The recent action of the IRS to deny tax-exempt status to three hitherto unnamed non-profit political advocacy groups has set tongues wagging in the industry. Now it has been revealed that all three groups were all part of Emerge America, an organization devoted to cultivating female political leaders for local, state and federal government. The three groups are Emerge Maine, Emerge Nevada and Emerge Massachusetts.
The IRS issued letters to all three Emerge groups stating their tax-exempt status has been declined due to the fact that they were set up to train Democrat political leaders. On their websites, each of the three groups asks for evidence that the candidates for training are Democrats.
The IRS action on these three groups have sparked concerns among other fellow 501(c)(4) groups – organizations set up under Section 501(c)4 as non-profit groups under the tax code – whether such action will be taken against them as well.
One such 501(c)(4) group is Crossroads GPS, a conservative political advocacy group associated with Karl Rove, the GOP political advisor and strategist. Crossroads sent an email to their supporters last week assuring them they were not one of the three groups denied tax-exempt status by the IRS.
Emerge America president, Karen Middleton, confirmed the three Emerge groups had been denied tax-exempt status. She added that the groups are at present in the process of converting into 527 organizations, that are also tax-exempt but obligated to disclose their donors (501(c)(4) groups are not required to).
“We’re all small organizations,” Ms. Middleton said. “We train about 25 Democratic women each year in each state where we work, and we don’t engage in any work that involved candidates or campaigns.”
In a strange twist of events, the IRS approves the tax-exempt status of five other Emerge groups namely Emerge Kentucky, Emerge California, Emerge New Mexico, Emerge Wisconsin and Emerge Arizona. Kimberly Ellis from Emerge California had this to say, “It’s just bizarre. Nevada has been around and waiting for approval for the last five years, and in the interim, Oregon and Kentucky are established and file for their approval — and Kentucky gets it but Nevada, Maine and Massachusetts don’t.”
The IRS has declined to comment on this matter. But according to Paul Streckfus, a former IRS official, such inconsistencies could be due to the fact that among the thousands of applications for tax exemption from non-profits received by the IRS every day, the applications from Emerge could have been channeled to different IRS offices.
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Law Offices of Darrin T. Mish, P.A.: Tax Attorney