IRS gift tax move could hit new anonymous groups

Source: Politico

POLITICO
Ben Smith
IRS gift tax move could hit new anonymous groups

May 10, 2011


The Internal Revenue Service appears to have begun to enforce a tax on gifts to the non-profit organizations that were a key vehicle for anonymous politics in the last five years and had promised to play a large role in the presidential cycle, a move which could reshape the place of money in politics in 2012.

"It appears that the IRS Estate and Gift Tax team has also started paying attention to 501(c)(4) organizations," a Los Angeles tax lawyer who has followed the issue closely, Ofer Lion, wrote in a memo to clients today.

Gifts to other political organizations are not taxable under federal law, and lawyers informally say many donors do not typically pay the gift tax -- which may run as high as 35%, mirroring income tax rates -- for contributions to 501(c)4s.

The IRS focus would only apply to quite large donors: the first $13,000 annually are exempt. The rest of the contributions, however, reduce a donor's lifetime tax exemption, which stands currently at $5 million but stands to drop to $1 million in 2013, a fact which would mean a donor's heirs lose substantially more to estate taxes, including potentially a "clawback" of money that's already been given away back into the taxable estate.

Read more: http://www.politico.com/blogs/bensmith/0511/IRS_gift_tax_move_could_hit_new_anonymous_groups.html

A potential trap for contributors. If they go to court to fight the taxation on anonymous gifts they will lose their anonymity. If they don't want to fight so that they maintain their anonymity they will have to pay the tax.


LMAO

I suppose that with enough money they will find a way around both potential downsides of it. Best of both worlds would be that some of these big spenders decide its worth loosing anonymity to challenge it in court, and then lose the battle and have to pay their taxes anyway. But hell. Any slowing or reconsidering of the massive cash flowing into politics is well worth the try.

They were supposed to start up in time for the 2012 election.

and they probably don't feel so much of a need to be anonymous.

for being in the pockets of ferriners. Granted, its xenophobic but should be quite effective.