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August 08, 2011

Donors Seek IRS Ruling on Advocacy-Group Gifts

A group of political donors is seeking an immediate Internal Revenue Service ruling on whether contributions to nonprofit advocacy organizations are subject to gift taxes, says The New York Times.

Marcus S. Owens, a former IRS official who is the lawyer for four donors, accused the agency of caving in to pressure from congressional Republicans last month when it abandoned audits of a handful of contributors to groups classified under 501(c)(4) of the tax code. Such groups are not required to disclose their donors.

The lawmakers had accused the IRS of acting at the behest of the White House in seeking to levy gift taxes on donors to 501(c)(4) groups, which primarily supported right-leaning organizations in the 2010 elections.

Mr. Owens, who formerly led the IRS division that deals with nonprofit and advocacy groups, said dropping the audits suggested that enforcement activity can “be curtailed by intervention from a handful of members of Congress, whatever their party affiliation, when political contributions are at risk.”

Mr. Owens did not disclose the name of the donors involved. He plans to provide a letter outlining the complaint to the IRS on Monday.