The "527" fuss explained.(Opinion)(tax, finance implications for political organizations )

For much of this election cycle, controversy has swirled around the rise of a new class of organizations that now operate in the political world, the so-called 527 groups. Some politicos condemn them; others defend them. Many consultants and operatives want to form them, see them formed, or think they do.

But what exactly are 527s, what is the controversy about and what is the state of play? What follows is a brief primer. (Disclosure: our law firm represents Democratic party committees and 527 groups.)

What is a section 527 group anyway?

Section 527 is actually the section of the Internal Revenue code that allows all partisan political organizations to take contributions without paying taxes on them, to the extent the money is used on political purposes. Technically, every political committee at any level--from the Republican National Committee (RNC) or Kerry for President or Jones for dogcatcher--is a section 527 organization.

In the current vernacular, it is used to refer to groups that are political organizations for federal tax purposes but not under campaign finance laws, particularly federal campaign finance laws. And if such an organization is not a political committee for purposes of federal campaign finance laws, there is basically no legal …