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Archives
2009 Issue 4
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IRS Offers Insight into Shared Websites IRS Offers Insight into Shared Websites Earlier this year, the IRS ruled publicly for the first time that a 501(c)(3) violated its exempt status for content on a website shared with a related 501(c)(4) organization. The Technical Advice Memorandum (TAM), published in February, provided a rare glimpse of the IRS' views regarding the sharing of websites by related organizations. In the ruling (TAM 200908050) the IRS found that political content on the section of the site owned and operated by the 501(c)(4) organization was insufficiently distinguished from the 501(c)(3)'s content on its portion of the site. While clearly the IRS is looking more critically at shared websites, the details of this particular case suggest that 501(c)(3) and 501(c)(4) organizations may share a website under some circumstance if they proceed carefully. As described in the ruling, the two organizations had taken measures to separate each organization's content on the shared website by designing the 501(c)(4) pages as a discrete subset of the site and ensuring that the 501(c)(4) paid all costs associated with the operation and maintenance of its portion of the site. However, the IRS found that these efforts fell short in several ways: Each page of the site, including those with 501(c)(4) content, had the 501(c)(3) banner and logo at the top and links at the bottom of each page, including "About Us" and "Support Us" links, directed site visitors to information about the 501(c)(3)'s tax status and the deductibility of contributions rather than information about the 501(c)(4). These facts led the IRS to rule that the 501(c)(3) and 501(c)(4) portions of the site were "virtually indistinguishable" from one another, with the lines between them so blurred that the content of one organization could fairly be attributed to the other. Political content on the 501(c)(4) pages, including candidate endorsements and other communications, was therefore attributed to the 501(c)(3) and ruled to be impermissible political campaign intervention by that organization. Although the 501(c)(3) in this case was found to have violated its tax-exempt status, the TAM offers some insights into IRS thinking that will be very useful to organizations that wish to share a website in a permissible way. Branding each page with the appropriate organization's name and logo was helpful, and the IRS noted with approval that each of the two organizations paid for its own share of the website, but those efforts were not sufficient. Links on each page, such as links to donate to the organization, to find out more about the organization or its staff, or to contact the organization, must all be appropriate to the content of that page of the site - 501(c)(3) information for the 501(c)(3) portion of the site and 501(c)(4) information for the 501(c)(4) portion. It also seems clear that it is helpful for the 501(c)(3) and 501(c)(4) portions of a shared website to use layout and graphic design to help identify which organization is responsible for the content of that page or section - giving the portions attributable to each of the related organizations a different "look and feel." If a related 501(c)(4) organization is engaged in a lot of 501(c)(3)-prohibited electoral activities, it may be more prudent to maintain separate websites for the 501(c)(3) and the 501(c)(4). Note that the IRS has indicated that it will not penalize 501(c)(3)s for links to the home page of a related 501(c)(4) organization. We at Harmon Curran would be happy to help you navigate these issues as they apply to your organizations and their specific needs. Please feel free to contact us if you would like to discuss these issues further. By Christine Tschiderer  This publication is designed to provide accurate and authoritative information about the subject matter covered. It is not distributed with the intent to render legal, accounting, or other professional advice. The services of a competent professional should be sought if legal advice or other expert assistance is required. Newsletter Home | HarmonCurran Home | |