I.R.S. Moves to Tax Gifts to Groups Active in Politics

Source: NY Times

Big donors like David H. Koch and George Soros may owe taxes on their millions of dollars in contributions to nonprofit advocacy groups that are playing an increasing role in American politics.

The Internal Revenue Service confirmed on Thursday that it had sent letters to five donors, who were not identified, informing them that their contributions may be subject to gift taxes.

These groups have been drawing more and more criticism, from President Obama as well as others, as they have proliferated and funneled vast sums of money in support of campaigns and causes, without having to publicly disclose their donors. During the midterm cycle, for example, groups like Crossroads GPS, which has ties to the Republican strategist Karl Rove, and Americans for Prosperity, backed by Mr. Koch and his brother Charles, were heavily involved in politicking, spurring campaign finance watchdogs to complain that they were largely unregulated and flouting election and nonprofit laws.

The organizations in question were established as nonprofit corporations under a section of the tax law, 501(c)(4), and the rules governing them say their primary purpose cannot be political. Unlike contributions to charities, however, donations to these groups have always been subject to a gift tax. But tax experts and campaign finance experts say the I.R.S. had not enforced that rule, until now.



Read more: http://www.nytimes.com/2011/05/13/business/13gift.html?_r=1&hp

Isn't usually the recipient of a donation that owes taxes?

The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.

The gift tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.

http://www.irs.gov/businesses/small/article/0,,id=164872,00.html

:shrug:

Talk about short circuiting the "Citizens United" decision. The IRS is pulling the covers off these "Shadow Groups" (google Karl Rove's Crossroads GPS group) back room deals.... and I like it.

the fact is it has to be stopped regardless who is doing it.
Now if the IRS could only find a way tax the news media for supporting specific candidates and or parties like some of them have been doing but then there is that dang first amendment issue.

on "issues" as a means at backdoor attacks against people in office or running for office then ya I would assume so, if you are gifting money to a hospital to build a new wing or something then no the IRS probably wont be wanting its fair share.

35%.

The person doing the giving pays it.

It's difficult to enforce.

is $5,000,000. Thus, any amount over the $5 million is taxed.

However, an individual can give up to $13,000 a year to a single individual without it counting towards the $5,000,000 limit.

So, if the Koch brothers have given millions of dollars in gifts to these organizations, they are considered "taxable gifts" and thus those amounts apply to the $5 million limit.

Basically, the first $5 million can be given away without any gift tax consequences. The amounts above that are taxed at 35% (I think).

Of course, good tax planners can construct ways in which gift/estate amounts that are much higher than $5 million can escape taxes.



Notice: this is not intended to be tax law advice.

They thought they had a free ride.

The dreaded IRS coming after these bastards! Yeah I know that would presumably include George Soros-types, but there are so vastly many more of his ilk on the side of the bad guys. Many more of THEM to get hurt by this. Which would be fine with me.

which they probably won't

Tax ANY churches (including mine - Catholic) if they do any politicking. Because to do that, they should have to pay for the privilege. Otherwise, they should get OUT of politics.

IRS Investigating Donors To Political Nonprofits
by The Associated Press

May 13, 2011 The Internal Revenue Service is investigating five donors for making contributions to the kind of nonprofit groups that have become popular for spending millions of dollars on political ads in the past few years.

The IRS is trying to determine whether the donors owe federal gift taxes for the donations, an agency spokeswoman said Thursday.

The IRS did not name the donors or the nonprofit groups to which they contributed. But the agency's confirmation of an investigation could have a chilling effect on politically active groups that have become integral to campaigns for Congress and could play a big part in the 2012 presidential election.

At issue is whether contributors to the tax-exempt organizations — many of them donate in six and seven figures — have to pay the 35 percent gift tax on their donations. It is a murky area of the law and the IRS has offered little guidance.

More:
http://www.npr.org/2011/05/13/136263289/irs-investigating-donors-to-political-nonprofits

politicking.

Meh, I'm dreaming. No Democrat or Republican is going to touch that.

not "gifts"

Gifters = Grifters

tax 'em

yup

if it's retroactive even better