IRS approves a nonpartisan voter-registration program under section 4945(f)

Plain-English summary

The IRS determined that an exempt organization could qualify under section 4945(f) for an exception concerning grants supporting nonpartisan voter-registration activities. The organization planned to operate in at least five states, remain independent of candidates and political parties, and use agreements, training, oversight, and quality controls for local organizations. The IRS concluded that the organization met the section 4945(f) requirements based on the submitted representations, so grants to it by private foundations would not be taxable expenditures if the grants remained consistent with those requirements. The determination was conditioned on there being no material change in the facts and approved only the described program standards and procedures.

Ruling snapshot

• Question: Whether the organization qualifies under section 4945(f) for its nonpartisan, multistate voter-registration program.
• Outcome: Approved.
• Key authorities: IRC §§ 4945(d)(2) and 4945(f); Treas. Reg. § 53.4945-3(b)(4).

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
P. O. Box 2508
Cincinnati, OH 45201

Release Number: 201137012
Release Date: 9/16/11

Date: June 21, 2011 Person to Contact - ID#:

Contact Telephone Numbers:

Employer Identification Number:

Legend: UIL: 4945.04-03

B = Field Manual
C = Agreement
D = Quality Control Manual

Dear :

This letter is in response to your request under section 4945(f) of
the Internal Revenue Code. You have been recognized by the Internal
Revenue Service as exempt from federal income tax under section 501 (a) of
the Code by reason of being described in section 501(c) (3). In
addition, you are not a private foundation by reason of being
described in sections 509(a) (1) and 170(b) (1) (A) (vi).

You will conduct non-partisan voter registration activities carried
out in multiple jurisdictions based on the demographic concentration
of individuals who have historically shown low voter response. Trained
staff and volunteers will set out in these areas to register voters
with a focus not on candidates or parties but on civic participation
and involvement.

Registration drives will be non partisan in manner, not confined
within one specific election period, and carried out in more then five
states.

It is expected that you will enter into agreements with local
organizations to carry out voter registration activities. These
organizations will agree to and be subject to your (C) which spells
out goals, committed resources, compliance requirements, training and
supervision, quality control measures, performance standards and
general contractual obligations.

Organizations operating under the (C) will be funded and trained to
carry out registration activities. They will also be provided with a
copy of your (B), a comprehensive with detailed

procedural guidance for opening an office, operating that office,
managing staff, ensuring quality results, measuring and accounting for
those results and overall compliant processes as a representative of
your organization.

Local organizations will also be encouraged to operate

which allow for follow up on individuals that have been registered in
the event further information is required to complete their form or if
they express interest and/or for recruitment of that individual for
work at a local office. You issue a (D) for them to follow regarding
staff and shifts, reporting, and the components behind successful

office operation.

Those conducting voter registration activities will have been told and
will have agreed to impartial conduct without favorability to any
party or candidate. The (C) prohibits this activity and you will be
actively involved in oversight of these efforts. In discovering any
adverse behavior you will withhold funds designated to compensate any
canvasser or local office. However, you expect most payments to occur
after services have taken place thereby discouraging any prohibited

practices.

In the event you discover canvassers conducting activities favoring
the registration of one party line or candidate an investigation would
take place. If actions were limited to one individual the local office
would likely be responsible for disciplinary actions; if the local
office was found to lack compliance funds would be withheld or
recaptured through provisions agreed upon through the (C). Actions of
this nature would also lead to immediate termination of any contracts

in place.

You expect to receive more then a substantial amount of income from
public and private sources as well as fundraising efforts thereby
meeting adequate public support levels. You do not project any
investment income. You will not accept any contributions conditioned
for designated use in specified locations or election periods.

Your expenses will consist of direct program expenditures as well as
funding provided to community organizations actively conducting voter
registration drives through local offices. In making these
distributions for operations you expect to maintain close contact and
control so as to establish an agent relationship with said funded
entity governed by the aforementioned (C).

Sections 4945(a) and (b) of the Code impose certain excise taxes on
“taxable expenditures” made by a private foundation.

Section 4945(d)(2) of the Code provides that the term “taxable
expenditure” means any amount paid or incurred by a private foundation
to influence the outcome of any specific public election, or to carry
on, directly or indirectly, any voter registration drive, unless such
grant satisfies the requirements of subsection (f).

Section 4945(f) of the Code provides that section 4945(d) (2) shall not
apply to any amount paid or incurred by any organization so long as:

(i) The organization is described in section 501(c) (3) as exempt
from taxation under section 501(a);

(ii) The activities of the organization are nonpartisan, are not
confined to one specific election period, and are carried on
in five or more States;

(iii) Substantially all of the income is expended directly for the
active conduct of the activities constituting the purpose or
function for which it is organized and operated;

(iv) Substantially all of the support (other than gross investment
income as defined in section 509(e)) of which is from exempt
organizations, the general public, governmental units
described in section 170(c) (1), or any combination of the
foregoing; not more than 25 percent of such support is
received from any one exempt organization (for this purpose
treating private foundations which are described in section
4946(a) (1) (H) with respect to each other as one exempt
organization); and not more than half of the support is
received from gross investment income; and

(v) Contributions for voter registration drives are not subject to
conditions that they may be used only in specified States,
possessions of the United States, or political subdivisions or
other areas of any of the foregoing, or the District of
Columbia, or that they may be used in only one specific
election period.

Section 53.4945-3(b) (4) of the Regulations states that an organization
will be given an advance ruling that it is an organization described
in section 4945(f) if it submits evidence establishing that it can
reasonably be expected to meet the tests under section 4945(f) for

such taxable year.

Based upon the representations submitted you will be treated as an
organized described in section 4945(f) of the Internal Revenue Code.
You will be an organization described in section 4945(f) for
subsequent tax years if you continue to meet the requirements of the
section for those years.

For tax years for which are an organization described in section
4945(f), grants made to you by private foundations will not be taxable
expenditures under section 4945(d) (2) for such private foundations,
provided that their grants are consistent with the requirements of
section 4945(f).

This determination is conditioned on the understanding that there will
be no material change in the facts upon which it is based.

The approval of your program procedures herein constitutes a one-time
approval of your system standards and procedures. This determination
only covers the programs described above. Thus, approval shall apply
to subsequent programs only as long as the standards and procedures
under which they are conducted do not differ materially from those

described in your request.

This determination is directed only to the organization that requested
it. Section 6110(j) (3) of the Code provides that it may not be used

or cited as a precedent.

We have sent a copy of this letter to your representative as indicated
in your power of attorney.

Please keep a copy of this letter in your permanent records. If you
have any questions regarding this matter, please contact the person
whose name and telephone number appear in the heading of this letter.

Sincerely,

Lois G. Lerner
Director, Exempt Organizations