Paul L. Caron
Dean


Thursday, May 19, 2011

GOP Questions IRS on Applying Gift Tax to Contributions to 501(c)(4) Groups

Senate Logo Six Republican members of the Senate Finance Committee have sent this letter to Commissioner Douglas Shulman, questioning the IRS's recent efforts to subject contributions to 504(c)(4) organizations to the gift tax:

To ensure that we fully understand the process that led to the IRS decision to enforce the gift tax in these instances, we respectfully request that you provide us with the following information:

1) The names of any individuals at the IRS who contributed to the decision to enforce the gift tax against contributions to 501(c)(4) organizations, as well as the names of any other federal officials outside of the IRS that you had any discussions with regarding this decision.

2) Any correspondence (including phone logs, emails, written notes, or electronic documents) generated with respect to the decision to enforce the gift tax against contributions to 501(c)(4) organizations, including correspondence between IRS employees (including both career employees and political appointees), or between or among the IRS, the Department of the Treasury, the Office of the White House Counsel, the Office of the White House Press Secretary, the Office of White House Political Affairs, and the Executive Office of the President.

3) Any correspondence (including phone logs, emails, written notes, or electronic documents) generated with respect to the proposed executive order requiring disclosure of political contributions by potential government contractors, or enforcement actions against 501(c)(4) organizations by the Securities and Exchange Commission, the Federal Communications Commission, and the Federal Election Commission.  Please include correspondence between IRS employees (including both career employees and political appointees), or between or among the IRS, the Department of the Treasury, the Securities and Exchange Commission, the Federal Communications Commission, the Federal Election Commission, the Office of the White House Counsel, the Office of the White House Press Secretary, the Office of White House Political Affairs, and the Executive Office of the President.

4) Any analysis generated, requested, or obtained by IRS regarding the First Amendment implications of applying the gift tax to 501(c)(4) contributions.

Press and blogosphere coverage:

Prior TaxProf Blog coverage:

https://taxprof.typepad.com/taxprof_blog/2011/05/gop-wants-.html

Tax | Permalink

TrackBack URL for this entry:

https://www.typepad.com/services/trackback/6a00d8341c4eab53ef01538e920ba9970b

Listed below are links to weblogs that reference GOP Questions IRS on Applying Gift Tax to Contributions to 501(c)(4) Groups:

» Can political contributions really be taxable gifts? from Roth & Company, P.C.
The IRS has stirred up the controversy over political finance by launching examinations to determine whether donors should pay gift... [Read More]

Tracked on May 19, 2011 8:52:48 AM

» Can political contributions really be taxable gifts? from Roth & Company, P.C.
The IRS has stirred up the controversy over political finance by launching examinations to determine whether donors should pay gift... [Read More]

Tracked on May 19, 2011 9:19:57 AM

Comments

REally?

Posted by: Greg | May 19, 2011 5:01:17 AM

Letters - whatta waste of time.

Bi-monthly or monthly meetings, "What mischief are you getting into now?"

Posted by: Sandy P. | May 19, 2011 6:13:43 AM

Prior to the passage of 2501(a)(4), which exempted contributions to political organizations (as defined in 527(e)(1)),there was considerable dispute as to whether gifts to political parties or candidate organizations were taxable gifts. The IRS steadfastly took the position that such gifts were taxed as gifts. It took the Fifth Circuit to end it all in its decision in the Stern case (436 F.2d 327) in 1971. The court in an exercise taht can only be described as "legal realism" ruled that no gift was present as the alleged donor was a wealthy individual who in return for her gift was getting a candidate who would represent her financial interests. This honest characterization of campaign contributions was too much for Congress to bear and they responded with the above section. Perhaps the same defense can be made here by the donors who are worried about being taxed.

Posted by: Bill | May 19, 2011 10:57:52 AM

Oh, by the way, for those who are worried about political motives of the Obama administration on this issue, it was the Eisenhower administration which first sought to tax gifts to political parties and candidates as gifts. See, Rev. Rul 59-57. But then again we all know that poor old Ike would have been run off by the Tea Party crowd to a distant land where he could join Ronald Reagan whose stance on immigration alone would have made him persona non grata.

Posted by: Bill | May 19, 2011 11:05:48 AM

i am shocked that politicians are trying to protect their donors and the amounts of the donations they receive from public view. 501(c)(4) is that mechanism, something 527 was supposed to prevent (all contributions and amounts are public info).

i mean, we all know that a politician's sole purpose in life is to get re-elected (or get elected to a higher position), but no matter how bad the info would be, the same would be true of your opponent. so i fail to see why Congress really cares. both candidates will have unpopular donations. there will be not chaste monks running against you. so red will be red and blue will be blue even if you disclose who is who.

Posted by: tax guy | May 19, 2011 5:43:49 PM