A 527 group, named after a section of the United States tax code, is a tax-exempt organization that is created primarily to influence the nomination, election, appointment or defeat of candidates for public office. Although political action committees are also created under Section 527 of the Internal Revenue Code, the term is used to refer to political organizations which are not regulated by the Federal Election Commission and not subject to the same contribution limits as PACs.
A 527 group is permitted to accept contributions in any amount from any source. They are exempt from federal income tax on contributions received but they are required to report their funding and expenditures to the Internal Revenue Service. These unregulated contributions are frequently referred to as soft money. Because 527 organizations are not regulated by the Federal Elections Commission, they may not make expenditures to directly advocate the election or defeat of any candidate for federal elective office. They also may not coordinate their activities with any candidate's campaign. 527s are permitted to undertake non-prohibited political activities such as voter mobilization efforts and issue advocacy.
Many 527s are run by special interest groups and used to raise unlimited amounts of money to spend on issue advocacy and voter mobilization. The line between issue advocacy and candidate advocacy is the source of heated debate and litigation.
Under federal election law, coordination between an election campaign and a 527 group is not allowed. The heavy spending of key 527 groups to attack presidential candidates brought complaints to the Federal Elections Commission of illegal coordination between the groups and rival political campaigns. These formal complaints included:
Several people who are involved with both organizations have removed themselves to avoid the appearance of conflict. Attorney Benjamin Ginsberg pointed out that it was not uncommon or illegal for lawyers to represent campaigns or political parties while also representing 527 groups. For example, Washington attorney Joe Sandler simultaneously represents the Democratic National Committee and a 527 group airing anti-Bush ads, the MoveOn.org Voter Fund.
Top 20 527 groups, 2004 election cycle
Some of these listings identify a parent organization that has created a 527 group but that also engages in many nonpolitical activities.
A political organization subject to 527 is a party, committee, association, fund, or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function.
The exempt function of a political organization is influencing or attempting to influence the selection, nomination, election or appointment of an individual to a federal, state, or local public office or office in a political organization.
When there are no formal organizational documents, consideration is given to statements of the members of the organization at the time of its formation that they intend to operate the organization primarily to carry on exempt function activities.
Organizations would be required to file a report of receipts and disbursements, and the names and addresses of contributors or recipients of over $200 in a calendar year on the same schedule as political committees.
Organizations which only attempt to influence state or local elections, appointments to state or federal offices, or the selection of individuals to offices in a political organization; and groups which accept contributions or make expenditures of less than $5,000 per calendar year would be exempt from these requirements.
Organizations which file with the FEC as political committees, state or local committees of political parties, political committees of state or local candidates, organizations with gross receipts of less than $25,000 per year, tax-exempt organizations with political expenditures, and independent expenditures would not be subject to the reporting requirement.
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