In a previously unreported action, the Internal Revenue Service has revoked the DLC’s tax exemption on the grounds that it primarily benefited a private group—Democrats, and particularly “New Democrats” running for or holding office—rather than the community at large. The DLC has sued in federal court to overturn the decision;
The DLC isn’t a 501(c)(3) charity like the United Way. It won exemption in 1986 under section 501(c)(4) of the code, covering civic and social welfare groups. Contributions to civic groups aren’t deductible. But 501(c)(4)s are allowed to lobby more than charities and to even get involved in partisan politics. The National Rifle Association, MoveOn.org, Planned Parenthood and the National Right to Life Committee are all 501(c)(4)s.
What’s the practical value of a (c)(4) designation if it doesn’t generate writeoffs for its donors? A (c)(4) isn’t taxed as a for-profit business would be and doesn’t have to disclose its donors, as a political action committee does.
A lot of my fellow liberal bloggers are expressing glee over this development. They shouldn't. If we want to be the big tent party, you actually have to be willing to let others into the tent that do not always agree with you.
As for this ruling, there are a hell of a lot of "issue" group whose main beneficiaries are mostly politicians. I wander why the IRS decided to go after one of our "issue" groups, and not say Rod Parsley group which I know has a complaint filed against it.