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House Gift Tax Bill Seen as Guarding Against IRS Targeting

By    |   Thursday, 16 Apr 2015 10:39 PM

Legislation passed quietly by the House on Wednesday to shield large donors from paying gift taxes on contributions to certain political groups was seen by conservatives as a way to prevent the IRS from targeting tea party and related organizations.

"If the law is clear, everyone knows what the rules are and can follow them, and I think that’s a better situation," Elizabeth Kingsley, an attorney at the Harmon, Curran, Spielberg & Eisenberg law firm, told Politico.

Kingsley was among a group of conservative and liberal nonprofits and lawyers who sent a letter to House lawmakers supporting the bill.

The letter argued that "application of the gift tax to 501(c)(4) donors raises serious constitutional questions, and threatens to hamstring smaller or start-up citizens’ groups," Politico reports.

Kingsley said the bill equalized the playing field for donors, since the vagueness of the current law impeded cautious donors — and aided those who were more comfortable with making larger donations, according to the report.

Proposed by Illinois Rep. Peter Roskam, the Republican chairman of a House subcommittee that oversees the IRS, the bill specifically state that the federal gift tax does not apply to groups registered under sections 501(c)4, (c)5 or (c)6 of the tax code.

The classifications encompass a broad range of both liberal and conservative groups, Politico reports.

Those supporting Republican causes include the Karl Rove-backed Crossroads GPS, and the Freedom Partners Chamber of Commerce and Americans for Prosperity, both of which were founded by industrialists Charles and David Koch.

The NextGen Climate group, founded by liberal environmentalist Tom Steyer; the George Soros-funded Media Matters for America — along with many large labor unions — would also be affected by the legislation.

The 501 groups are not required to disclose their donors to the IRS. The legislation would not affect party or campaign committees or political action groups. Those are required to disclose their donors and contribution amounts.

Roskam's bill received bipartisan support and passed on a voice vote, according to Politico. The approval sent the bill to the Senate.

While most large donors do not pay taxes on their contributions to the groups, the existing law was not clear on whether gift taxes would be assessed, Politico reports. That raised fears of investigations by the IRS, fundraising sources said.

"The bill codifies existing IRS practice," said a spokesman for Michigan Rep. Sander Levin, the top Democrat on the House Ways and Means Committee, told Politico. "Right now, for contributions to 501(c)(3)s and 527s, the gift tax does not apply, and there is a moratorium applied to the gift tax on 501(c)(4) donations."

Other Democrats railed against the bill — telling Politico that it would give such groups truly unfettered access to and influence in political campaigns — but conservative groups saw it as a way to guard against IRS targeting.

A 2011 gift-tax probe by the agency involved Freedom's Watch, a conservative group founded in 2007 by Las Vegas casino mogul Sheldon Adelson that supported President George W. Bush’s military surge in Iraq, The Wall Street Journal reports.

James Davis, a Freedom Partners spokesman, told Politico that the bill "would prevent political targeting by the federal government, which is a response to the very real threat we’ve witnessed over the past few years.

"Regardless of political affiliation, Americans are rightly concerned about partisan-Washington bureaucrats targeting and penalizing individuals due to their beliefs," he said.

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Legislation passed quietly by the House on Wednesday to shield large donors from paying gift taxes on contributions to certain political groups was seen by conservatives as a way to prevent the IRS from targeting tea party and related organizations.
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2015-39-16
Thursday, 16 Apr 2015 10:39 PM
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