(Source: Detroit Free Press)
By Todd Spangler, Detroit Free Press
June 15--WASHINGTON -- U.S. Rep. Dave Camp of Midland -- chairman of the House's top tax-writing committee -- wants to know why the Internal Revenue Service is suddenly looking at donations to nonprofit groups and whether they run afoul of the federal gift tax.
The IRS revealed last month that it had sent letters to five such donors to 501(c)(4) organizations of a type that, in recent years, has become known for putting millions of dollars into political advertisements. The IRS, which didn't reveal the names of the donors or the organizations they donated to, is investigating whether those donations should fall under the rules for paying gift taxes, which can cost the donor 35% of the amount of the gift above a $13,000 exclusion.
While gifts to more traditional political organizations don't fall under the gift tax, those to 501(c)(4) groups, which are organized as social welfare groups allowed to engage in some political activities while retaining a nonprofit status, may be. But before last month's letters to donors, it wasn't a question the IRS appeared to be in any hurry to resolve.
Camp, in his note to the IRS made public today, said this abrupt interest in enforcing the gift tax appears aimed at targeting a certain kind of nonprofit donor -- think the industrialist Koch brothers who have given huge sums to conservative groups or George Soros, the financier who has similarly funded liberal ones.
"Every aspect of this tax investigation, from the timing to the sudden reversal of nearly 30 years of IRS practice, strongly suggests that the IRS is targeting constitutionally protected political speech," Camp said today. "The IRS must explain its actions or risk creating a chilling effect that threatens not only political advocacy groups, but all tax-exempt organizations that depend on contributions from individual donors."
As chairman of the committee that oversees the IRS, he asked for a detailed explanation of what led the IRS to undertake this investigation now and how many employees are engaged in it, as well as the criteria the agency uses to decide who to investigation for potential violation of the gift tax.
The IRS is expected to begin providing the materials to Camp this month, his office said.
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