Guide to the IRS Decision-Making Process under Section 501(c)(3) for Journalism and Publishing Non-Profit Organizations
April 2, 2012
With the journalism industry in a state of flux, there are a growing number of news ventures that have elected to operate as non-profit organizations. Many of these ventures depend upon receiving a federal tax exemption from the Internal Revenue Service ("IRS") under Section 501(c)(3) of the Internal Revenue Code. However, confusion about the IRS's standards in applying Section 501(c)(3) has led to applications for tax-exempt status being delayed or denied. It has also led to criticism of the IRS as being arbitrary in its decision-making process and adverse to the journalism industry.
In 2011, a pattern of delays emerged at the IRS in decisions on the tax status of news-oriented non-profits. After speaking with some of the affected non-profits and reviewing the applicable law, the Digital Media Law Project determined that there was a gap in understanding of the IRS decision-making process. This Guide is intended to close that gap by providing detailed information regarding the standards that the IRS applies when reviewing a journalism venture's application for a tax exemption.