Should big political donors pay gift tax? IRS won’t say
Earlier this year the story broke that the IRS had notified five bigfoot political donors that they could owe gift taxes on secret contributions made to nonprofit political advocacy groups which then shuttle the money over to political campaign efforts. The New York Times weighed in with an editorial, saying, “The Federal Election Commission should be policing some honest disclosure here, but it has abdicated its responsibility. So it is commendable that the tax agency has the will to enforce existing law, particularly if it puts some caution in the minds of donors preparing to flood the next elections with secret money.”
Eh, never mind.
This month the IRS did a rarely-seen bureaucratic backbend, dropping any audit programs aimed at bigwig political moneybags. In a three-paragraph memo, an IRS deputy commissioner said, “This is a difficult area with significant legal, administrative, and policy implications with respect to which we have little enforcement history.”
Translation: IRS is backing off, and another barrier is removed to a 2012 flood of political advertising beyond anything we’ve ever seen. Did the agency come under political pressure? Who knows. But when Senator Orrin Hatch says in a statement, “The decision today ensures that the IRS remains free from even the hint of undue political influence,” does it make you think that maybe there was some political influence?