Federal District Court Issues Opinion Finding IRS 501(c)(4) Political Activity Standard Unconstitutionally Vague
By: Andrew D. Watkins and Rebecca Layne
On September 30, 2025, the United States District Court for the District of Columbia issued an opinion in Freedom Path, Inc., v. Internal Revenue Service, et al., holding that the IRS’s standards for determining whether a section 501(c)(4) organization has engaged in an impermissible amount of political activity are unconstitutionally vague.
Organizations operating under section 501(c)(4) have long been permitted to engage in a limited amount of political activity. However, the IRS has never issued clear guidance on the precise amount of political activity that is permissible, or what activities qualify as “political” under the IRS’s multi-factored facts and circumstances analysis. In Freedom Path, the D.C. District Court found the agency’s lack of clear standards to be unconstitutionally vague. The Court also rejected alternative standards proposed by the litigants. The Court ordered additional briefing in the case on a constitutionally permissible standard to apply to decide the question of Freedom Path’s exempt status.
The Court’s opinion is likely to draw media attention and speculation about the impact of the decision. At this time, however, it is premature to draw any final conclusions. The court’s decision is limited to the parties in the case, and litigation over a constitutionally permissible standard for considering section 501(c)(4) organizations’ political activities is ongoing. We will continue to monitor developments in this case and provide updates on any new standard the Court or IRS adopt that may apply to tax-exempt organizations.
