The Commissioner of IRS has suggested that advice on the tax relief for social welfare organisations will not be available before next year. Organizations have to be sure that they are operating within the scope of the relief in areas such as political donations. For example they are permitted to engage in political lobbying for their cause provided that this lobbying is not the main purpose of the organization. Donations made by these bodies are generally not subject to gift tax and to maintain this situation the welfare organization must be sure that it is conforming to the requirements for the exemption to apply.
The rules are complex and taxpayers need guidance on the details. Proposed regulations were issued to clarify the amount of political lobbying permitted without forfeiting the tax relief. More definite rules would replace the test based on facts and circumstances that has previously applied. The new guidance when it is published will also provide a definition of the term “candidate-related political activity” which will not be regarded as a social welfare activity.
