The recent decision in Freedom Path, Inc. v. Internal Revenue Service addressed whether the IRS’s standards used to deny Freedom Path’s tax exemption as a 501(c)(4) organization were unconstitutionally vague. The United States District Court for the District of Columbia partially agreed with Freedom Path, acknowledging that the relevant guidance failed to satisfy the heightened scrutiny warranted by the First Amendment for regulations that impact free speech. However, as we detail in this alert, outstanding issues remain, namely how much political activity social welfare organizations may engage in and what constitutionally appropriate criteria the IRS and taxpayers can rely on to determine eligibility for tax exemption under Section 501(c)(4).
