SERVICE ANNOUNCES POSITION ON INFLUENCING JUDICIAL CONFIRMATIONS; SPECIAL 'EXPENDITURE TEST' ELECTION PROVIDED.

Notice 88-76

The Internal Revenue Service has considered the tax consequences under section 501(c)(3), as regards the rules on lobbying and political activities in that section, and sections 501(h), 4911, 4912, 4945(d)(1) and (2), and 4955 of the Internal Revenue Code where a section 501(c)(3) organization attempts to influence the Senate confirmation of an individual nominated by the President to serve as a federal judge.

It has concluded that attempts to influence the Senate confirmation of the federal judicial nominee do not constitute participation or intervention in a political campaign within the meaning of section 501(c)(3) and, effective for tax years beginning after December 22, 1987, section 4955 of the Code. It has also concluded that this activity is not influencing the outcome of a public election within the meaning of section 4945(d)(2).

However, it has concluded that attempts to influence the Senate's confirmation of a federal judicial nominee constitute carrying on propaganda or otherwise attempting to influence legislation, within the meaning of sections 501(c)(3),501(h), 4911, and 4945(d)(1) of the Code and, effective for tax years beginning after December 22, 1987, section 4912.

An announcement will be forthcoming that will give the public the opportunity to comment regarding whether a section 501(c)(3) organization attempting to influence the senate confirmation of a federal judicial nominee is subject to tax under section 527.

ANALYSIS

The issue common to the statutory language of sections 501(c)(3) and 4955 of the Code is whether an organization that attempts to influence the confirmation of a federal judicial nominee is participating or intervening in a political campaign on behalf of or in opposition to any candidate for public office. While section 4945(d)(2) refers to "influencing the outcome of any . . . public election", section 53.4945-3(a)(2) of the Foundation Excise Tax Regulations defines this as "[participation or intervention] . . . in any political campaign on behalf of or in opposition to any candidate for public office." Thus, the three sections share common terms.

Section 1.501(c)(3)(iii) of the Income Tax Regulations and section 53.4945-3(a)(2) of the Foundation Excise Tax Regulations limit the meaning of the term "candidate for public office" to an individual who offers himself or is proposed by others as a contestant for elective public office. Federal judges are not elected; rather, they are appointed by the President, subject to the advice and consent of the Senate. U.S. Const. art. II, sec. 2, cl. 2. Therefore, attempts to influence the Senate's confirmation of a federal judicial nominee do not constitute intervention in a political compaign either for purposes of section 501(c)(3) or for purposes of section 4955. Moreover, such attempts do not constitute influencing the outcome of a public election under section 4945(d)(2).

The common issue under sections 501(c)(3), 501(h), 4911, 4912, and 4945(d)(1) of the Code is whether an organization described in section 501(c)(3) that engages in activities that attempt to influence the confirmation of a federal judicial nominee by the Senate is attempting to influence legislation. Section 4911(e) provides that "legislation includes action with respect to Acts, bills, resolutions, and similar items." Because the Senate's action of advice and consent on a judicial nomination is an action with respect to a resolution or similar item, the Senate's confirmation vote constitutes a vote on legislation. Accordingly, these activities are subject to the restrictions on attempting to influence legislation contained in the Code sections referred to above.

SECTION 501(h) ELECTION -- SPECIAL EXTENSION FOR RETROACTIVE ELECTION

Section 501(h) of the Code provides that certain public charities may make an election and have the limitations on their lobbying activities governed by an expenditure test in lieu of the "no substantial part" test of section 501(c)(3). Normally, such an election must be made by the close of the first taxable year to which the election is applicable. In order to provide greater uniformity and certainty in the determination of the permissible level of lobbying activity by a section 501(c)(3) public charity, the Service is permitting a special election period that allows organizations whose taxable years may have ended to make a retroactive election under section 501(h). Accordingly, for tax years beginning after December 31, 1986, and ending before December 31, 1988, an eligible public charity may make the election described in section 501(h)(3) by filing the Form 5768, ELECTION/REVOCATION OF SECTION 501(c)(3) ORGANIZATION TO MAKE EXPENDITURES TO INFLUENCE LEGISLATION, either by the end of its tax year or by the ninetieth day after the publication of this notice, whichever is later. Organizations that make this election after their tax year has expired should state at the top of their Form 5768, "Filed pursuant to Notice 88-76".

FILING INSTRUCTION

Eligible public charities that wish to make the special election described above that have already filed their Form 990, should file Form 5768, as described above, and file an amended information return on Form 990, completing Schedule A, Part VI, Lobbying Expenditures by Public Charities.

RELIANCE

This document serves as an "administrative pronouncement" as that term is described in section 1.6661-3(b)(2) of the Income Tax Regulations and may be relied upon to the same extent as a revenue ruling or revenue procedure.

DRAFTING INFORMATION

The principal author of this notice is John F. Reilly of the Exempt Organizations Technical Division. For further information regarding this notice contact Mr. Reilly on (202) 566-4050 (not a toll free number).