WASHINGTON, D.C. – The Committee on Ways and Means is conducting an examination into whether entities that qualify as tax-exempt under Section 501 of the U.S. Code are abiding by the statutory and regulatory prohibitions against certain activities and whether foreign sources of funding are being funneled through such organizations to influence America’s elections. As a part of that effort, Ways and Means Committee Chairman Jason Smith (MO-08) and Oversight Subcommittee Chairman David Schweikert (AZ-01) have released an open letter to groups organized under Section 501(c)(3) or 501(c)(4) requesting information and input on existing rules and regulations governing them and foreign sources of funding for tax-exempt organizations and what, if any, policy changes Congress should consider.

“Public reporting has raised questions about whether tax-exempt sectors are operating in a manner consistent with the laws and regulations that govern such organizations and whether foreign funds are flowing through these organizations to influence American politics,” writes Ways and Means Committee Chairman Smith and Oversight Subcommittee Chairman Schweikert. “For example, the Committee has learned that a Super Political Action Committee (PAC) recommended donations to 501(c)(3) organizations as ‘the single most effective tactic for ensuring Democratic victories’ and that large donations from a wealthy donor to state election offices in 2020 may have been done in a manner that helps one political party over another. Additionally, the Committee has also found that significant amounts of foreign money is flowing through 501(c)(3) and 501(c)(4) organizations to influence elections.”

In addition to the request for information from tax-exempt organizations, Smith and Schweikert’s open letter provides:

• Background on the laws and regulations governing 501(c)(3) and 501(c)(4) entities.
• Information on a February 2020 Government Accountability Office report on the roles, responsibilities, and perspectives of federal agencies that oversee campaign finance that found Internal Revenue Service prohibitions on political activity lack clarity, leading to confusion among tax-exempt organizations.
• Detailed concerns that already exist about the flow of funds into America’s political system and elections under the guise of charitable, religious, or educational purposes or the promotion of social welfare.

Read the full letter here.

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