Freedom Path, Inc. has been engaged in a years-long dispute with the Internal Revenue Service (IRS) after it was denied 501(c)(4) tax-exempt status by the IRS on the grounds that it participated in excessive political activity. In the ongoing litigation, the Court could not determine whether Freedom Path was entitled to 501(c)(4) tax-exempt status as a social welfare organization using the IRS guidance that it found unconstitutionally vague.
The Institute for Free Speech filed an amicus brief in support of neither party, advising the D.C. District Court to consider a few key recommendations to remedy the vagueness, including:
- The Court should adopt a bright-line rule that the IRS should deny exemption under § 501(c)(4) if the FEC classifies the organization as a political committee. OR
- The Court should deny § 501(c)(4) status to an organization only if it spends over 50% of its funds on contributions to PACs or § 527s and express election advocacy or its functional equivalent.
The brief reminds the court that the Federal Election Committee (FEC) is designed to regulate campaign finance matters and includes important bipartisan safeguards to do so—the IRS was never intended to make decisions on such matters. Furthermore, the FEC has never found Freedom Path, Inc. to be a political committee, and the Institute argues that engaging in election advocacy is squarely in line with the purpose of social welfare.
To read the brief, click here.
