Final Regulations Issued Addressing 501(c)(4) Notification

The IRS has released final regulations regarding the requirement that 501(c)(4) social welfare organizations file notice of their formation with the IRS.

In 2015, the PATH Act added the requirement that non-profits intending to be classified as 501(c)(4) organizations must notify the IRS within 60 days of formation. Thus, ending the blissful days in which 501(c)(4) organizations could self-declare their 501(c)(4) status on their tax return.

The new rules were motivated by use of 501(c)(4) activities for political purposes, which is permitted so long as such activities are not their primary purpose.  As explained in our prior LEGALcurrents, dark money has flocked to these 501(c)(4)s, motivating Congress to seek greater reporting requirements. 

The new rules posed a host of technical issues, addressed by the IRS in a Notice and Temporary Regulations.  The new regulations make the temporary regulations permanent, with no changes other than a couple minor grammatical fixes.  In the preamble to the new regulations, the IRS explains the reasons for its rejection of the many changes proposed by commentators.

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