I.R.S. Begins Enforcing Rule on Gifts to Political Nonprofits ...

Th? Domestic Revenue Benefit h?? sent letters t? ?t ????t half a dozen major donors t? such groups, informing th?m th?t th?? ?h???? h??? reported th??r contributions ?? taxable gifts.

Th??? groups h??? b??n drawing more ?n? more evaluation, fr?m President Obama ?? well ?? others, ?? th?? h??? proliferated ?n? funneled vast sums ?f cash ?n support ?f campaigns ?n? causes, without having t? freely t??? th??r donors. During th? midterm sequence, f?r example, groups ??k? Crossroads GPS, wh??h h?? ties t? th? Republican strategist Karl Rove, ?n? Americans f?r Prosperity, backed b? Mr. Koch ?n? h?? brother Charles, w?r? heavily involved ?n politicking, spurring campaign finance watchdogs t? nag th?t th?? w?r? largely unregulated ?n? flouting election ?n? nonprofit laws.

Th? organizations ?n q???t??n w?r? established ?? nonprofit corporations under a section ?f th? tax law, 501(c)(4), ?n? th? rules governing th?m ??? th??r primary purpose ??nn?t b? political. Unlike contributions t? charities, b?t, donations t? th??? groups h??? always b??n subject t? a gift tax. B?t tax experts ?n? campaign finance experts ??? th? I.R.S. h?? n?t enforced th?t rule, ?n anticipation ?f now.

Th? timing ?f th? agency?s moves, ?? th? 2012 election sequence gets under way, ?? prompting ??m? tax law ?n? campaign finance experts t? q???t??n whether th? I.R.S. ????? b? sending a signal ?b??t h??? campaign donations t? th??? groups ?n ?n effort t? curtail th?m.

?Th?r? ?r? a whole heck ?f a lot ?f public misusing (c)(4) groups ?? a means ?f being paid around campaign finance regulations, ?n? w? lack a coherent system ?f laws t? deal w?th th?t,? ???? Donald B. Tobin, a legal expert ?n th? intersection ?f campaign finance ?n? tax laws ?t th? Moritz College ?f Law ?t Ohio State University. ?Now here?s a stick, frankly, th?t ???? th?r? ?r? consequences f?r doing th?t.?

Th? extent ?f th? agency?s inquiries w?? n?t known, n?r w?? ?t known whether Obama administration officials w?r? involved ?n initiating th? I.R.S. actions. Th? Colorless House w???? n?t note, n?r w???? th? I.R.S.

? If th? I.R.S. enforces th? tax rule broadly, experts ?r? sensing th?t ?t ????? act ?? a counterweight t? tamp down donations ?n one side, ?? another anticipated set ?f h??? corporate, union ?n? ??k?-minded political contributions flood campaigns through th? barriers lifted b? last year?s Supreme Instigate ruling ?n th? Citizens United case.

Both major political parties ?n? candidates h??? benefited fr?m th??? types ?f organizations, b?t th? Republican groups grew ?n force ?n? size ?ft?r th? 2008 election, partly ?n recognition ?f Mr. Obama?s proficiency ?t fund-raising. F?r example, Mr. Rove?s group, one ?f th? best known fr?m th? 2010 midterm sequence, raised $70 million. Americans f?r Prosperity, a libertarian group th?t provides a training ground f?r Tea H??? fun activists ?n? ?? opposed t? many ?f President Obama?s policies, h?? b??n generously financed b? David Koch, a billionaire.

B?t Democrats h??? embraced th? model, t??. Bill Burton, Mr. Obama?s former deputy press secretary, h?? b??n skewered b? critics ?f th??? groups f?r announcing last month th? creation ?f Priorities USA Action t? h??? Democrats. In 2009 ?n? 2010, Mr. Soros, th? billionaire shareholder, donated more th?n $12 million t? advocacy groups effective ?n a variety ?f issues.

Whether Mr. Soros ?n? ?th?r prominent donors h??? paid taxes ?n th??r contributions t? such groups ?? unknown. A spokesman f?r Mr. Soros declined t? note. Representatives ?f th? Kochs ??? n?t respond.

In general, individuals incur gift taxes ?f 35 percent ?n ?n? amount exceeding $13,000 ?n a single year, wh??? couples h??? t? pay taxes ?ft?r donating $26,000. Currently, th?r? ?? a lifetime exemption th?t covers $5 million ?n gifts ? wh??h ?? scheduled t? b? ??t-rate t? $1 million ?n 2013 ? b?t tax experts ??? many wealthy donors ?r? ??k??? t? h??? already used th?t benefit ?n th??r estate plans.

Th? I.R.S. definitively declared th??? gifts taxable ?n 1982, b?t th?t rule h?? rarely b??n enforced, tax lawyers ????. ?Th?t w?? th??r last word ?n ?t, ?? th??? letters ???t look ??k? a sort ?f trap f?r th? unwary, wh??h ?? n?t h?n??t,? ???? Ofer Lion, a lawyer wh? h?? written ?b??t th? issue.

Last December, ?ft?r th? 2010 midterm elections, th? I.R.S. rift th?t oversees tax-exempt organizations ??? ??? th?t th?? year ?t w???? pay q???k?r concentration t? th?m ?n? t? labor unions ?n? business associations ??k? th? U.S. Chamber ?f Commerce, wh??h ???? w?r? more politically active th?n ?n th? past.

B?t officials ?f th?t rift wh? attended a assembly ?f th? American Bar Association?s subcommittee ?n political ?n? lobbying organizations last Friday w?r? surprised t? find out th?t th??r colleagues ?n th? estate ?n? gift tax unit, typically regarded ?? a backwater ?t th? agency, ???? h?? ?n increased interest, according t? lawyers wh? w?r? th?r?.

?I don?t know h?w extensive th?? effort ??, b?t I h??? one such client ?n? I?ve spoken w?th others w?th clients wh? h??? received similar letters,? ???? Gregory L. Colvin, a lawyer specializing ?n nonprofit law. Ellen P. Aprill, a law professor ?t Loyola Law School ?n Los Angeles, noted th?t th? gift tax rift ???? h?? b??n asking states t? provide records ?f property transfers between family members. ?It ????? ???t b? ??rt ?f a general enforcement ?f th? gift tax th?t ?? transmittable ??m? ?f th??? donors,? Ms. Aprill ????.

Oth?r groups rarely entice gifts h??? enough t? subject th??r donors t? th? gift tax, wh??h ?? wh? many ?f th?m h??? established affiliated charities. Charities, unlike nearly ??? ?th?r tax-exempt organizations, offer th??r donors a tax deduction ?n? ?? attract th? ??r???t gifts.

H??? donations t? a previously well ????? category, th? largely unregulated 527 groups th?t w?r? influential ?n th? 2004 election sequence, ?r? n?t subject t? th? gift tax. ?Congress specifically exempted donors t? 527 organizations fr?m th? gift tax ?n 2000, b?t ?t didn?t exempt contributions t? (c)(4) groups b?????? th?r? wasn?t ?n issue ?t th? time,? ???? Alan P. Dye, a lawyer wh? represents a number ?f conservative advocacy groups. ?Citizens United h?? now m??? ?t ?n issue, ?n? I r??k?n ?t?s going t? b? really f????n?t?n? t? see h?w th?? plays out ?n Congress ?r th? courts.?

In th? meantime, Marcus S. Owens, a lawyer wh? represents nonprofits ?n? wh? formerly headed th? I.R.S. rift th?t oversees tax-exempt organizations, predicted th?t th? tax agency?s moves w???? b? watched warily b? contributors. ?Th? lack ?f clarity ?n? th? th? makings f?r n?t-insignificant taxation ?n th??? gifts w??? cause many ?f th? ??r???t donors t? r??k?n twice,? h? warned.

Article source: http://feeds.nytimes.com/click.phdo?i=24cd5ad4f1075ab9177ee819003e9c9c

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