Opinion Page: Should the IRS require exempt organizations to report political expenditures?

From The Center Square (Chicago), May 2, 2023:

Chicago just elected an extreme progressive union organizer as its new mayor. Reports indicate the Chicago Teachers Union (CTU) – an affiliate of the American Federation of Teachers (AFT) – was key to ensuring Brandon Johnson’s victory.

Because the CTU enjoys a special status as a tax-exempt organization, it must follow certain rules when it decides to spend money on political activities. Electing one of its own as mayor therefore raises a host of tax questions. Does a union have to pay taxes if it deploys its membership to canvas and campaign on behalf of a candidate? Can a union underwrite the costs for political rallies, T-shirts, and phone banks without incurring tax liabilities? What about paying for travel expenses for political candidates? Answers to these questions aren’t always clear – IRS guidance and regulations are dated and incomplete. This leads to exempt organizations such as labor unions flexing their political muscles with little concern for the tax repercussions.

Labor unions (like the AFT or CTU) and other types of organizations (such as social welfare groups like the ACLU) can use general revenue for political activities without risking their exempt status. If they decide to do this, however, the organization needs to report and pay taxes on such expenditures. The principle behind taxing political activities is that such outlays are not strictly in-line with an exempt organization’s missions such as improving working conditions, accessing greater benefits, or negotiating higher salaries. The problem is that the IRS hasn’t fully spelled out what constitutes a political activity.

Despite the tax implications, many (if not most) of these organizations spend considerable resources on politics. Unions deploy hundreds of members to canvass during election season. Their leadership campaigns relentlessly for favored candidates and they contribute millions to candidates and political parties through their political action committees. Social welfare organizations sponsor advertisements supporting issues that influence elections.

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