:

VA;S�tpF

C

SPCMlcha�G�głrYJamesT’�A.Cłpe�Dem�lcoJUS�Ce.

0f

LynChofH.Grovs�S�ł�No�hNC:

AdamS’O�ty.SsgtPAlMA:scottPFcSSOAndrsw�Er CDic�nso�j H�man’KellSr.o

f Sere

of Tlsard.

łf

EvansDieg0.

CA; C� �icha� A. Rlvem Jr.. of Ven�ra.

CA; LC� Oresory � Buck�y.of 0�eanside.

OySgtNY;MatthswSS�tRyan�SkYManoukiaR"

Mł�’of

Ho�don.�

łf

Lłs

El

Dłradł’Al�sV&lHflle.CaptCA:

CA; MS�t Orogory � Tmn� � NorW� MA;

MAJ Thomas � Kenn�y. of W�t Po� NY;

CSM Ksv� J. O� of Larami� WY: SPC

Ethan J. Mart�. � Lswlston. ID: M� W�r

D. G�y. o� Conyers. G� PO3 C�yton R.

Beaucham� of Weatherford. TX; C� Daniel

� Linnabary H. � Hube�. NC.

ISG Russell � Bell. of Ty� TX: SSG

Matthew � Bitten. of Lar� F� 1LT Todd

W. L�mbk� of Frase� MI; PFC J�us J.

Lop�. of San Bernard�o. CA; SPC K�o �

McCla�. � Roch�r HII�. MI; LC�I Curt�

� Duar�. � Cov� CA; Oy�t JoDathaD W.

eiffel o� P�m Bay. F� OySEt Daniel �

P�c� of Hollan� MI; ILT Seen � Jacobe. �

Reddin�. CA; SOT John � Hanse� � Aua�

TX; 8PC BeDJam� � � of Turlock.

CA; SFC Bobby � Eafl� of Lebanon. O�

PFC Jose Osc� Belmontes. � I� V�. CA;

PFC Theodore M. Olend� � Roches�L NY;

S�t Justin M. Ha�sen. of Traveme �. MI;

SPC Justin L. Ho�le� of P�m Bay. F�

PFC Brenden N. S�azar. of Ch�uo�. F�

PFC Adam � Ro�. � Lyrmm. SC; S�T Eric

� Williams. of Murrieta. CA: PFC J�ian �

C�v�. � Blrmin�ksm. AL.

SSG Richard � Berry. of S�ttsd� AZ:

PO� Mlcha� J. Bm�k� of Tamarac. F�

SSG Brandon �Psppo� of Yor� PA; SPC

Darrlon � Hicks. of I�.le�h. NC; PFC Je�

f�ey� Rice. �

Troy. OH: PO2 JosephP.

Fitamo�. of Rus�n. I�A; CPO Seen � S�-

�van. of S� Lou� M� SPC Krystal M.

Fit�. � HouSto� TX; Cpl Joshus � Ashls�

of Rancho Cucamon�a. CA; SOT D� A.

Rod�u�. of Ba�imors. MD: SOT Jo�e �

Reyss. of San Lo�zo. PK; SPC Ser� �

Perez J�. � C�wn Poin� IN; SPC �lc�as

� Ta�o� � Berne. IN; SOT Erik N. Ma� of

LakeInde�ndence’HavasuKS:CIt�SSOA�CarlsoT

�

Hammar’Michae

1

łrE.

RIs� of l�ockfo�. IL: SPC S�rlln� W.

Wyat� of Colum� M� PFC �amsron J.

Stamt�u�h. ofSprin� drove. P� PFC

DEPUTY COMMIS�ONER

DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

WASHINGTON D.C. 20224

November 23 2012

The Honomb� Carl Le�n

Chairman Permane� Subcomm�ee on Investigations

Senate Comm�ee on HomelandSecud�

and Govemme� Affaim

UnRed States Senate

Washington DC 20515

Dear Mr. Ch�rman:

I am responding toyour

le�er to Comm�s�ner Shulman dated O�ober 23 2012

mque�ingadd�on� inform�n about se�n

501(�(4) o�an�ations.This

response

supp�me�s our previous responsesdated June

4 2012 July 13 2012

Augu� 24 2012 Se�ember 14 2012 and O�ober 17 2012 and addresses the add�on�

questions raised in

yourrecent leffe[

Quesbon 1. The October17 2012 leRer �om the IRS indicates that it is unable to

locate theapplica�on submiffed by Americans for

Prosperity�)for

�xexempt

s�tus under secbon501(c)(4).

Has the IRS asked Americans for

Prosperityfor a

copyof i�

applica�on?If

so please provide acopy

of theresponse

�om Americans forProsperity.

We have not asked Ame�cans forProspe�ty

for acopy

of Ksappl�at�n. As indicated in

our responsesdated June 4 2012 and O�ober

17 2012 sexton6104�)

of the Internal

Revenue Code�he Code) requires

taxexempt organ�ations

to make ce�ain docume�s

including appl�ationsfor

exemptions av=�b� forpublic inspection. Any �dividu�

may

reque� copiesof

applicat�nsfor

exemptionand determination leffeB dire�

�om the

o�an�ations.Under the Code � an o�an�ation

has filed an ap�at�n forta�exemption

and we haveapproved

theap�ation the exem� �atus appl�ation mate�a� shall be

made av�b�by

sucho�an�ation

forinspection upon reque�

ofany

�dividu�.

�

�

Section6104(d)

of the Code.

2

Ques�on 2. Has the IRS examined whether or not the following 501�)(�

organ�aUons are engaged pdmad� in the promo�on of social wel�re? Please

indica�yes

orno and ff

yes whether the examinabon is sUII

pending.

Aspre�ous�

stated in our responsedated June

4 2012 section 6103 of the Code

prohibitsthe d�osure of informat�n about

spec�c taxpayers includingwhether they are

underof

the �!�g�v�X�remil�t� ’;r�l�i�t�ef�smcl�i��tnhfOOrrimz:�Obnyr�ar;l:d�

On

examinationact�y.

QuesUon 3. Inmy leRer of March 30 2012 I asked the IRS to indicate how

many

le�errulings

have been issuedby

the IRS sinceJanuary 1 2007 to deny or

revoke the �x-exempt s�tus of an organ�aUon under secUon501(c)H) due to

invo�ement with p�c� acUvity.I fu�her

requested tha� if the IRS had issued

10 or less such le�errulings

the IRSprovide copies

of all such le�e�. Mn Miler

responded tha� "The ap�aUon processfor tax�xempt status does not involve

the revocaUon of taxexempUon; mthe� it

only concerns the denial of

ap�ica�ons."He did not provide copies

of the denials of ap�aUons he referred

to.

Please provide the documentaUon requested in my March 30 2012 leffer.

Aspre�ous� �ated section 6103 of the Code

proh�sthe d�dosure of information about

spec�c taxpayemunless some pro�on of the Code authorizes the d�osure. Se�ion

6104(a)of the Code

permi� publicdisclosure of an appl�ation

forrecogn�on

of tax-

exempt �atus andsuppo�ng

mateda�only

after the o�an=ation has beenrecogn�ed as

exemp[ Under section 6110 of the Code � we u�mat�y denythe

appl�ationfor

recogn�onof

ta�exempt �atus the denial leffer andbackground information is su�e� to

public �spection with

�entifyingand other information

redacted tohelp

thepublic

understand our reasoningwhile also

prote�ingthe

�enti�of the

o�an�ation.

�

Section6103(f)

of the Code sets foRh the meansby

wh�hcongress�n�

comm�eesmay

o�ain access

to return and return information(�at

is not �herwise madepublicly

av�b� under se�ns 6104 and

6110).We are av=�b� � d�cuss �ese rules in more detail wi�

your�a�

SinceJanua� 1 2007 we have issued �n adve�e de�rm�a�ons to sec�on

501�)�)

appl�a�s. We concluded that meo�an�ations did not

primad� opem� �r mepBmotion

of social weffam.Generally mey were pdmad� engaged

in activ�es that benefited pdva�

ind�dua� and in�s� and�r cons�ted dire� and indi�pol�cal campaign

i�ewen�on on behaff ot or inoppos�on � cand�ates �r

public office. I am en�o�ng

�da�ed d�ermin�n le�eBdenying

se�ion 501 �)H) taxexem� �us to the ten

o�an�ation� Note however that me number of adveBe d�ermina�ons does not

�p�se� the number cfo�an�ations m�

applied but we� n�

ginned �exem� �us

under se�n 501�)H).Some

o�an�ations w�hdmw theirappl�ation

�rexemption

whenthey

learn mat a denial is

�hcoming. OtheB do not�rmal� wimdBw but do not

�spond to �ques� �r in�rma�onnecessa�

to develop theirap�ations.

A�er

add�onal �iled a�em�s toget

the in�rm�n from theap�ant we close those

appl�ations as "�ilu� � e�abl�h."

QuesUon 4. InAugust 2012 I asked the IRS to indicate "how

many 501�)(4)

organ�aUons whichappear

to be p�ma� engagedin p�c� acuity

have been

noUfiedby

the IRS within the last 6 months thatthey may

be in �o�Uon of the

law." Mr. Millerresponded tha� "Ou�ng the

past six months no noUces of

proposed or final revocabon were �sued to sec�on 501(c)(� organ�a�ons�

a. Howmany

noUces ofproposed or final revocabon have been issued

sinceJanuary 1

2007? If the IRS has issued 10 or less such le�er

rulings please provide copiesof all such letters.

We have issued 42 revocation nonces to se�ion 501(�(4) o�an�ationssince

Janua�

1 2007. Theseo�an�ations were revoked for

failingto meet the

requiremen�under

se�n501(�(4).

In add�ion to the 42revocations we issued 18

o�an�ationswd�en

advisoriesnoting iEegu�rities

which � le�unchanged posed a dsk to the

o�an�ations

ofpossible

loss of theirta�exempt �atus under se�ion

501(�(4).

b. SinceJanuary 1 2007 how

many 501(c)(4) organiza�onshave been

examinedby the IRS to determine if

they a�engaged

in p�c� acUvity

in amounts which exceed IRSguidelines?

As discussed in

phor responses when we examine a section

501�)(4) o�an�ation the

o�e�e of the aud� is to determine whether thato�an�ation qual�es

forta�exempt

�atus as a so�al welfareo�an�ation. As d�cussed in our June 4 2012 response

we

have taken no pos�ion on a fixedpe�e�age or

anyone favor in

precedential gu�anc�

To determ�e whether an o�an�ation operates pdmad� for thepromotion

of social

weffare the coups and the IRS con�der a� the fac� and �um�ances in�uding but not

lim�edto

theo�an�ation�

�atedpurposes expend�u�s prin�pal

souse of�venue

number ofemp�yees and volunteeR and �me and effo�.

3

�

Tmasu� Regulationsec�on

1.501(c)�1(a)(2) (No pe�en�ge � e�a�hed). Rev. Rul. 6845 1968-

1

C.B. 259(Pdn�p� souse of income does n� de�rmine an o�an�atioWs pdma� a�Ni� under section

501(c)�);all �e �s and �um�ances are cons�e�d). Se� genemlly Haswe# � United S� 500

FromJanua� 1 2007 �mugh Se�ember 2012 we have examined 643 sec�on 501(c)H)

o�an�ations to de�rmine whe�er they are pdmad� engagedin social weffare acti�ties.

Weanalyzed a vade�

of issuesdudng

these examinations �duding where mleva� the

level of p�cal a�.

Of the 643o�an�ations examined the Pdn�p� Issue Codes (PIC codes) in our sy�em

indicatepol�cal a�ivi� was one of the issues

exploredin the examination of 22 sec�on

501(�(4) o�an�ations.

We use PIC codes to capture the issues on which an IRS aged

spenttime

dudng an examina�on or that resumed in a change and we enter them as pa�

of theclosing process

of a case. A�hough current�96 PIC codes exit agen� may only

repo�the

topfour PIC codes. The determ�n of which PIC codes am app�cab� to a

pa�cular case is a judgmentthe

agentmakes. Please note that

a�houghPIC codes are a

tool toide�i�

issues and trends PIC codes do not cover all issues in a case. Therefore

wi�out a manual review of the case files we cannotdefin�ve�

conclude whether we

examined an o�an�ation to determine the level of pol�al a�i�ty.

I

hope this in�rm�n ishelpful.

If

youhave

questions please contact me or haveyour

staff contact Catherine Ba� Dim�o� Leg�lat�e Affaim at(202)

622-3720.

Sincem�

Steven T. Miller

Depu� Comm�s�ner

�r Sewices and En�meme�

En�osums(10)

F.2d 1133 1142 1147

(Cl.C[

1974)�’A pemen�ge test...

is notappropriate

Such a te� obscures the

comp�x�y ofbanning

theo�an�ation’s

activ�es in rela�on to i� o�e�es and �rcum�ances in the

con� of thetotally

of �eo�an�ation.�. Se� Contracting

Plumbers � United S�te� 488 F.2d684

686(2d

Cir.1973) (mu�p� factors relevant in

appl�ngthis �anda� �ud�g �rmative

hi�ow �ated

purposes and actual

operation�.See

generally Seasongood� Commissione� 227 F.2d 907 909 912

(6thCir.

1955) (expenditure� em�oyee� ando�an�ation� time and effo�

con�dered).

Oca}bcr 23.20] 2

VIA U.S. MAll & EMAIL{Calherine.M.fkirre@lRS a.�

The Honomblet}ouglas

tt. Shulman

Cmnmissioner

lmernal Revenue Service

U. S.Depa�ment

oflhe’F�vasury

1 Ill Con�itmion Avenue

WashingtomD.C. 20224

Dear Commissioner Shuhnan:

I am i�

�cei� oflhc Oclober I7 2{}12 mNmnse

lix m ME Millerto mv !c{ler of

Se�ember 27 201_2

In the June 4 20�2.I�Sl}{mse

thail �vcciwd Ih}m fl�c IRS your agency provided

the

tMlowing guidance:

"’Thetin}motion

of social �vlIh�" does not include direcl or indirempanicipalion

or

inmrvention inpolitical campaigns on behalf of or in

oppositionIO ally cm]didatc tbr

publico�icm Ncvenhdes� a seclion 501

{c�4) social \�elt2�re

{}rgani�alioncan

engage

inpolitical

aoivitics as long as it is

primarily engagedin activilles thai

pmmolcsocial

wdt�rc. �heregulations

do not impose acomplete

ban onpolitical acdvi�y

by sccIion

501{oR4) organizalions Whether an organizalion �ncets the

requirementsof section 501

{oR4) depends uFonall of the lhcts mid ckcmnstanccs of file

particular appficmu and m}

one limmr is detenninmiv<"[6/4/12

IRSresponse pg 8]

t have indicatedp�vviously

Ihat I believe dfisguidance misinterprets

Ihc law because the

lawsays

lhat Ihcorganization

mus� beoperated "’exclusively"

lbr the pmmmion of social

we!ihrc t lmvevc�acceFling

the IRSinterp�vtmim� as accurate tbr the

purposesof�his lct�c>

please provideIhe

Ibllo�vinginikmnmion:

The {}c[ober t7. 2012. lcuer tk m fl�e 1RS indicates �at it i� unable to locate the

applicmionsuNniued

byAmericans for

l’mspcfi� t }br tuxexempt

--(b)(3)/26 USC 6103

status under Section501{c)(4}.

tlas the tRS asked Amedcmm lotPnmpefity

�}r a

cop}ofi�

applicatitm7If so. please �v�e a

c{�pyof the

responseliom Americans

liarPmsperi�5

Has lhe IRS examined whether or not theIbllowing 5011c}{4) organizations ;�e

engaged pOmarilyin the prommion ofsociat �ellhrc? Please indicme

yesor no. and.

ifyc� whether the examination � �il!pending.

b

Americans iBrPn�spcrity

PatriotMz�iority

USA

Inmy

letter of March 30 2012. I asked the IRS to indicate howmany

letterrulings

have been issuedby the IRS since

lanuary1 2007 to deny or revoke the

tax-exmnpt

status ot’maorganization

under Section 501(cR4) duc to involvement withpolhical

activity i li�nher

requemedthat iflhe IRS had issued 10 or less such lelter

rulings

the IRSprovide copies

of all such letters. Mr Miller�vsponded

that. "’The

application processlbr

tax�excmptstatus does not involve the revocation of tax

exemption:rather it

only concerns the denialofapplicmions."

fie did not provi&

copiesof the denials of

applicationshe rel?rred to.

Pleaseprovide

the documenmt�n mques�din

myMarch 30 2012. letter.

InAugnst 2012. I asked tile IRS to ind�atc "qlo\v

many 501(c)(4) otNanizations

�hichappear

to beprimarily engaged

inpolitical activity

have bccn notifiedby’

tile

IRS within the last 6 momhs that theymay

be in violation ofthe la�’.’" Mr. Miller

respmldcdthat

"’Duringthe

pastsix months no notices of

proposed or final

revocation were issued to section501(c)(4) organizations."

a. Howmany

notices ofproposed

or final revocation have been issued since

JanuaU I 20077 If the tRS has issued 10 or less such tetmr

rulings please

provide copiesof �fll such lamrs.

b. SinceJanuary

I. 2007 how many 50I{c)(4) organizmions have been

examined by the IRS to determine ifthey are engaged

inpolitical activity

in

amoums which exceed IRSguidelines’?

?�ankyou

R)ryour

assistance. If

youhave

any quc�ions please c�mmct me or ha�c

yourstall" contact

KayeMeier o f

mystaff" at kave meicr@lc� n.scnate.uov or 202/224-9110.

Pleaseprovide

this inlbmlationby November 9 2012.

lhe t Ionorable ’[�m Cobu� M D

Ranking MinoriuMember

t’ermancnt Subcommit�e onlnvc�ig�ions

Since�ly

Carl Lcvin

Chairman

Permanent Subcommitme on In\�stig�ions

From:

To:

Su�ect:

Date:

A�achments:

Flax Nikole C

Pa e Christo her M"

FW: Annual Report/Work Plan-- w�h additions

Monday February 04 2013 3:10:42 PM

�r �ia

From: Lerner Lois G

Sent: Fdda� December02

2011 4:55 PM

To: Flax Nikole C

Cc: GrantJoseph H;

Letourneau Diane L

Subject:FW: Annual

Report/WorkPlan-- with additions

Just two smallchan es to the work

in

both hi hted

I am goneall next week but if we can

put time on Steve’s calendar the week a�er I’d love to

finalize this. You can work with Diane on scheduling.

thanks

Director of Exempt O�an�aflons

From:

Sent: Fdda�December

02 2011 3:51 PM

To: Lerner Lois G

Cc: SmithPhilip A; Partner Melaney J;

Letourneau Diane L

Subject:Annual

Report/WorkPlan-- with addi�ons

Hi Lois:

The aEached workplan

includes the revisions discussed toda

Additions have beenhighligh�d

inyellow.

Please review and if

youare comfoRable with the

changes �rwa� �

Steve Mille�s office.

Thanks.

Customer Education and Outreach

IRS Exempt Organizations

202-283-(p)

202-283-8858 (�

From:

To:

Su�ect:

Date:

A�achments:

Flax Nikole C

Pa e Christo her M"

FW: 2012 WorkplanFINALDRAFT.v.2

Monday February 04 2013 3:10:04 PM

For FOIA

From: Lerner Lois G

Sent:Monday

December19

2011 5:04 PM

To: Flax NikoleC;

Miller Steven T

Cc: GrantJoseph

H

Subject:FW: 2012

Workp�nRNALDRAFT.�2

�ou wanted chan

Thanks

Director ofExempt O�an�aflons

From:Light

Sharon P

Sent:Monday

December19 2011 4:56 PM

To: Lerner Lois G

Subject:2012 Workp�n�NALDRAF�v.2