Elsewhere online
May 13, 2011

IRS Confirms Audits of Advocacy-Group Donors

The Internal Revenue Service has notified five donors to politically active 501(c)(4) groups that their contributions to the advocacy organizations could be subject to gift taxes, The New York Times and the Associated Press write.

Michelle Eldridge, an IRS spokeswoman, confirmed the agency had contacted the donors but would not identify them. In the past, the IRS rarely invoked the provision making gifts of more than $13,000 to advocacy groups subject to gift taxes of up to 35 percent, but its 2011 “work plan” specifies stepped-up enforcement of the rule.

Such organizations, which are classified under Section 501(c)(4) of the Internal Revenue Code, spent millions of dollars on political ads during the 2010 election cycle but are not required to disclose their contributors, prompting criticism from President Obama and campaign-finance watchdog groups.

Ms. Eldridge said the investigations were all initiated “by career civil servants without any influence from anyone outside the IRS.”