Curriculum Guide · Courses

Professor Douglas Varley

LL.M Course 894 (cross-listed) | 2 credit hours

This course will examine the relationship between tax-exemption and political and lobbying activities. Political activities are regulated, within the constraints of the First Amendment, directly by the Federal Election Campaign Act ("FECA"), which sets contribution and other limits on political activities in relation to Federal elections. Political activities that are not regulated by the FECA, in general, are not regulated by law unless the actor also is a tax-exempt entity, in which case the entity is subject to the applicable organizational and operational requirements set forth by the Internal Revenue Code. Tax exempt entities engaging in political activities are various and include charities, social welfare organizations -- such as NARAL Pro Choice America, Inc. and Americans for Tax Reform -- labor unions, trade associations, and political action committees and other "section 527" organizations, including groups such as Americans Coming Together and Swift Boat Veterans for Truth.

This course will emphasize the Federal tax policy considerations that help shape legislation and legislative proposals in the area and will study the tax rules that apply to such disparate organizations -- including operational and disclosure requirements, penalties and excise taxes for misbehavior, and the rules regarding deductibility for income and gift tax purposes of payments to entities conducting political and lobbying activities. The course will cover the reasons for being one type of tax-exempt entity rather than another, the use and complexities of affiliated structures for conducting lobbying and political activities, the constitutional implications of regulation, special considerations presented by churches, and the burdens and relevance of tax-exempt status.

The course will characterize different types of activity and its consequences, with emphasis on the lobbying rules that apply to charities and the questions raised by the issue advocacy of section 527 organizations that are independent from a candidate's campaign. Other types of activity covered include endorsements, advertisements, get-out-the-vote efforts, ballot and referendum measures, and the influence of judicial nominations. The course also will provide an overview of applicable campaign finance rules. The course is recommended for anyone with an interest in public interest law, tax-exempt organizations, lobbying, representing organizations that will undertake political activities, or more generally, with an interest in understanding the tax law, and, to a more limited extent, the campaign law framework regarding political activities.

Prerequisite: Taxation I, or the equivalent course The U.S. Income Tax: Policies & Practice.