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Election 2016: A Primer on Political Campaign Activities

As the 2016 Presidential election season heats up—and in light of an internal memorandum on political activity audit procedures circulated within the IRS last month—we’d like to take the opportunity to remind our 501(c)(3) clients, colleagues and friends about the federal tax law prohibitions on political activities conducted by 501(c)(3) organizations and the applicability of those prohibitions to the activities of employees of 501(c)(3) organizations.

Federal tax law prohibits 501(c)(3) organizations from participating, directly or indirectly, in any political campaign activities on behalf of, or in opposition to, any candidate for public office.  Violation of this prohibition could subject an organization to excise tax penalties as well as jeopardize the organization’s tax-exempt status.  The prohibition is absolute and there is no de minimis rule.

The prohibition does not apply to political campaign activities of a 501(c)(3) organization’s employees in their individual capacities.  However, such activities must be conducted by employees on their own time and with their own resources to ensure the activities are not attributed or attributable to the 501(c)(3) organization.

As the election approaches, we recommend that 501(c)(3) organizations distribute a reminder to staff, containing guidelines staff should observe if they wish to participate in a political campaign, as follows:

  • An employee may not use their 501(c)(3) employer’s facilities, personnel, equipment or financial resources, including computers, faxes, telephones, support services (secretarial, duplicating, messenger, etc.) or supplies (letterhead, postage, etc.), in connection with political campaign activities.
  • An employee may not engage in any political fundraising activities while on his or her 501(c)(3) employer’s premises and may not use the employer’s resources (letterhead, etc.) to transmit personal campaign contributions.
  • Any employee who desires to participate in campaign activities during normal working hours must take personal leave or vacation time to do so.
  • Any employee who wishes to assume an official position within a campaign (e.g., treasurer, member of a campaign advisory committee, etc.) must notify both the campaign and his or her 501(c)(3) employer, in writing, that such participation is in his or her individual capacity.  The employee should request that the campaign make no reference to the employee’s position with his or her 501(c)(3) employer and should use his or her home address for campaign-related correspondence.

By adhering to these guidelines, employees of 501(c)(3) organizations are free to pursue their own personal political interests on their own time this election season, without running afoul of the federal tax rules that govern their employers.