Last Tuesday (6/21/11), an article in the Washington Times alleged that Media Matters is improperly receiving tax-exempt status. I not going to pretend to be an expert in tax-exempt statuses as said Ellen at Newhounds when discussing this story. I'm just going to offer my observations about this complaint against Media Matters.
Is Media Matters legally tax exempt under 501(c)(3)?
From the IRS
To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes. None of its earnings may inure to any private shareholder or individual. It may not be an action organization- not attempt to influence legislation or participate in any campaign for or against political candidates. Organizations under 501(c)(3) are also known as charitable organizations. Organizations described in 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with Code section 170. The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization's net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction. 501(c)(3) organizations are restricted in how much political and legislative (lobbying) activities they may conduct. See Political and Lobbying Activities, Lobbying Issues
So it seems to me that yes Media Matters is legally tax-exempt under 501(c)(3) as they say on their site.
"What the news coverage has ignored is his use of tax-free funds for his organization, Media Matters for America (MMA), for these attacks — a form of government support for activities that clearly do not merit tax-exempt status and that as a result infringe on Fox News’ First Amendment rights."-Washington Times June 21, 2011
C. Boyden Gray claims that's not what 501(c)(3) allows.
You know who else is tax exempt under 501(c)(3)? The Media Research Center! That's right! They're the ones who own NewsBusters: Exposing and Combating Liberal Media Bias. The MRC's stated mission is to educate the public and media on bias in the media. Whereas MM is dedicated to comprehensively monitoring, analyzing, and correcting conservative misinformation in the U.S. media. So what's the difference between the two? I'd like to ask Gray. Both have the right to watch and criticize whoever they want.
"Gray’s appearance on The O’Reilly Factor last night (6/23/11) was nothing less than a thinly-veiled effort to get a viewer to file a complaint against Media Matters with the IRS".- News Hounds
Really this is as stupid as the red scare the right wing through out there over President Obama appointing "Czars"