The Internal Revenue Service on Thursday abandoned its effort to force five big-ticket donors to pay gift taxes on contributions they made to nonprofit advocacy groups that are playing an increasing role in American politics.
Until further notice, examination resources should not be expended on this issue, Steven T. Miller, deputy commissioner for services and enforcement, wrote in a memo posted on the I.R.S. Web site.
This is a difficult area, Mr. Miller wrote, with significant legal, administrative and policy implications with respect to which we have little enforcement history.
The memo was a sharp reversal for the tax agency, which had invoked a rarely used, 30-year-old ruling to warn the five donors in February that they might owe gift taxes on their donations. Organizations heavily financed by conservative donors like David Koch, or in the case of Crossroads GPS, tied to top Republican strategists like Karl Rove, would have come under such newly enforced rules, were they to be imposed across the board.
The I.R.S. audits became public just as such groups were ramping up for the 2012 election cycle, and a group of six senators led by Senator Orrin Hatch, Republican from Utah, wrote to the I.R.S. commissioner Douglas H. Shulman raising concerns that its effort to impose gift taxes on donations to these groups was politically motivated and in violation the First Amendment.
This decision today ensures that the I.R.S. remains free from even the hint of undue political influence, Mr. Hatch said in a statement on Thursday. It cannot be turned into an arm of political retribution or payback.
Similarly, David Camp, Republican of Michigan and chairman of the House Ways and Means Committee, questioned the process the I.R.S had used to challenge the five donors and whether the Obama administration, which has been critical of the increasing power of advocacy groups, was involved
http://www.nytimes.com/2011/07/08/business/irs-drops-audits-of-donors-to-political-groups.html?_r=1&partner=rss&emc=rss
Until further notice, examination resources should not be expended on this issue, Steven T. Miller, deputy commissioner for services and enforcement, wrote in a memo posted on the I.R.S. Web site.
This is a difficult area, Mr. Miller wrote, with significant legal, administrative and policy implications with respect to which we have little enforcement history.
The memo was a sharp reversal for the tax agency, which had invoked a rarely used, 30-year-old ruling to warn the five donors in February that they might owe gift taxes on their donations. Organizations heavily financed by conservative donors like David Koch, or in the case of Crossroads GPS, tied to top Republican strategists like Karl Rove, would have come under such newly enforced rules, were they to be imposed across the board.
The I.R.S. audits became public just as such groups were ramping up for the 2012 election cycle, and a group of six senators led by Senator Orrin Hatch, Republican from Utah, wrote to the I.R.S. commissioner Douglas H. Shulman raising concerns that its effort to impose gift taxes on donations to these groups was politically motivated and in violation the First Amendment.
This decision today ensures that the I.R.S. remains free from even the hint of undue political influence, Mr. Hatch said in a statement on Thursday. It cannot be turned into an arm of political retribution or payback.
Similarly, David Camp, Republican of Michigan and chairman of the House Ways and Means Committee, questioned the process the I.R.S had used to challenge the five donors and whether the Obama administration, which has been critical of the increasing power of advocacy groups, was involved
http://www.nytimes.com/2011/07/08/business/irs-drops-audits-of-donors-to-political-groups.html?_r=1&partner=rss&emc=rss
