Speaking Up: The Challenges to Section 501(c)(3)’s Political Activities Prohibition in a Post-Citizens United World

Abstract

Following the Supreme Court’s decision in Citizens United v. Federal Election Commission, there is still one type of corporation that cannot engage in political speech: the nonprofit corporation. Section 501(c)(3) of the Internal Revenue Code prevents nonprofit corporations that hold tax-exempt status from participating in “any political campaign on behalf of (or in opposition to) any candidate for political office.” But recent events show a growing call to reform this provision, referred to as the political activities prohibition. These events include new First Amendment developments, charities allegedly flouting the prohibition in recent elections, the 2013 IRS targeting scandal, and finally a notice of proposed rulemaking promulgated by the IRS and the Treasury Department in 2013 that could change the political activity regulations for both section 501(c)(3) and section 501(c)(4) organizations.

This Note responds to these recent events and discusses the purpose and structure of the political activities prohibition, both within section 501(c)(3) and in connection with section 501(c)(4). The Note then examines different constitutional challenges to the political activities prohibition, including First Amendment and selective prosecution challenges stemming from the IRS’ alleged haphazard enforcement of the prohibition. This Note concludes that the political activities prohibition should not be eliminated, but advocates implementing several laws and agency policies to ensure even enforcement of the prohibition.