E-mail updates
Follow on Twitter
Subscribe to RSSThe Internal Revenue Service is ramping up its enforcement of a tax-code provision that requires donors to pay a "gift tax" on political contributions to 501(c)4 groups. As the New York Times reported earlier today, the IRS sent letters to five donors, advising them their contributions to political advocacy groups -- like Karl Rove's Crossroads GPS -- may be subject to gift taxes.
Though the IRS has shied away from enforcing gift taxes in the past, the tax enforcement agency intends to argue political contributions to these groups are not charitable contributions -- and are thus taxable. The language explaining the difference between "charitable contributions" and gifts" is laid out in section 170(c) of the Internal Revenue Code. In IRC 170(c), the government says donations to a "corporation, trust, fund, or foundation" do not qualify as a charitable contribution if they use that money to support "any political campaign on behalf of (or in opposition to) any candidate for office."
Unlike so-called 527 groups, which Congress exempted from restrictions limiting political activity in 2000, 501(c)4 groups are considered "social welfare organization. While the IRS permits 501(c)4 organizations to engage in both lobbying and political campaigning, the latter cannot be their primary focus. So despite their 501(c)4 status, the political activity of groups such as Crossroads and the newly formed Democratic "Priorities USA Action" fall outside the definition of entities allowed to receive a "charitable contribution."
The strict enforcement of these provisions could mean donors like Donors like David H. Koch and Hollywood producer Jeffrey Katzenberg would owe hundreds of thousands in taxes to the IRS. Section 2503(b) of the tax code provides that each donor can give $13,000 without that money being factored in the taxable gift computation. But beyond this, any gift is theoretically taxable. Just how much money donors owe would depend on the gift tax rate, determined by the IRS, and how far back the IRS will look into donor tax records. The maximum tax rate is 35% on taxable gifts.
Leave a Comment:
I just don't think that the wealthy donors to Karl Rove's Crossroads GPS really care about the consequences of a gift tax. Pocket change to his friends.
Oh m, now this is really going to be good.
Talk about unintended consequences - just wait and see how this effects a wide range of "regular" charities.
Silly rabbits will never learn to stop playing politics with the tax code.
And don't worry your pretty little heads about the Kochs, Soros [ah, feels good don't it DBO?, yeah it does] or whomever else - their tax attorneys will crush the IRS. They always do and they always will.
A great tax attorney is ALWAYS worth his/her weight in gold. :)
I say tax'em all. Make taxes so punishing on political contributions either directly to candidates or to parties or to party related groups that the money dries up and politicians have to run solely on public funds. Take the money out of the game.
What a novel concept! lol
I agree with you 110%
Spanky. I know attorneys like to rationalize the line from Shakespeare's King Henry the VI, about killing all lawyers. Personally I think that is a little extreme, but I understand the frustration.
Tax each and everyone of them regardless of party. Maybe we can then get some of the money out of politics. I suspect the super rich will still contribute though. Their bean counters will net it out and maybe, even if paying taxes on their contribution, shows a profit by getting certain politicians in their corner they will do just that anyway.
Should be interesting to see how this one pans out.
Its cool Pat - everybody hates lawyers.
Until they need one. :)
Me, I'm not into rationalization - it don't pay the bills. You know what does? Clean living. Oh Yeah. I know my boy Drive By would agree, but he clocked out anbout an hour ago. Go for you Drive!
But hey, there's our man Navy, Mr. "you are a big old nasty bigot if you don't agree with me." Oh and look-y there, Navy's a-calling for more taxes.
Golly, poor old Navy, reduced to a caricature of a stereotype. So sad.
Keep on keeping on Navy. And do enjoy that government pension. :(
Dang Spanky, personally attacking a dude that not only didn't attack you but didn't even mention you? Not cool.
That's how the little critter 'troll' rolls!
First Read is his own personal 'Fantasy Island' where he can be anything he dreams of!
Spunky graduated from troll college with honors! ;o)
Who's playing with the tax code? Karl Rove, maybe. And George Soros, possibly. And the Koch brothers, too. The IRS Code is what it is, but some of these folks think they're above the law.
As a "rule of law" guy yourself, Spanky, this should REALLY ring your chimes. The fact that it does not is VERY telling about you.
I guess the rule of law only matters when it's YOUR rule of law.
Spanky-
A great tax attorney is ALWAYS worth his/her weight in gold. :)
................................................................
I'll take that as a compliment...thx.
While I am reluctant to do anything that smacks of defending Spanky, or even defending myself, we don't rationalize it. That quote is usually taken out of its true context, which was that the bad guy comedians wanted to kill the lawyers because they were planning a revolution where they would rule, and killing the lawyers was deemed to be critical to that plan.
http://www.spectacle.org/797/finkel.html
Uh Indy - sure I am not cool, but Pat certainly did mention me. "Spanky. I know everybody hates lawyers..."
Unless you are talking about Navy. He's just a dumbass bigot. Just take a gander at yesterday - anyone who didn't agree with him about the Dream Act was a bigot. Dude is just so simple minded.
Kinda like....
Feisty, dearest, we have talked about this sooooo many times - I'm on your ignore list. Those are your words dear.
You do understand what the word "ignore" means, don't you love?
Oh and make sure to keep posting all weekend long Feisty. Me, I'll be back next Monday. xoxo
Hey Navy,
Got collapsed yesterday and saw where you needed to repost it everywhere. Thanks - I actually read beyond the first 2 paragraphs the second time around. Good stuff as usual ...... thought you would want a reply.
"REPOST - I GUESS THE GOT/TP CANNOT HANDLE THE TRUTH"
So the illegal immigration problem is not the vast numbers of illegals illegally flooding in and causing financial strain on schools, health facilities, local governments ...... no strain on law enforcement ..... Border Patrol officier deaths, etc. .... nothing to do with breaking the law ..... the problem is just trying how to make all the illegals legal?
Kinda funny, that part about what is illegal - legal. Obama was down there holding the DREAM Pinata up for the Hispanic vote, touting himself ...... they loved it ...... till he mentioned deporting convicted criminals. They booed..... I guess they think like you ....... make the convicted criminals legal too.
Thanks for the honesty and candor, but some Americans are more worried about the country than Obama's personal re-election efforts. Speaking of re-election ....
Obama announced ......
Of course, as typical, he immediately proceeded to mock the opposition ..... "moving the goal posts" ....
Repubs want alligators to eat Hispanics in moats .......ha-ha......good, classy stuff.
I guess you can take the community organizer out of Chicago but you can't take the rabble rouser out of the community organizer, huh?
Aside from Obama's boasts and mocking moat speeches, Richard M. Stanza, director of homeland security and justice issues at the Government Accountability Office, told the Senate Homeland Security Committee in April that the federal government can actually prevent or stop illegal entries into the US along only 129 miles of the 1,954 mile long US-Mexico border.
In addition, he stated there was another 744 miles where the Border Patrol says it has the capability to deter or detect or apprehend illegal entrants after they have entered the country and penetrated US territory.
In other words - There are 1,052 miles of border, more than 1/2, that they have no clue and no capability. Wow - 1,825 miles where we cannot prevent or stop illegal entry out of a 1,954 mile border!
SEVEN PER CENT (7%) OF THE BORDER IS SECURE!
And Obama says .....
Immigration has ZERO chance of passing in the next 1 1/2 years with 7% of the border secured.
Politics? Yep ...... that's all what Obama's little Pinata trip was all about.
Repubs can't ..... "HANDLE THE TRUTH?"
Right ....... and BTW - feel free to "REPOST" any of the above.
The Supreme court and other courts have allowed 501(c)4 groups to hide donations and cloak their votes. The Internal Revenue Service is ramping up its enforcement of a tax-code provision that requires donors to pay a "gift tax" on political contributions to 501(c)4 groups. It is about time the IRS did it's job in containing the abuses within political donations, no matter which party utilizes 501(c)4 groups. All sources of revenue to theses pseudo groups and other contributions be accounted for. The language explaining the difference between "charitable contributions" and gifts" is laid out in section 170(c) of the Internal Revenue Code. In IRC 170(c), the government says donations to a "corporation, trust, fund, or foundation" do not qualify as a charitable contribution if they use that money to support "any political campaign on behalf of (or in opposition to) any candidate for office." The maximum tax rate is 35% on taxable gifts. This is one way to increase the collection of taxes on mega-donors.
I have news for you, Rudy- Everybody in this country "cloaks their votes". They are called secret ballots for a reason. It is one of the rights citizens of this country enjoy.
I just read the article on Politico, and it raises a few questions-
First, which five people got these letters? It would not just so happen that ALL FIVE were contributors to republican groups, now, would it?
Second, it kind of leads me to believe that the White House established groups- you know, the ones not connected to Obama but just happen to have been organized by two people who incidentally just left the White House- might be having a little bit of trouble getting funding.
According to Politico, the lawsuits are filed. Read here
http://www.politico.com/news/stories/0511/54962.html
Call me a cynic, but I'm betting that, once the five names are public, they can add "selective enforcement" to those lawsuits.
I'm sure the unions will be taxed as well on their polical contributions? Yeah sure they will.
Well I am just tickled that Obama has now joined the Drill Here, Drill Now mantra.
It is so nice to see that he has abandoned his desire to see our energy cost skyrocket, but I suppose that just political triangle-ation.
It's just so far from what his democratic base and their hate for oil and love for green energy.
lol-
For First Read's "usual suspects", it's all about Karl Rove.
Did any of you note the Jeffrey Katzenberg reference?
Do any of you know who Katzenberg has given money to?
Do you care?
Go get 'em, IRS.
As long as it's a bipartisan effort, I'm all for it.
lol.
Feisty Redhead Roselle, IL
Well Feisty Troglodyte, at least he isn't still sitting in the cave waiting for the enlightenment!
That will give them an opportunity to help reduce the budget deficit. I'm sure they'll be happy about doing their patriotic part. Especially Koch (ha ha).
This was definitely a shot at republicans. One mention of a newly formed democrat based organization. No mention of Soros and the millions he donates to the democrats.
Jason Seher must be a democrat... but what else is new with MSNBC writers...
It's about freakin time!
I have to wonder why it's taken so long?
They should of been all over this after the Citizens United ruling!
If the Koch Brothers have a blank checkbook (which apparently they did in 2010) well then, by golly tax the cr@p out of them!
As much as they'd like to, they can't have it BOTH ways!
Brianb-999431
Just because Soros is a boogey man for right wingnuts doesn't mean he is exempt from the law (unless there's an exemption for wingnut boogey men).
Hey, BrianB,if you wanna read the story on MSNBC's homepage, you'll see that George Soros was mentioned before the Koch brother's!
Idiot, screaming FIRE!
BrianB. So reporting a story about a law that applys to all, makes the reporter a democrat?
The Supreme court and other courts have allowed 501(c)4 groups to hide donations and cloak their votes. The Internal Revenue Service is ramping up its enforcement of a tax-code provision that requires donors to pay a "gift tax" on political contributions to 501(c)4 groups. It is about time the IRS did it's job in containing the abuses within political donations, no matter which party utilizes 501(c)4 groups. All sources of revenue to theses pseudo groups and other contributions be accounted for. The language explaining the difference between "charitable contributions" and gifts" is laid out in section 170(c) of the Internal Revenue Code. In IRC 170(c), the government says donations to a "corporation, trust, fund, or foundation" do not qualify as a charitable contribution if they use that money to support "any political campaign on behalf of (or in opposition to) any candidate for office." The maximum tax rate is 35% on taxable gifts. This is one way to increase the collection of taxes on mega-donors.
So, any mention of the gift tax owed by 75% of Obama's 2008 donors? One, Raj Rajaratnam, who just got convicted of insider trading. He owe gift tax on the $87,000 he gave Obama?
Rudy Gonzales..
The code you referenced was before the Supreme Court overturning McCain Feingold allowing corporations to make these gifts. Bet a nickle that some smart attorney argues in tax coutt that the exclusion is no longer applicable.
Second, the maximum rate is 35% but as an itemized deduction it's at the taxpayers marginal tax rate...generally a lot less. Also the taxpayer has the right to make a onetime lifetime gift exclusion. Since this is now considered a gift and not a political contribution, (charitable contribution), there really should be no limit as to the amount contributed. Bet a nickle both these issues get tested in court.
Brianb
All's fair in love and war. Puts Citizens United in a different light. The great big spotlight of the IRS.
Quick! Somone holler 'Soros"!
SOROS!
Does it count since I'm a libtard?
Not sure if it counts, since I was slow on the 'send' key, and someone already brought him up for both of us. Dang, I hate when that happens.
Whether Soros, Rove, Koch or whomever, and whether you consider this a good or bad development, it is still yet one more way the federal government has created to take money from the citizenry.
And I suspect that if the IRS begins to enforce this policy as reported, these individuals will still find a way to promote and donate to their chosen candidates and their chosen points of view.
Money that has already been taxed at least once James.
But see for the Feistys and DBOs taxing someone once,or a corporation's earning twice, just isn't enough.
Unless of course they are the ones being taxed.
Spanky
Federal taxes are the lowest they've been in 60 years. Quit your whining.
James. When you figure how we get taxes out of sagebrush, I am with you all the way.
Ain't it great Houston? They are "letting" us keep more of our own money.
Damn right nice of them. Oh wait, I think you are only talking about federal and state taxes, right? {yeah I know you have no idea of what you are trying to say, just repeating what you have heard others say].
So Houston I don't suppose you added up all the special assesments, sales taxes, bonds, and taxes that didn't exist 60 years ago, now did you sport?
Take a gander at your cell phone, cable, property tax, water, utility and other bills you are paying. See all those little taxes? And let's not forget alcohol, tabacco, and other neat taxes. Damn near all over the place - $5.00 here, $25 bucks there, special assessment over there. Really adds up, right Houston?
say Houston, what was the gas tax 60 years ago? What was your car registration fees back in the day? So buddy as a total percentage of taxes paid, we really doing better than 60 years ago?
I hate taxes, don't you Houston? Sure you do.
The Supreme court and other courts have allowed 501(c)4 groups to hide donations and cloak their votes. The Internal Revenue Service is ramping up its enforcement of a tax-code provision that requires donors to pay a "gift tax" on political contributions to 501(c)4 groups. It is about time the IRS did it's job in containing the abuses within political donations, no matter which party utilizes 501(c)4 groups. All sources of revenue to theses pseudo groups and other contributions be accounted for. The language explaining the difference between "charitable contributions" and gifts" is laid out in section 170(c) of the Internal Revenue Code. In IRC 170(c), the government says donations to a "corporation, trust, fund, or foundation" do not qualify as a charitable contribution if they use that money to support "any political campaign on behalf of (or in opposition to) any candidate for office." The maximum tax rate is 35% on taxable gifts. This is one way to increase the collection of taxes on mega-donors.
x
As long as the Unions get taxed as well, then I'm good with it.
Kirby.This law does not apply to unions.
Karl Rove's Crossroads GPS?
I thought it was called Free"Dumb"Works For T-Baggers.
Thank you Lawrence O'Donnell for your segment on Rand Paul. Thank you. Thank you. Thank you.
Pat,
Lawrence O was indeed outstanding last evening.
The Rand Paul is probably one of the scariest politicians in Congress. His affect is flat and his concepts so misguided.
I have wondered just how many MEDICARE or MEDICAID patients either he or his father had in their practice.
Both he and his dad milked and continue to milk the Federal Government that they both hate and believe is too big and intrusive.
This is why there’s so much disgust and distrust for government agencies and the government in general. If there are rules on the books, they should be enforced -otherwise why bother with rules at all? The IRS has shied away from enforcing the gift tax rule?
In 2009, the IRS counted 282,000 current and former federal employees who were delinquent on their federal taxes, owing more than $3.3 billion. If the IRS would simply collect the taxes owed by those people and private citizens as well, we could make a bit of dent in our deficit and debt. Collect taxes owed by other people before raising mine, please.
Candice---the IRS has a finite amount of resources like any other agency and has to go after tax issues that will generate the most return on the resources. Because of the way the gift tax is structured, it wouldn't be the most "lucrative" use of the resources.
Steeler Fan – You’re right. Agencies have limited resources and should focus on the most productive activities. Or, how about when writing legislation and rules, an important factor to consider would be “can this rule be enforced?” Does the benefit justify the cost of time and energy to implement the rule? If the Gift Tax or any rule isn’t so lucrative, don’t write the rule.
With the suspension of the estate tax in 2009, the Estate and Gift Tax departments of the IRS didn’t have much to do. Did they switch personnel from those departments to work on collecting taxes already owed (like the $3 billion from federal employees and who knows how much from private citizens)? Probably not.
Since we’re sort of desperate for money right now, time and energy might be well spent, in my opinion, collecting unpaid taxes from those delinquent -- before simply raising taxes on folks like me who actually pay my taxes according to the law.
But, then, who am I to expect the government to prioritize, use resources in the best possible way, or think things through in the first place.
It does seem a bit suspect for this gift tax issue to be coming up now as election activity ramps up.
And the beat goes on...drums keep pounding rhythm through my brain...la, de, da, de de, la, de, da, de, di. Wankers to the left of me. Wankers to the right of me. In to the valley of politics rode the 600. America is based in one principle: Don't F with my stuff!! True whether you have a Nickle or a Million. We are a collective bunch of me, me, me, me, me, me, me, me. Not much of a Country really.
Hey Spanky total taxes are a smaller part of GDP than any time back to the 1950's. If you do a little reserarch you will find that is is true.
Too bad government spending are a much greater part.
This should be interesting....
Will the IRS really pursue this?
What will be the fallout?
Will the big money donors really care?
Will this add to the "revenue" stream?
Will this add to the rhetoric about revamping the tax code?
ABOUT TIME!!!!!!!!!!!!
Dang, that explains why the GOP/TP wants to reduce auditors in the IRS. Will using the tax code put faces to all those nameless corporate donors? So much for citizens united then. HA!
Well, it is about time.....I hope they get taxed into eternity. It probably isn't going to hurt their pocketbooks much but it will still pain them.
Ollie I'm sure you aren't ignorant enough to think this is a one party thing. Both parties are whores they both take so damn much money, but it's funny nobody cares when it's their side of the aisle.
So Obama is going to have a $One Billion (One Thousand Millions), re-election fund but, i'll be noe of it get's taxed....He's just having his agents carefully taking care of the opposition....
Interesting ... had this been enforced in the 2010 elections, Republicans woudn't have control of the House. This is going to impact a lot of State races and should cut back on the negative TV ads. Wonder what the TeaParty folks will do now?
And, although mentioned that this won't bother the super rich donors ... notta ... one thing that is a constant is that rich people are always counting their money. If they can't deduct the donations, most of them won't make 'em.
All laws that are legally on the books need to be enforced to the fullest. The IRS is the enforcement agency that is responsible for all tax collection. Progressive Power has been watching the "double standard" of donors when it comes to paying all their taxes on time, and in full. The IRS needs to do their jobs, and no more allowing the manipulations of the tax laws/codes. These GOP/RNC poltical donors are especially guilty of tax evasion, tax manipulation, and tax corruption. The IRS has let this very taxing situation get out of control. Get this done quickly IRS, and do not let this ever happen again! Progressive Power is watching, and the GOP/RNC has been getting away with tax fraud for at least 10 years. The bottom line is simple. Get those taxes collected immediately.
About time they started enforcing it!!
That is one way to help reduce the deficit! :-))
Newt Gingrich is a flat-out racist. Referring to Barack Obama as the "food stamp president" and "he'll make the whole US like Detroit" are thinly veiled references to the large black population in Detroit and to the erroneous belief that most food stamp recipients are black. He criticized Barack for having a "Kenyan sensibility" when Obama has never even BEEN to Kenya. You're a miserable racist Newt and i will take great delight seeing you lose every primary you are in next year. Mark Monmtgomery NYC, NY boboberg@nyc.rr.com
The IRS has already made a list of GOP/RNC spewers that will be soon getting their tax audit. "Bonehead Boehner" will start crying when he gets his. "Nutty Newt" will blame the Middle Class for his tax audit. "Crazy Cantor" will go right ahead and deny that he knows what taxes are. "Trampy Trump" will send in his "zombies." To look up and see if any IRS agent has the long version of their Birth Certificates after he is gets his audit. Where will they ever hide their tax free oil donations?? Oh! They are not tax free! The new hit song for the GOP/RNC will be. "When the IRS comes a Knocking." Hey! Maybe Snoop Dog can sing it to the GOP/RNC when they are spewing at their local IRS building. Now that would be very interesting to see and hear!