IRS Sued For Failing to Revise Rules Governing 501(c)(4) Groups

A lawsuit against the Internal Revenue Service was filed today seeking to compel the agency to initiate a rulemaking procedure to resolve conflicts between IRS regulations and the tax code's requirements for section 501(c)(4) groups. IRS regulations currently permit 501(c)(4) organizations to have tax-exempt status if they operate "primarily engaged" in promoting social welfare. Yet, the tax laws require these organizations to be "operated exclusively" for social welfare purposes.

The Citizens for Responsibility and Ethics in Washington filed the suit in the United States District Court of the District of Columbia. View the press release and their complaint.