The Law of Tax-Exempt Healthcare Organizations. Bruce R. Hopkins

campaign activities by social welfare organizations,^186.1 which attracted intense criticism and was withdrawn.

       p. 218. Insert following first complete paragraph, before heading:

(h) “Religious Liberty” Executive Order

The White House, on May 4, 2017, issued an executive order containing guidance for the executive branch of the federal government “in formulating and implementing policies with implications for the religious liberty of persons and organizations in America,” and “to further compliance with the Constitution and with applicable statutes and Presidential Directives.”^186.2

      The overarching policy of the executive branch is said in this order to be “to vigorously enforce Federal law's robust protections for religious freedom.” Thus, the order states, “[a]ll executive departments and agencies (agencies) shall, to the greatest extent practicable and to the extent permitted by law, respect and protect the freedom of persons and organizations to engage in religious and political speech.”

From the standpoint of the law of tax‐exempt organizations, here is the operative sentence: “In particular, the Secretary of the Treasury shall ensure, to the extent permitted by law, that the Department of the Treasury does not take any adverse action against any individual, house of worship, or other religious organization on the basis that such individual or organization speaks or has spoken about moral or political issues from a religious perspective, where speech of similar character has, consistent with law, not ordinarily been treated as participation or intervention in a political campaign on behalf of (or in opposition to) a candidate for public office by the Department of the Treasury.”

      For these purposes, the term adverse action means the “imposition of any tax or tax penalty; the delay or denial of [recognition of] tax‐exempt status; the disallowance of tax deductions for contribution made to entities exempted from taxation under section 501(c)(3) of title 26, United States Code; or any other action that makes unavailable or denies any tax deduction, exemption, credit, or benefit.”

The order states that it shall be implemented “consistent with applicable law.” It concludes with the observation that it “is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.”^186.3

§ 7.5 BUSINESS EXPENSE DEDUCTION RULES AND POLITICAL ACTIVITIES

       p. 218, note 188. Insert following existing text:

      Citing this IRC provision, the IRS ruled that a business corporation maintaining a political action committee may not deduct as a business expense charitable contributions made to match its employees' charitable gifts, inasmuch as its charitable gifts are intended to incentivize political contributions by its employees to the PAC; the agency stated that the corporation's gifts to its PAC and its matching charitable gifts are “inextricably linked,” so that the latter types of gifts are being made in connection with political campaigns (Priv. Ltr. Rul. 201616002).

§ 7.7 PUBLIC POLICY ADVOCACY ACTIVITIES

       p. 222, note 210. Insert following existing text:

      A court ruled that this revenue procedure is not unconstitutionally vague and/or overbroad in violation of the First Amendment or void for vagueness in violation of the due process clause of the Fifth Amendment (Freedom Path, Inc. v. IRS, 2017 BL 234957 (N.D. Tex. 2017)).

§ 7.8 POLITICAL ACTIVITIES OF SOCIAL WELFARE ORGANIZATIONS

       p. 224. Insert as last paragraph:

The Department of the Treasury and the IRS, in 2013, issued proposed regulations concerning political campaign activities conducted by tax‐exempt social welfare organizations.^220.1 The government is, in its stead, developing proposed regulations regarding political campaign activities conducted by all categories of exempt entities. The Department of the Treasury and the IRS planned, in its stead, to develop proposed regulations regarding political campaign activities conducted by all categories of exempt entities. This plan was thwarted when Congress, in the fiscal year 2016 appropriations bill, prohibited issuance of tax‐law guidance concerning candidate‐related political activity.^220.2 This prohibition is in the fiscal year 2017 appropriations legislation^220.3 and the fiscal year 2018 appropriations legislation.^220.4

NOTES

      1 26.1 Priv. Ltr. Rul. 201505042.

      2 26.2 Priv. Ltr. Rul. 201932017.

      3 30.1 Parks v. Commissioner, 145 T.C. 278, 309 (2015) aff'd, 717 Fed. Appx. 712 (9th Cir. 2017).

      4 185 The use of one or more PARCs was announced in mid‐2015, in a memorandum from the Director, Exempt Organizations Division (TEGE‐04‐0715‐0018, July 17, 2015), where it was stated that a PARC consists of three General Schedule grade 14 managers, who will receive “appropriate training” and serve as a committee member for two years. A PARC is to review and recommend referrals for audit in an “impartial and unbiased manner.” The “inventory volume of political activities referrals” will determine the number of PARCs established and the time commitment required of the members of a PARC. It is not known whether the PACI is continuing by that name and thus whether use of PARCs is an element of an ongoing PACI.

      5 186 TIGTA, “Review of the Processing of Referrals Alleging Impermissible Political Activity by Tax‐Exempt Organizations” (2019‐10‐006 (Oct. 4, 2018)).

      6 186.1 See § 7.8, text accompanied by infra note 220.1.

      7 186.2 Executive Order No. 13798.

      8 186.3 This executive order in four instances frames its reach as being (as it must) within the law and in addition states that it is designed to “further compliance” with applicable statutory law. The prohibition, from an exemption standpoint, on political campaign activity by charitable organizations, including churches, sometimes referred to as the “Johnson Amendment,” is law. Therefore, from the standpoint of tax‐exempt churches and other religious entities and political campaign speech, it is hard to see what this executive order accomplishes for them. That would be the case if the order stopped there. But it does not.The order provides that Department of the Treasury shall not take any adverse action against an individual or religious organization engaging in speech about moral or political issues from a religious perspective, where speech of “similar character” has “not ordinarily been treated” as being in violation of the Johnson Amendment by Treasury, which, of course, includes the IRS. That language effectively enshrines guidance issued by