Legal Basis for Complaints

Understanding the federal and state laws that Turning Point USA allegedly violates

Federal Law: IRC Section 501(c)(3)

Absolute Prohibition: Political Campaign Intervention

A 501(c)(3) organization is absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office.

This prohibition includes:

Endorsing or opposing candidates for elected office
Making contributions to political campaigns or candidates
Organizing or sponsoring campaign events
Distributing materials that explicitly support or oppose candidates
Using organizational resources (staff time, funds, facilities) for campaign activities

Substantial Lobbying Limitation

A 501(c)(3) may engage in some lobbying (attempting to influence legislation), but this activity cannot constitute a substantial part of the organization overall activities.

The IRS uses a two-part test:

1. Expenditure Test: Organizations with gross receipts exceeding $500,000 can spend up to 20% of their first $500,000 in gross receipts on lobbying, declining percentages on additional amounts, with a cap of $1 million per year.

2. Substantial Part Test: For organizations not electing the expenditure test, lobbying cannot constitute a substantial part of overall activities (typically interpreted as more than 5-10%).

Penalties for Violation

•Excise Tax: 10% tax on the organization and 2.5% tax on managers who knowingly participate in prohibited activity
•Loss of Tax-Exempt Status: Revocation of 501(c)(3) status if violations are substantial and willful
•Criminal Prosecution: Potential criminal charges for fraud or embezzlement if funds are misappropriated

Arizona Law: Proposition 211 and Fiduciary Duty

Voters Right to Know Act (Proposition 211)

Arizona voters approved Proposition 211 in 2022, establishing the nation most comprehensive campaign spending disclosure law. The law requires covered persons (including nonprofits) spending over $50,000 on statewide campaigns or $25,000 on local campaigns to disclose the original source of donations exceeding $5,000.

Key Provisions:

Nonprofits engaging in campaign media spending must file disclosure reports with the Arizona Secretary of State
Campaign media spending includes paid advertisements, direct mail, and other communications that promote or oppose candidates or ballot measures
Failure to disclose dark money sources violates Arizona law and can result in enforcement action by the Arizona Citizens Clean Elections Commission (CCEC)

Arizona Nonprofit Fiduciary Duty

Arizona law requires nonprofit boards to act in the best interests of the organization and its charitable mission. Violations include:

•Misappropriation of charitable assets for political purposes
•Self-dealing or conflicts of interest
•Failure to maintain adequate governance and oversight

Next Steps

Now that you understand the legal basis for complaints, you are ready to file. Choose the complaint channel that best fits the violation:

File IRS Complaint File State Complaint