I. Introduction to Tax-Exemption and Political Intervention.

 Imagine that you manage a tax-exempt nonprofit organization whose mission is to educate the public on environmental issues.  Now imagine that, thankfully, one of your volunteers is computer savvy and offers to create a web site for your organization.  The web site will enable your organization to further its' mission of educating the general public by publishing environmental information to a global audience at little or no cost.  Furthermore, your website will leverage the power of the internet to easily enable web viewers to connect from your web page to additional environmental web pages via internet hyperlinks.
As a manger of a tax-exempt organization, you must be aware of the potentially drastic negative consequences of creating such links.  For example, if you hyperlink to other organizations that post political information on their website, your organization could lose its' tax-exempt status.  That's right, you didn't misread the last sentence; by linking your organization's web site to other organizations, your organization could lose its' tax-exempt status.  Therefore, as a well-informed exempt organization manager, you would be wise to consider the legal implications involved in linking to other organizations.
 Interesting legal questions arise when tax-exempt organizations expand into the internet context.  This paper focuses on the statutory prohibition of exempt organizations and partisan political activity applied to the context of internet hyperlinks.  According to the Internal Revenue Code, tax-exempt Section 501(c)(3) organizations are, by definition, statutorily prohibited from partisan political activity.1  Historically, the IRS has applied a facts and circumstances test to decide whether the 501(c)(3) has engaged in such prohibited conduct.2  This paper reviews the traditional IRS facts and circumstances political prohibition test and then reviews analogous case law in Private Benefit theory and Contributory Copyright Infringement theory.  All of these legal theories are then applied to your hypothetical exempt organization in four different hypothetical scenarios.  The paper then summarizes the future of the political prohibition as applied to hyperlinking tax-exempt organizations.  Finally, important safeguards are proposed, which your exempt organization should consider when hyperlinking beyond it's own web site.

II.   Background.

In 2000, the Internal Revenue Service ("IRS") released a set of questions to the public in an effort to clarify the application of the 501(c)(3) Code to the context of the internet.3  The IRS stated:
The Internal Revenue Service is considering the necessity of issuing guidance that would clarify the application of the Internal Revenue Code to use of the Internet by exempt organizations.  Accordingly, the Service is soliciting public comment concerning the application of Code provisions governing exempt organizations to activities they conduct on the Internet.  The Service has made no final decision concerning the need for additional guidance of general applicability and may conclude no further action is necessary.4

Among the listed questions, the IRS poses a question which is relevant to-and indeed the genesis of-this paper:

Does providing a hyperlink on a charitable organization's Web site to another organization that engages in political campaign intervention result in per se prohibited political intervention?  What facts and circumstances are relevant in determining whether the hyperlink constitutes a political campaign intervention by the charitable organization?5
 

III. Why Are Exempt Organizations Worried About Announcement 2000-84?

Any decision by the IRS regarding linking and political intervention directly impacts 501(c)(3) organizations and it is important to note such organizations' concerns regarding the announcement.  Below is a sampling of exempt organizations' responses to Announcement 2000-84 with respect to the question stated above regarding hyperlinks and political intervention.
The American Society of Association Executives ("ASAE") strongly supports exempt organizations' use of internet hyperlinks for voter education, provided the links do not show bias for or against a candidate.6  ASAE states that an organization's intent in providing a hyperlink should be the most important fact in a political intervention, fact and circumstance test.5  In support of this contention, ASAE gives a scenario where the content of the linked cite changes quickly without the exempt organization even knowing about the changed content of the linked site.8  ASAE also proposes additional fact and circumstance tests as indicia of the organizations linking intent, including: statements made in connection with the hyperlink, any direct or indirect support of the linked organizations political intervention, or other charitable reasons for the link.9  ASAE also suggests the IRS ask whether the link-to page or some other page of the linked organization contains political activity.10  Also, ASAE indicates that the Service should look into the timing of the hyperlink and whether the hyperlink is accessible by members of the public generally or only through a password-protected gateway.11
Following up with ASAE's argument that nonpartisan, educational linking should be acceptable, Public Citizen, Inc. and Public Citizen Foundation, Inc. ("Public Citizen") state that exempt organizations' links to political sites should not necessarily be political intervention.12  Public citizen argues that just as providing candidate information outside of the internet context is not necessarily political intervention, so should the presence of political candidate information through hyperlinking not necessarily be political intervention.13  Therefore, Public Citizen urges the IRS to refrain from any per se rules with respect to linking.14
Jim Harper, operator of Privacilla.org-a 501(c)(3) privacy policy website--makes an important point with respect to the administrability of constantly needing to monitor links for political content.  He states, "I am very concerned with the IRS proposal because of the difficulty I would have with policing links from the site...I would easily have more than 1,000 links, each of which the IRS could find to be 'advocacy' because of the content on the other end."15
Another organization named Independent Sector emphasizes that a linked-to site, absent an agreement between the two sites or common control of both organizations, may change its content at any time without notice.16  Further, the sites may reside on servers located on opposite sides of the earth, without any connection except for the single hyperlink.17
Independent Sector provides an analogy where a nonprofit is sponsored by a company and the nonprofit is allowed to give a sponsors name, street address and telephone number as part of a sponsorship acknowledgement, without triggering Unrelated Business Income ("UBIT") taxes.18  This example of sponsorship acknowledgement, they argue, is much like a hyperlink, in that it provides access to another organization, without attributing action by the other corporation to the nonprofit organization.19
They argue further that the important facts and circumstances with regard to hyperlinking are those which establish an organization's linking purpose.20  They state that a link to an educational web site, without any support or opposition to a candidate, should not result in political intervention simply because of political content on the linked-to site, which the tax-exempt organization does not control.21
The American Institute of Certified Public Accountants ("AICPA") have several recommendations in response to the IRS Announcement 2000-84.  First, the AICPA recommends, "tax-exempt organizations be encouraged, but not required, to maintain contemporaneous documentation regarding their Web sites."22  AICPA proposes an exempt organization should develop specific web policies including organizational documentation of web publishing and procedures for management approval of the organization's web content and links to outside web pages.23  The exempt organization should document web content on a regularly scheduled basis.24 However, the IRS should not require a burdensome assignment of continuous web content policing, which would create an undue administrative burden for nonprofit organizations.25  Such a burden may deter organizations from linking to otherwise beneficial educational and other charitable information on the web.26

IV.  History of Tax-Exemption

Interestingly, in 1934 Congress added a proposed statute section which, if enacted, would have restricted lobbying of a 501(c)(3) organization to no more than an insubstantial part of its activities.27  However, the proposed 1934 legislation language was later withdrawn as it was considered "overly broad."28
So, before 1954, there was no absolute prohibition of electioneering activity by 501(c)(3) organizations or their precursors.  However, twenty years later in 1954, then Senate Minority Leader Lyndon Johnson added a floor amendment which stated that IRC 501(c)(3) organizations could not participate in, or intervene in any political campaign.29  Johnson stated that, "[t]his amendment seeks to extend the provisions of section 501 of the House bill, denying tax-exempt status to not only those people who influence legislation but also to those who intervene in any political campaign on behalf of any candidate for public office."30  The amendment was accepted; no debate or discussion took place.31  The Conference Report contains no further discussion of the amendment.32  The current statute, 26 USCS § 501(c)(3) (2003), states that organizations shall be exempt from taxation when they are "organized and operated for religious, charitable...or educational purposes,...and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office."33
It is important to ask, "to what extent is this prohibition?"  Interestingly, the Lyndon Johnson quote above seems to indicate that the political prohibition extends only to activities amounting to substantial political intervention like in the lobbying context, rather than a complete prohibition.  However, In a 1981 case dealing with IRS tax-exemption and churches, where the IRS sought to review relevant church documents relating to tax issues, including political intervention, the 7th circuit court of appeals stated: "It should be noted that exemption is lost...by participation in any political campaign on behalf of any candidate for public office.  It need not form a substantial party of the organization's activities."34  As a matter of facial statutory interpretation, this outcome seems appropriate.  Section 501(c)(3) mandates that exempt organizations need to be organized and operated for an exempt purpose and as an additional necessary condition may "not participate in or intervene in" any political campaign.35
In a U.S. Supreme Court case analyzing the application of the absolute prohibition of political intervention to a bar association that rated judicial candidates, the Court reasoned that the statutory prohibition on political intervention was not at all similar to the insubstantial test based on the lobbying context.36  The Court stated that, "The short answer [to this argument] is that Congress did not write the statute that way."37

V. What Facts and Circumstances Constitute Political Intervention?

What political activity is allowed and what political activity is not allowed?  In other words, what factors differentiate benign political activity from prohibited political intervention?  The Service states that such a determination depends on "all of the facts and circumstances of each case."38  The facts and circumstances test is the keystone of the IRS's political intervention analysis.  Important facts and circumstances are highlighted below in several IRS Revenue Rulings, Private Letter Rulings, and Tax Court cases.
In Revenue Ruling 78-248, which provides instructive hypotheticals, the Service covers voter education activities which can be "conducted in a nonpartisan manner by an organization recognized as exempt under section 501(c)(3) of the Code [which] will not constitute prohibited political activity disqualifying the organization from exemption."39  The Service lists four hypothetical examples to illustrate the difference between a prohibited political activity and acceptable nonpartisan voter education activity.40  In the first example, an organization annually prepares an un-editorialized (doesn't directly or implicitly approve or disapprove of candidates) annual voting record compilation of all members of Congress on a wide range of subjects.41  The Service says this activity is not prohibited under section 501(c)(3).42  The important facts and circumstances are that the organization does not, directly or indirectly, support or oppose candidates, the publication covers all candidates rather than a select few, and covers a wide range of subjects, not just subjects important to that particular organization.43
In the second example, during election years the organization solicits every candidate's positions on a wide array of issues and then widely publishes the positions in an unbiased fashion.44  This activity is also not prohibited.  Again, notice that facts and circumstances indicate that all candidates are included, a wide array of issues are covered, and the publication seems unbiased with respect to candidates.45
The third example builds on the organization in the second example, where the organization solicits candidate's positions and then publishes them.46  However, in this third example, the organization distributes the answers during a campaign in the form of voter guides where the questions evidence bias on certain issues.  This third organization has acted contrary to the 501(c)(3) prohibition.  Clearly, the third example highlights the following facts and circumstances, which are important in determining prohibited political intervention.  The timing of the publication correlates with a campaign so that the publication will likely impact voting behavior.  Further, the publication is biased on issues important to the organization, which evidences a political, rather than educational, voter impact.
In the fourth example, during an election campaign, an organization primarily concerned with land conservation publishes a voter guide consisting of incumbents' voting records on selected environmental issues and does not seemingly support or oppose any candidate.47  The Service concludes that facts and circumstances including the narrow issue focus, wide distribution and timing during an election campaign indicate that the guide's purpose is partisan voter education and therefore it constitutes prohibited political intervention.
In Rev. Rul. 86-95, the Service presents a classic example of a nonpartisan candidate forum.48  The exempt organization proposes to produce several educational candidate forums in congressional districts during congressional elections.  Every candidate will be invited to attend and a broad range of topics will be covered.  There will be a nonpartisan, independent panel administering the forum whose function is to assure the ground rules are followed by candidates, so that each candidate has an equal opportunity to express views on each issue.  The moderators will not focus on issues considered important to the organizations' membership, instead they will cover a wide range of issues.  Further, "at both the beginning and end of each forum, the moderator will state that the views expressed are those of the candidates and not those of the organization and that the [organization's] sponsorship of the forum is not intended as an endorsement of any candidate."49  The service cites facts and circumstances such as the wide range of issues, the independent moderator, and the statement that the organization does not endorse any candidate as important to deciding the political forum will not be prohibited political intervention.
In Rev. Rul. 80-282, the Service issued a ruling regarding the publication of a Congressional session voting summary that listed incumbent's votes along with the organization's view on selected legislative issues.50  The Service distinguished a non-prohibited voter summary from prohibited political intervention by the following facts and circumstances:
[t]he voting records of all incumbents will be presented, candidates for reelection will not be identified, no comment will be made on an individual's qualifications for public office, no statements expressly or impliedly endorsing or rejecting any incumbent as a candidate will be offered, no comparison of incumbents with other candidates will be made, and the organization will point out the inherent limitations of judging the qualifications of an incumbent on the basis of certain selected votes by stating the need to consider such unrecorded matters as performance on subcommittees and constituent service.51
 
The service skims over the fact that the organization is impliedly endorsing the candidates whose votes correlate with the organization's opinions which are posted along with candidates' voting records.  However, the Service makes a point of several distinguishing facts and circumstances.  Importantly, the organization's publication is not widely distributed.  In fact, the publication is only distributed to the few thousand of the organization's readership, which are widely dispersed across the nation.  Therefore, it is important to the Service that the readership is not located in a focused voting area such as a particular state or congressional district and is not timed to coincide with an election campaign.
The Service gives weight to organizations' alignment of interests with the political activities at issue.  For example, the Service ruled that a university was not participating in the political activity of its students where the university allowed students two weeks to participate in a political campaign as an educational exercise.52  It was important that the interests of the students were independent of the university.  This was apparent in the facts and circumstances because the university had no oversight of the substantive political activities of the students, only of the general structure of the student's two weeks of volunteering.  Likewise, where a university provided faculty advisors and facilities for a student-run campus newspaper, which expressed political views, the Service ruled that the university was not electioneering.53  The students' political activity, because of a an assumed disalignment of interests between students and the university, was not imputed to the tax-exempt university.
However, In Branch Ministries, the IRS revoked a church's tax-exempt status because of political activities related to a newspaper publication.54  The church, four days before a presidential election, placed a full-page ad in two nationally published newspapers with the headline "Christians Beware" and asserted that a particular presidential candidate's positions on "abortion, homosexuality, and the distribution of condoms to teenagers in schools violated Biblical precepts."  After the IRS was notified of the ad, they started an investigation of the church's political activity.  When the church refused to disclose the requested information, the IRS revoked the church's tax-exempt status.  Presumably, the facts and circumstances, including the publications' narrow issue focus, obvious political campaign timing, and direct opposition to a candidate were dispositive facts and circumstances in this IRS revocation of tax-exempt status.
In an IRS Private Letter Ruling involving disalignment of interests between the exempt organization and the political activity, a large nonprofit organization that employs union members sought a ruling regarding a union request that the employer implement an employee payroll deduction plan where the employees could direct a portion of their wages to the union's political action committee.55  The employees, not the employer, would have sole discretion with regard to the amount of the deduction and the union political action committee would reimburse the employer for administrative expenses involved in processing the wage deductions.  The Service ruled that because the discretion of the wage deduction lies with the employee and not the nonprofit employer and that the union and the employer likely have different political interests, the nonprofit employer could operate the deduction plan without jeopardizing its exempt status.
 When thinking of analogies to the context of the internet and hyperlinking between organizations, it is important to note the well-established rule that 501(c)(3) organizations may operate out of the same building as other organizations, but may not commingle accounting for resources between organizations.   For example, 501(c)(3) organizations are often closely affiliated with 501(c)(6) organizations.56  In fact, the two types of organizations may be, and often are, housed in the same office space.  However, they must each keep separate bookkeeping records to ensure that the 501(c)(3) organization is not subsidizing the efforts of the 501(c)(6) organization with tax-exempt dollars, thereby jeopardizing the tax-exempt status of the 501(c)(3) organization.  For example, in a Private Letter Ruling, the IRS ruled that if effective separate booking was used, a 501(c)(3) organization which was closely affiliated with a 501(c)(6) Business League would not loose its' tax exempt status if the 501(c)(6) organization created a Political Action Committee ("PAC").  The IRS ruling states that although the 501(c)(3) organization has an identical board of directors as the 501(c)(6) organization, there would be no common managing officers between the 501(c)(6) organization and the 501(c)(6)'s PAC.  Further the PAC would solicit funds at different times than the 501(c)(3) and 501(c)(6) annual dues solicitation and that the PAC will not receive any direct or indirect services or benefits from the 501(c)(3).  Therefore, facts and circumstances including operating separate accounting of assets, different donation solicitation times, and different management effectively insulated the Political Activity of the 501(c)(6)s' PAC from imputing prohibited political activity to the tax-exempt 501(c)(3) organization.
 An exempt organization may not even indirectly, through arguably non-monetary means, act in a partisan political manner.  A Section 501(c)(3) organization that sells or rents its mailing list to other organizations must make the list equally available to all other candidates on the same terms.57  The Service states that, "[i]n determining whether the mailing list is equally available to all other candidates, it must be shown that all candidates were afforded a reasonable opportunity to acquire the list."58
Where an organization distributes fundraising letters coded with the terms "conservative" and "liberal" in a politically partisan manner favoring one candidate over another, the fundraising letters constitute prohibited partisan political intervention.59  In one particular IRS Memorandum, a tax-exempt organization's publication referred to the positive conservative progress of the last 3 1/2 years and warned readers that without their vote, liberals could reverse such progress.  Although the letter did not specifically mention President Reagan, the organization had previously indicated strong support of President Reagan and strong dislike of Walter Mondale.  The Service advised that code-worded partisan political activity is still substantively partisan political activity, even if it arguably doesn't mention any specific candidate.25
Likewise, in Christian Echoes National Ministry, a church's activities included radio and television broadcasts and wide-scale publications and distribution of pamphlets.60  The Service ruled that the church violated the prohibition on political intervention when it endorsed specific candidates and more generally attacked candidates and incumbents, "who it considered were too liberal."61  The facts and circumstances don't necessarily need to indicate bias for or against a specific candidates.  Rather, an implied attack on a grouping of like-minded candidates through popular terminology, such as liberal or conservative, factors into the facts and circumstance analysis.

VI.  Motivation and Electioneering

It is not altogether clear whether subjective intent is relevant to a decision of political activity, although it is safe to say that a majority of sources, both through IRS publications and legal commentators' publications, endorse the view that subjective intent is immaterial.  However, according to one prominent commentator, Professor Frances R. Hill, "the Service and the courts continue to rely on intent as a core element of tax jurisprudence in determining whether particular activities violate the political prohibition."61  However, there are clearly others who advise the opposite conclusion.  Other commentators, state that Professor Hill's assertion that the IRS and courts rely on intent with respect to political activities, "is not the law, never was the law, should not be the law, and could not be the law."62  The same commentators cite a 1993 IRS Continuing Professional Education ("CPE") publication where the following question is posed to the Service,  "Does the motivation of an organization determine whether the political campaign contribution prohibition has been violated?"  The CPE text answers, "No, the motivation of an organization is irrelevant when determining whether the political campaign prohibition has been violated."63  The commentators further cite IRS Technical Advice Memorandum ("TAM") 9635003, which involves a fundraising letter that supported some candidates and attacked others with the sole intent to fundraise for charitable purposes.64  In TAM 9635003, the Service states, "the motivation of an organization is irrelevant when determining whether the political campaign prohibition has been violated."65
In Association of the Bar of New York, the Second Circuit Court of Appeals declined to take subjective intent into account when deciding whether the Bar Association had acted in a prohibited political manner.66  The Bar Association rated judicial candidates based on qualifications such as professional ability, experience, character and temperament in order to secure election of "qualified" candidates and prevent the election of unqualified candidates according to N.Y. Code of Professional Responsibility Ethical Consideration ("EC") 8-6.  EC 8-6 states in part, that lawyers have a duty to aid in nominating and electing "qualified" judicial candidates, while preventing political considerations from playing an overweighted role in the election of judicial candidates.  However, the court notes that whatever the nonpolitical intentions of the Bar Association, a judicial candidate receiving "a 'not qualified' rating will derive little comfort from the fact that the rating may have been made in a nonpartisan manner."67
At least one commentator has written that objective, rather than subjective, intent should be incorporated into the political prohibition analysis.68  Gregory Colving, referencing earlier articles by other commentators, argues that the same exempt organization, doing the same activities, should not be treated differently based simply on the motivation of the director, manager or founder.  Colvin states that "[o]bjective manifestations of political purpose, not mere intimations of subjective intent, should violate and do violate Section 501(c)(3)."69
It seems apparent from the arguments of these various commentators that, at the very least, subjective intent would be very difficult to identify and enforce.  Further, without objective manifestations, who would (or could!) enforce the prohibition against subjective political intent?  At the end of the day, the IRS and the majority of legal commentators have stated that subjective intent is irrelevant to determining prohibited political activity; so exempt organizations are wise to ensure that even if their subjective intent is political, their objective manifestations of intent must not be.

VII.  Consequences of Political Intervention

 As indicated earlier, the IRS may revoke a 501(c)(3) organization's tax-exemption where the organization is not operated exclusively for a charitable purpose or where the organization's actions constitute political intervention.  However, more recently, Congress expanded the Services available responses to political intervention by adding less severe penalty options, in place of or in combination with, complete revocation of an organizations exemption.  In an Election Year Issues publication, the IRS stated:
Congress enacted IRC 4955 [a new penalty tax] because it believed that the absence of any stricture other than revocation for violation of the prohibition on political campaign activity created two problems.  One was that the penalty of revocation was disproportionate to the violation in cases where the [political] expenditure was small, the violation was unintentional, and the organization subsequently had adopted procedures to assure that similar expenditures would not be made in the future.  The other was that, in some cases, revocation would be an ineffective remedy, particularly if the IRC 501(c)(3) organization ceased operations after it diverted all of its assets to improper [political] purposes.  Therefore, IRC 4955 applies to IRC 501(c)(3) organizations whether or not their tax-exempt status is revoked.70

Section 4955 provides an initial 10% tax on each political expenditure by a 501(c)(3) organization.  Also, the initial tax provision imposes a tax calculated at 2.5% of the organization's political expenditure to be levied against any of the exempt organization manager's who agrees to a political expenditure, unless the agreement by the manager is not willful and is due to reasonable cause.71
Section 4955 also includes taxes in addition to the initial tax structure already mentioned above.  The additional tax kicks in when an IRS initial tax is imposed due to an organization's political expenditure and the organization fails to correct the expenditure within the taxable period.  Then, the tax equals 100% of the amount of the political expenditure.  The additional tax also effects management.  If, in any case of an additional tax on the organization, an organization manager refuses to agree to all or part of the correction of the political expenditure, the IRS imposes a tax on that manager equal to 50% of the amount of the political expenditure.
The structure of Section 4955 seems to be targeted towards expenditures on traditional media such as radio, newspaper, magazine and television where cost correlates with media exposure.  The more the newspaper or radio advertisement costs, presumably the larger the audience and the larger the impact of the political expenditure.  For example, if an organization makes a large political expenditure, say, on a full-page partisan political add just before an election, the IRS can revoke the organization's tax-exempt status and impose the Section 4955 management tax penalty.  In this way, the Section 4955 tax structure seems to address traditional media effectively; The larger the expenditure and thus the larger the audience, the larger the tax.
However, in the internet world, things are not so proportionate.  In the context of the internet, a tax-exempt organization with a web site can influence the political views of a large audience for little or no cost.  The Section 4955 tax would not effectively deter the offending organization's management from participating in prohibited political activity in the future because a percentage of a small amount is a small amount.  Therefore, a small web expenditure can make a big political impact, with little or no tax exposure for the organization's management.
Now, it is important to note that the IRS may revoke the tax-exempt status of the entire organization for flagrant violation of the political prohibition.  Unfortunately, in the internet hyperlink context the manager that advised or consented to the political hyperlinks will not be penalized much, as mentioned above, while the organization may make the ultimate sacrifice in losing it's tax exempt status.

VIII. Defining the Context; The Internet and Hyperlinking

Web pages are created in Hypertext Markup Language ("HTML") Files.  HTML allows a web page creator to edit a document in much the same way as a person editing a Microsoft Word document can highlight or underline text.  Within this HTML file resides the textual content of the web page.72  The file also contains any of the page's hyperlinks in the form of unique addresses called Uniform Resource Locators or URLs, which are usually highlighted or underlined on the linking web page.  In this way, a person reading a website knows that a link exists and may click on it, bringing the reader directly to the linked-to web page.
Arguably, links are what make the web as useful as it is today.  Certainly, without links, the web could not be as interconnected and functional.  Without hyperlinks, a web user would need to physically type the destination URL into the address box at the top of the web browser.  Obviously, this scenario is much less functional and accessible than current hyperlink technology.
Interestingly, a person who clicks on a link may not know "where" the linked-to page is located.  For example, the computer server that hosts the linked-to page may be the same server as the page containing the hyperlink.  However, the destination page may be located on a computer server physically located anywhere around the globe.  Indeed, a single website may be located on several different servers without the knowledge of the computer user who views each page.
Thus, the computer user who clicks on a link may not know if she is being sent to the URL within the same organization's website or if she is being connected to some outside organization's website.  To show the user the destination of the link, the organization producing the originating website would have to directly state to the user that the link connects to an outside organization.  Otherwise, without other visual clues such as color or graphical design changes, the web user may not know the linked-to organization is different from the originating website.
The characterization of hyperlinks is much debated because they are unique to the internet and because such characterization has significant legal implications for those organizations who provide hyperlinks on their web page.  Hyperlinks can be characterized as a simple mailing address or phone number of a linked-to web page or more of an active and direct portal to other web pages and the organizations that create them.  This difference becomes more than academic within the current topic of imputing the political content of linked-to web pages to the linking exempt organization.  Likewise, the cases below show the importance of the hyperlink in the context of linking liability.

IX.  Federal Election Commission Linking Case

In a Federal Election Commission ("FEC") Advisory Opinion, the FEC responded to a request for an opinion regarding the propriety of hosting a website with a wide-scale political campaign education focus, including extensive hyperlinks.73  The proposed website in the FEC Advisory Opinion would be operated by the League of Women Voters and the Center for Governmental Studies (together, organized on the internet as Democracy Network, or "Dnet") and would be highly interactive.  Further, the web site would provide hyperlinks to editorials, news services, and candidates' web sites.  DNet indicated that when they link to newspaper web sites, they would "make every effort, on a nonpartisan basis, to list a representative assemblage of local newspapers that have made endorsements in the relevant race, or, in the case of national candidates, to list a representative assemblage of large papers across the nation."74
In their analysis, the FEC noted that DNet would not rate or score candidates on its web site or through its hyperlinks.  Nor would DNet endorse or expressly advocate for a candidate or a political party.  The FEC states, "DNet will function in such a way that none of the statements made by candidates...can be imputed to CNet."75  Further, CNet's web site will be available to the general public and will not be targeted in a way that would encourage voting by a particular subsection of voters tending to vote for a particular candidate or party.  Therefore, the FEC decided that such an interactive website, containing nonpartisan political information and links to diverse political information in a way that will not impute partisanship to the exempt organization would not violate the prohibition on contribution or expenditure in a federal political campaign.

X. IRS Revokes Tax-Exemption Based on Web Page Hyperlinks

 In 1998, according to the publication Tax Notes Today, an exempt organization named Freedom Alliance lost its tax-exempt status for political intervention through internet hyperlinking.76  In 1999 the IRS reinstated the organization's exempt status, as the report states, "based in part on your representation that you have taken steps to remove, from the Internet, the web site formerly maintained by you that among other things contains a link to a politically partisan organization."77.  The report does not contain any further information as to whether other activities, in addition to the link, were important in the IRS's decision to initially revoke or subsequently reinstate tax-exempt status.

XI. Analogy to Contributory Infringement Through Hyperlinks

In this section, the analogy between Contributory Copyright Infringement Theory and hyperlinking to political content is proposed and explained.  The resulting legal theory is newly proposed in this paper as Contributory Partisan Political Activity Theory.  First let's discuss Contributory Copyright Infringement.  Contributory copyright infringement occurs when one organization knew or should have known that a second organization was directly infringing on a copyright and the first organization causes or materially contributes to the infringement of the second organization.78
In one copyright infringement case, the defendant was ordered by a court to remove infringing material, a Church Handbook of Instructions ("Handbook"), from their website.  Defendants removed the infringing material, but then subsequently posted hyperlinks to the Handbook, which was located on other web sites.79  Further, the defendant then posted messages on their web site which encouraged web viewers to click on hyperlinks in order to view copies of the Handbook on other web sites.  The court found that the linking site actively encouraged the infringement of plaintiff's copyright, constituting contributory infringement.  Interestingly, it was unimportant to the court that there was no direct relationship between defendants' enjoined website containing the links and the linked sites containing the infringing material.  In fact, defendants were not receiving any services or other compensation in return for providing the links, nor did defendants provide the copyright infringing websites with the Handbook.  Therefore, the facts do not necessarily need to indicate an association between the originating web site and the infringing linked-to web page.
The law of contributory infringement is well developed outside of the internet context.  In an music performance case, where a performance promotion association denied oversight of local theater performances, but promoted local performances through marketing and thereby helped create an audience for the performances, the promotion association was liable for contributory and vicarious infringement.80  It was important to the court that the promotion agency, because it produced advertising and other brochures, was in a position to police the conduct of the infringing musicians.  An important distinction to make is that in vicarious copyright infringement, knowledge is unimportant.  Rather, because vicarious liability flows from the legal theory of respondeat superior, the performance promoters' ability to police, control, and benefit from the activity are key factors before the court.
In music promotion case, however, the court also held that the association was a contributory infringer of the copyrighted work.  The court held the performance promotion association was liable for contributory copyright infringement because the Association knew or should have known of the infringing nature of the musical compositions.  Further, the court stated that one who knows or should have known of the primary infringement and "induces, causes or materially contributes to the infringing conduct of another, may be held liable as a 'contributory' infringer."81
Apparently, liability for contributory infringement through internet hyperlinks does not reach beyond the first linked web site.  In a U.S. District court case brought by the photographer and copyright holder of Elizabeth Taylor photographs, the photographer sought to hold J.C. Penny liable for contributory copyright infringement based on "multiple linking" from the companies' website.82  The defendant J.C. Penny promoted an Elizabeth Taylor line of perfume on the JC Penny website, which was hyperlinked to the website of Movie Database, which in turn was hyperlinked to the website of the Swedish University Network ("SUNET").  The SUNET website contained two of plaintiff photographer's copyrighted Elizabeth Taylor photographs.  The plaintiff photographer claimed that J.C. Penny was contributorily infringing on his copyrighted photographs through multiple linking with other sites.  Without elaboration or comment, the District Court granted defendant companies motion to dismiss for failure to state a claim.
 Applying Contributory Infringement theory to tax-exempt organizations, when an exempt organization links to politically partisan material, the organization is acting analagously to a contributory copyright infringer.  Just like the contributory infringer who is held liable by materially contributing to copyright infringement through a hyperlink, so should an exempt organization be held accountable if they knew or should have known of the partisan political content which a web visitor reached via a hyperlink from the organization's web site.

XII.  Analogy to Private Benefit Doctrine

 The Private Benefit legal theory was developed before the internet, but the IRS could easily apply this theory in the context of the internet and hyperlinks.  In American Campaign Academy, the United States Tax Court held that the Academy, by operating as a school to train political campaign workers who then worked exclusively for Republican candidates, conferred a substantial secondary private benefit on the Republican Party and therefore was not operating for exclusively charitable purposes.83   According to the Court, "when an organization permits its net earnings to inure to the benefit of a private shareholder or individual, it transgresses the private inurement prohibition and therefore operates for a nonexempt private purpose."84
In this case, the Academy was developed by an association of Republican members of the United States House of Representatives and funded exclusively by the National Republican Congressional Trust.85  The Academy "does not require that its admissions panel members be affiliated with a particular political party, but [the Academy] believes that a substantial number of the panel members are affiliated with the Republican party."86  Also, there is no required political affiliation of students, but the court notes that the requirement of two political references on its student application effectively allows the admissions panel to deduce the party affiliations of prospective students.
Interestingly, the court found, the "Academy does not train candidates nor participate in, nor intervene [directly] in, any political campaign on behalf of any candidate."87  However, although the Academy operated for the primary educational benefit of its students, it was important that the Academy operated for the secondary benefit of private interests, namely "Republican party entities and candidates."88  The Academy argues that it has absolutely no control of where its' students work after graduation and therefore lacks the ability to control "the conferral of secondary [private, non-charitable] benefits attributable to such employment."89
The tax court dismissed the Academy's lack-of-control argument, stating that the Academy "cites no compelling authority in support of its contention that non-incidental benefits must be controllable by the organization."90  Further, the court states, "[s]econdary benefits which advance a substantial [nonexempt] purpose cannot be construed as incidental to the organization's exempt educational purpose" and therefore the organization is not operating exclusively for charitable purposes.91

XIII. Four Hypothetical Scenarios for Illustration

For Illustration, let's return to the hypothetical at the beginning of this paper.  Remember, you are to imagine yourself as the manager of a hypothetical 501(c)(3) tax-exempt organization ("Organization").  You may recall, the Organization's mission is to promote awareness of environmental issues through environmental education of the public.  The Organization wishes to publish a web site which will contain general environmental educational information available to the public via the Internet.  Further, the Organization's web page will contain hyperlinks to other environmental education websites.  The following situations further describe your Organization's activities.  These four scenarios will help us analyze the legal implications of hyperlinks on your Organization's web site.

Scenario 1:  Hyperlinked Candidate List
The Organization wishes to educate visitors to it's web site during a political campaign by providing a hyperlink to the website of each political candidate.  The Organization lists the hyperlinks in alphabetical order by the candidate's last name.  Further the Organization adds a disclaimer above the hyperlinks stating that the Organization does not endorse any candidate and is providing the links only for the educational benefit of its web visitors.
With any political activity by a tax-exempt organization, it is important to apply the IRS facts and circumstances test.  The facts and circumstances in this scenario, although somewhat different because they are based in the new context of the internet, are very similar Revenue Ruling 86-95.  In Revenue Ruling 86-95, the Service held that an exempt organization would not violate the political prohibition by hosting a nonpartisan political forum.92  In that Ruling, the organization proposed to hold candidate forums in congressional districts during congressional elections and every candidate would be invited and allowed equal opportunity to speak, the moderators would not show bias in questions and would cover a broad range of topics, and the organization would state at the beginning and end of the forum that the organization's hosting of the forum does not constitute endorsement of any candidate.
Similarly, in Scenario 1, the Service would likely hold that the Organization would not violate the political prohibition by acting as a virtual host to what could be characterized as an unbiased political forum during a political campaign.  In this case, the links could be characterized as equally representing the political candidates.  The presentation of the hyperlinks on the Organization's web site would be impartial to each candidate by listing the hyperlinks alphabetically.  Further every candidate's web page would be allowed one hyperlink.  Likewise, the web page would state that providing the links, similar to the in-person political forum's disclaimer, is not an indication of support or opposition to any candidate.
Importantly, each candidate would have control over her web page content, which would ensure a separation between the alignment of the candidates' position and the position of the Organization.  This is similar to the alignment of interest argument addressed in several other contexts, including a college newspaper publication.  In Revenue Ruling 72-513, the Service held that where a University provided faculty advisors and facilities for a student-run campus-newspaper, which expressed political views, the University was not participating in the partisan political activity because of the disalignment of interets between the University and the Student writers.
It is important that the Organization would not be using its' assets for the benefit of any one candidate or party.  In this case, the Organization's asset is the web page and hyperlinks, into which the Organization invested time and money.  Further, the Organization's web page has created an asset in the form of a web viewing audience.  This internet audience is analagous to an IRS publication example which commented on tax-exempt organizations and mailing lists.  There, the Service stated that an organization will not violate the political prohibition by selling or renting its' mailing list if it makes the list available to all candidates on equal terms.  Similarly, in your Organization's case, the Organization would allow each candidate equal access to its' web page viewers by displaying each hyperlink in an equal, unbiased fashion.
One could argue that the web site of an environmental organization could not be as unbiased in presentation compared to an in-person forum hosted by an independent moderator.  However, in Revenue Ruling 80-282, the Service held that even though an organization listed its' views along with the candidates voting record on selected issues, the organization did not breach the political prohibition.  It was important to the Service that the organization did not compare voting records or qualifications for office and did not expressly support or oppose any politician as a candidate.  Therefore, in Scenario 1, the Organization should be wary of conveying any indication of candidate bias on the Organization's web page.  The Organization may wish to post the political hyperlinks on a separate web site in conjunction with an environmental organization with a different political bias in order to preserve the unbiased presentation of the hyperlinks.
To summarize Scenario 1, the facts and circumstances test applies well to this Scenario, even though the Organization's activity takes place in the newer context of the internet hyperlink.  The Service will likely allow the Organization to alphabetically list hyperlinks to political candidates web sites in an unbiased fashion.  In Scenario 1, the Organization wisely chose to make it clear to the web viewers that the hyperlinks do not indicate support or opposition to any candidate, but rather an equal opportunity for each candidate to express themselves to web viewers.

Scenario 2:  (Biased) Hyperlink Candidate List
Similar to Scenario 1, in Scenario 2 the Organization wishes to educate visitors to its' web site during a political campaign by providing a hyperlink to the web site of each political candidate.  However, in Scenario 2, the Organization does not list the candidate hyperlinks in alphabetical order.  Rather, the Organization lists the candidates' hyperlinks according to a ranking system. As a result of the Organization's ranking system, those candidates who have the same views as the Organization are listed nearer to the top of the list.  Those candidates whose environmental views are contrary to the Organization's environmental views are listed further down on the hyperlink list. The hyperlinks are accompanied by a written description of how the Organization regards the environmental stances of the particular candidate, including the environmental voting record of incumbent candidates.
Again, the IRS facts and circumstances test is the starting point of political intervention analysis.  The fourth example in Revenue Ruling 78-248 is similar to the facts and circumstances in Scenario 2.  In that Revenue Ruling, the Service stated that where an exempt organization widely distributed compilation of incumbents' voting records during a political campaign on selected environmental issues important to the exempt organization, the organization has acted in a prohibited political manner.
Similarly, in Scenario 2, the Organization is posting opinions on each candidate's stances on a narrow set of select environmental issues.  The narrow scope of the Organizations' voting record compilations indicates that the Organization may influence the electorate in a prohibited biased fashion on those environmental issues.
The Organization has listed the hyperlinks in a way that indicates and alignment of interests between the top-ranking candidates and the Organization.  In other alignment of interest fact patterns, the Service has ruled that where there is a separation between the alignment of interests, there is no political intervention.  Recall, for example, the case where a university allowed its students to work on political campaigns for two weeks.  The Service ruled that the university was not acting in a prohibited fashion because the alignment of interests was likely different between the students and the university.  Likewise, in a case involving a student run newspaper, where the school supplied support in the form of faculty advisors and facilities, the school was not acting in a prohibited fashion because of the disalignment of political interests between the students and the school.  However, recall that in Branch Ministries, the IRS revoked the tax-exempt status of a church after the church published a full-page ad in two nationally circulated newspapers 4 days before a presidential election.  The ad insisted that one of the candidates held views contrary to Christian Theology.
In Scenario 2, the Organization is clearly aligning its' views with candidates at the top and opposing candidates at the bottom of its' list.  This Scenario is not like the University case where the students volunteered for political campaigns because in that case the students, not the university, had control over the benefit of the activities.  Also, the Students likely had a different alignment of interests than the university. Similarly, this Scenario is not like the case involving the student run newspaper.  In that case, the students likely had a different identity of interests and the school took no steps to editorialize the political content of the publications.  In Scenario 2, unlike the school, the Organization is clearly aligning its' environmental interests with the selected candidates that hold similar views on environmental issues.  Scenario 2 is more like the Branch Ministries case because here, the Organization is aligning its' interests based upon a narrow set of issues and is doing so in a widely distributed format on the internet and was timed to correlate with a political campaign.
Rating candidates is not allowed, even if done in an arguably nonpolitical fashion.  Recall that in Bar of the City of New York, the Bar Association rated judicial candidates based on nonpolitical factors such as professional experience and ability.  However, the court for the Second Circuit noted that a candidate receiving a "not qualified" rating will "derive little comfort from the fact that the rating may have been made in a nonpartisan manner."  In a ranking situation, it seems to matter more that candidates are favored by any criteria, even criteria that is arguably nonpolitical.  Therefore, in Scenario 2, where the Organization is both ranking and commenting on candidates' environmental views, it is clear that the Second Circuit would prohibit such activity.
How could the Organization have changed its hyperlinking activity to eliminate prohibited political intervention?  The Organization should consider the example set forth in Revenue Ruling 86-95, where an organization proposed several candidate forums in congressional voting districts during a congressional campaign.  In that Ruling, the organization was operating a political forum during a campaign, but covered a wide range of topics, not just the issues important to the organization.  Also, an independent panel would moderate each event, ensuring that each candidate followed equitable rules set forth before the forum.  This is much different than Scenario 2, where the Organization clearly is acting as a biased commentator on the hyperlinks to candidates.  Further, in the Revenue Ruling, the organization stated at the beginning and the end of the forum that the Organization is only a sponsor of the forum and such sponsorship should not be interpreted as support or opposition to any candidate.  By favoring candidates through positive comments next to hyperlinks to candidates with like-minded environmental views and locating such candidates' hyperlinks further towards the top of the list, the Organization is acting politically rather than educationally.
It is important to note that anything posted on the web is available to everyone with an internet connection.  Therefore, without some sort of password-protected access, any web publication should be considered wide-scale distribution.  In Revenue Ruling 80-282, the Service noted the importance of wide vs. narrow distribution.  In that Ruling, the Service held that a publication with a narrow issue focus with voting records combined with the Organizations' comments did not violate the political prohibition.  Important to the courts' analysis was the fact that the publication was only distributed to a few thousand readers scattered across the country while the political campaign was local.  Therefore, the impact of the publication would be negligible.  In Scenario 2 however, hyperlinks posted on the internet will reach an unidentifiably large audience across the globe.  Therefore, more information is needed to predict how the Service would characterize the web audience in Scenario 2.

Scenario 3:
The Organization is funded by several wealthy democrats.  In order to please their contributors and ensure future funding, the Organization only hires staff who are registered democrats.  In fact, political affiliation is requested as part of the Organization's employment and volunteer application questionnaires.  The Organization's major activity is to update an organizational web site that educates the public about environmental issues.  The web site often contains links to sites containing politically partisan phrases such as "Democrats care for the environment" and "Conservatives love oil spills".  During elections, the Organization sets up a whole page of hyperlinks to partisan organizations biased toward democratic candidates.
In Scenario 3, application of the facts and circumstances test seems to show prohibited political intervention.  However, it may be more appropriate to apply Private Benefit Theory to this fact pattern.
Again, first we apply facts and circumstances analysis.  In Scenario 3, the hyperlinks connect to political content both year-round and then increase quantitatively during political campaigns.  The facts and circumstances analysis suggests that the Organization is leaning toward political intervention more severely during political campaign times.  The fact that the organization links to partisan political organizations year-round should not mitigate the impact of the campaign-time hyperlinks.  In fact, the year-round hyperlinking to some partisan political content seems to indicate a definite year-round political bias.
 The internet is a unique form of political information distribution because, unlike traditional media which often have a selectively focused distribution towards a city or geographic area, the internet is available to everyone simultaneously.  One possible comparison to a traditional publication is to compare a web page to a nationally distributed national newspaper.  However, it may be important that the web site, unlike a major national newspaper, is probably only viewed by like-minded web visitors.  Therefore, in effect, the Organization is likely focusing the hyperlink's political content not on the public generally but rather on a specific group of environmentalists who visit the Organization's web site.
It could be argued that hyperlinks are unique because, as in this case, the partisan content is not controlled by the Organization.  Rather, the content is controlled by other, possibly totally unrelated, organizations.  However, this situation has similar characteristics when compared to the American Academy, a private benefit theory case.  Recall in that case, the tax-exempt organization was a political campaign management academy.  The school's funding was from all Republican sources, the school's instructors were all Republicans and the students worked for exclusively Republican candidates.  These facts showed that the purpose of the organization was private rather than public.  The Academy operated for the benefit of a private interest, the Republican party, instead of a charitable purpose.
In Scenario 3, likewise, all of the Organization's funding comes from Democratic sources.  All of the workers and volunteers are Democrats, as indicated on the their employment and volunteer questionnaires.  Further, many of the Organizations' web site hyperlinks connect to partisan political information.  These facts indicate that the purpose of the organization is not charitable, but rather political.  Therefore, similar to the school in American Academy, the Organization is not operated exclusively for charitable purposes as required in Section 501(c)(3) and it's tax-exempt status will likely be revoked.

Scenario 4:
The Organization has only been in existence for a few months.  There is a presidential election in 9 months. In order to quickly create an informational web site for the public, the Organization hastily posted a document that contained partisan political content.  The document informed readers that anyone who considers themselves an environmentalist should not vote for a republican in the upcoming election.  The document was widely printed and distributed by web visitors and was brought to the attention of the IRS.  The IRS asked the Organization to remove the partisan content and the Organization quickly removed the document.  Subsequently, the Organization posted a hyperlink on their web site along with a statement that the partisan document was now available at a second organizations' web site via the hyperlink.  The Organization had no connection with the second organization other than the hyperlink.  In fact, the second organization was not aware of the first Organization and was not aware of the hyperlink to their web site.
The facts and circumstances test doesn't seem very effective in Scenario 4.  Even though the Organization would fit squarely into prohibited conduct before they removed the document from their web site, after removing the document and posting the hyperlink, things become more analytically challenging.  In fact, one could argue that after the Organization removed the partisan document, they were not politically partisan at all.  One could continue this argument by stating that the Organization's web visitors, if anyone, were the ones clicking on the link to the partisan document.  Therefore, the Organization could argue, it was not acting in a politically partisan manner.  Fundamental to this argument is the idea of separating the Organization by one step from the partisan political content in order to prevent IRS detection and the chance of losing tax-exempt status.
It is important to note that even though the Organization is not directly posting the prohibited political content, the political effect is not much different when the document is accessed via a hyperlink.  For this reason, the legal theory of contributory copyright infringement is applicable to Scenario 4.  In contributory copyright infringement, an organization knows or should have known of anothers' infringement and yet the organization contributes to or materially aids the infringement.
In Scenario 4, the Organization knew that the partisan document was prohibited.  However, the Organization arguably should have known that the document was prohibited political intervention even from the start, but the Organization definitely knew the document was prohibited after being contacted by the IRS.  By asking the Organization to take the document off of their web site, the Organization was explicitly put on notice that the document contained prohibited political content.  Then, by posting a hypelink to the document and encouraging viewers to visit the linked-to site, the Organization was materially contributing to partisan political intervention.  Therefore, the Organization meets the criteria for liability under the this author's proposed legal theory of Contributory Partisan Political Activity.  Under this proposed analysis, an organization that knowingly, materially contributes to partisan political content will still analytically fall within the 501(C)(3) prohibition of partisan political activity through hyperlinking.

XIV. The Future of Hyperlinking to Partisan Political Content.

Looking towards the future, there are competing interests at stake.  The letter and spirit of the political prohibition of IRC 501(c)(3) organizations needs to be respected and enforced, but balanced with the limited resources available for the IRS to monitor wide-scale web activity.  Further, tax-exempt organizations who are often stretching their resources, will be hard-pressed to diligently monitor the content of each hyperlink on their organization's web site.
 One future possibility is that irregular IRS enforcement of the political prohibition on hyperlinks will lead to some organizations gaming the system.  Some tax-exempt managers will be willing to take more risks and therefore will create many politically partisan links on their organizations' web site.  These managers are risk takers and are willing to risk the remote possibility that the IRS will find out about the partisan political content of their hyperlinks.  Other, more risk-averse managers, who are understandably concerned about losing their organizations' tax-exempt status, will avoid hyperlinks altogether.
Each of these two extremes present policy problems.  The risk-taking organization may well be in violation of the partisan political prohibition, but who's looking?  The IRS would have a very difficult administrative burden in monitoring the constantly changing online environment, consisting of millions of web sites and hyperlinks.  The internet obviously changes much more quickly and easily than traditional newspaper and pamphlet publications.  Therefore, even if the IRS did closely monitor the internet to search for links to prohibited political content, the content may change before anything could be done about it.
It is important, when looking towards the future of political prohibition enforcement, to consider the application of current deterrents to political activity with respect to the context of the hyperlink.  One problem with the current 4955 Statute penalty formula is that it's directly related to the amount spent on political partisan publication.  This tax formula seems destined to be ineffective in deterring tax-exempt organizations and their managers because the cost of linking on a web page are miniscule.  Therefore, this tax formula has no bite and will not effectively deter politically partisan activity.  One possible solution would be to create a new remedy, beyond Section 4955, that could flexibly punish managers proportionately to their political activity without denying an entire organization its tax-exempt status.

XV. What Should Tax-Exempt Organizations Do About Hyperlinks to Political Content.

Every tax-exempt organization with hyperlinks on their web site should institute a policy of hyperlink awareness.  Such a policy would control the creation of hyperlinks on the organization's web site.  Under this policy, before a hyperlink is created, the organization management would evaluate the linked-to page for both current political content and potential for political content.  In this process, the organization should document the content of what visitors will see when they click on hyperlinks and what the likelihood is that political content may be posted on the linked-to site in the future.  Further, the organizations' management would evaluate and document any political bias in the overall presentation of the organizations' hyperlinks.  The nonprofit organization should retain this documentation of linked site content and evaluation procedure for future use as a defense to accusations of politically partisan activity.
 In order to aid tax-exempt organization's compliance with the political prohibition, the IRS should publish more examples of acceptable and prohibited activity in the internet, and specifically the hyperlink, context.  To this author's knowledge, the IRS has not published any guidance in the area of political intervention through internet hyperlinks.  Three years after IRS Announcement 2000-84, the IRS would do well to publish some guidance for the benefit of the tax-exempt community.
Obviously, the facts and circumstances test will continue to be a mainstay of the political prohibition analysis.  However, since the context of the internet hyperlinks presents such new and different analytical problems, the IRS may wish to consider other analytical frameworks in the hyperlink context, including the Private Benefit analysis and the Contributory Partisan Political Activity analysis, suggested in this paper.
Further, although the IRS facts and circumstances test does not currently contain a safe harbor provision, it may be useful to create a safe harbor in the hyperlink context.  Since there is an important public policy argument for helping nonprofit organizations educate the public about charitable and political issues, it is important that future IRS enforcement of the political prohibition does not stop risk-averse organizations from posting educational hyperlinks from fear of losing their tax-exempt status.
 What would an IRS safe harbor for hyperlinks look like?  In order to qualify for a political hyperlink safe harbor, the tax-exempt organization should be required, in their application for tax-exempt status, to agree to implement an organizational hyperlink policy.  The hyperlink policy would be enforced by management and contain provisions requiring the organization to, first, evaluate each hyperlink for political content and document that procedure, and second, evaluate and document the overall presentation of all hyperlinks to political content.  In cases where an organization's web page contains more than 100 links, the organization could be allowed to bypass evaluating each individual link and only evaluate the overall presentation of linking to political content.  Therefore, organizations that have a large number of links would not be forced into an overly detailed administrative burden.
 What would be the benefit of a safe harbor for political content?  The safe harbor provision would benefit both tax-exempt organizations and the IRS.  Tax-exempt organizations would have relative security in knowing that they would not lose their exempt status because of hyperlinks to political content from their web site.  The IRS would benefit because the safe harbor would lessen its' administrative burden.  Cases involving less severe political intervention would not need to be prosecuted if they were covered by the safe harbor, making hyperlinking to political content cases less administratively burdensome.
 
 
 

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