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41 Tax L. Rev. 693 (1985-1986)
From Big Mama Rag to National Geographic: The Controversy Regarding Exemptions for Educational Publications

handle is hein.journals/taxlr41 and id is 703 raw text is: From Big Mama Rag to National Geographic: The Controversy Regarding Exemptions for Educational Publications DANIEL SHAVIRO * Introduction Among the many tax preferences provided under the Code, few are less controversial in principle, or more controversial in application, than the exemption from taxation provided to organizations described in section 501 (c) (3). Under this provision, organizations that are organ- ized and operated exclusively for charitable, educational, religious, literary, or certain other purposes, and which do not engage in political activities or lobbying or permit any of their net earnings to inure to the benefit of any individual, can qualify as tax-exempt organizations.' In general, organizations that qualify under section 501 (c) (3) not only are exempted from paying tax on their earnings, but are entitled to receive contributions that qualify for the deduction for charitable contributions.- Section 501(c) (3) is controversial because of the difficulty of defin- ing the grounds on which exemptions should be granted. An overly broad definition would permit tax avoidance, or the receipt of an indirect federal subsidy, by taxpayers who do not truly or sufficiently engage in the * DANIEL SHAVIRO (A.B., 1978, Princeton University; J.D., Yale Law School, 1981) is a legislation attorney with the staff of the Joint Committee on Taxation. The author wishes to thank RiCHARD B. RUGE, a legislation counsel with the staff of the Joint Committee on Taxation. I In full, § 501(c) (3) provides that the list of organizations qualifying as exempt under § 501(a) shall include: Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or dis- tributing of statements), any political campaign on behalf of any candidate for public office. 2 I.R.C. § 170(c) (2) (B). In addition, exempt organizations can qualify for nontax benefits such as reduced postal rates. See 39 U.S.C. § 3626 (1982). 693 Imaged with the Permission of N.Y.U. Tax Law Review

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