Citizens for a Healthy Jessup: Social Welfare or Politics?
Tom Shepstone
Shepstone Management Company, Inc.
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Citizens for a Healthy Jessup is a tax-exempt group supposedly organized for social welfare purposes, for the people, but seems to be doing straight-up politics.
Readers may recall the political controversy that attended the development of Invenergy’s natural gas power plant in the Borough of Jessup, Lackawanna County, Pennsylvania. We covered the early 2015 debates here, here and here and then, three years later, the appearance of radical lawyer Jordan Yeager on one of his mischief-making missions. Today, the Lackawanna Energy Center provides power to a million or so homes, much revenue to the Borough of Jessup and employs 30 full-time operators, having provided jobs for over 1,200 workers at peak construction. But, a supposed “social welfare” group called Citizens for a Healthy Jessup is asking voters to re-elect politicians who fought the plant. Is that really social welfare? Well, maybe not, according to the IRS.
Check out this billboard:
Notice the message to “please remember” three political candidates on May 16, which is Pennsylvania primary day. The word “vote”is missing but the intention is crystal clear. It’s perfectly legitimate, of course, to ask voters to vote for specific candidates but is legal for Citizens for a Healthy Jessup to do so?
We’ll let you, the reader, decide, but here are some very relevant facts:
- Citizens for a Healthy Jessup is, according to its state filings, incorporated under the Pennsylvania Nonprofit Corporation Law of 1988 and Section 501(c)(4) of the Internal Revenue Code of 1954 “for the promotion of social welfare.”
- “The purposes of incorporation are for the promotion of social welfare. The Corporation is dedicated to combating community deterioration and is committed to protecting the health (both physical and economic) and safety of the residents and taxpayers of the Borough of Jessup and surrounding communities.”
- “Notwithstanding any other provision of these articles, the corporation shall carry on any other activities permitted to be carried on by a corporation exempt from Federal income tax under Section 501(c)(4) of the Internal Revenue Code of 1954 (as amended, or the corresponding provision of any future United State Internal Revenue Law).”
The IRS rules applicable to Citizens for a Healthy Jessup as a 501(c)(4) “social welfare” group provide as follows:
The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity. However, any expenditure it makes for political activities may be subject to tax under section 527(f).
So, it appears Citizens for a Healthy Jessup, if not engaging in a prohibited activity is, nonetheless, pushing the envelope with respect to the rules. Moreover, the money it is spending on this billboard may well be taxable. This is a legal question, of course, and cannot be definitively answered here but it certainly seems safe to say this is not social welfare.
Why is this important? Because far too many anti-gas groups similarly skirt the intent of the tax-exemption rules. While Citizens for a Healthy Jessup cannot offer donors tax deductions for their donation, as a 501(c)(3) non-profit is able to do, it also cannot make politics its primary function or it loses its own tax exemption on those expenditures. It is way past time that the IRS enforced tax exemption rules. There is very little evidence, in fact, that it enforces any of them and that is a serious problem. The Jessup billboard is, though but tiny, yet another example of the tax exemption abuse we have detailed repeatedly here and that goes uncorrected as our nation’s democracy is undermined by the work of supposed charities that aren’t.
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