This issue has been around for
decades, but as related in the Ben Smith column and also
discussed at last week’s ABA Tax Section meeting the IRS
appears to have finally decided to pursue it through
audits of a number of large donors to section 501(c)(4)
organizations. Since those donors are reported to the IRS
on the non-public Schedule B to the Form 990 filed by
section 501(c)(4) organizations, the donors are not hard
for the IRS to find. The most significant effect for 2012
will probably be a chilling one. There are numerous
grounds for challenging application of the gift tax in
this context (see two articles by Barbara Rhomberg, one
relating to constitutional issues and one
relating to other legal issues). But many of these
donors may not want to risk an IRS audit, much less public
litigation with the IRS that would reveal not only their
identities but the extent of their gifts. Some lawyers
may also find themselves in trouble, because it is easier
to challenge application of the gift tax depending on how
the “donation” is structured. For example, if it is
structured to more closely resemble a payment for services
than a gift, the IRS would find it hard to apply the gift
tax.
Lloyd Hitoshi Mayer
Associate Professor
Notre Dame Law School
P.O. Box 780
Notre Dame, IN 46556-0780
Phone: (574) 631-8057
Fax: (574) 631-4197
Web Bio:
http://law.nd.edu/faculty/lloyd-hitoshi-mayer
SSRN Author
Page: http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=504775
From: election-law-bounces@mailman.lls.edu
[mailto:election-law-bounces@mailman.lls.edu]
On Behalf Of Rick Hasen
Sent: Wednesday, May 11, 2011 12:55 AM
To: Election Law
Subject: [EL] Electionlawblog news and commentary
5/11/11
May 10, 2011
"IRS gift tax
move could hit new anonymous groups"
Ben Smith notes
a very interesting development with potentially important
implications for 2012. What say you, tax/election law
people?
Posted by Rick Hasen at 09:52
PM