Forbes: Hey, Secret Big Political Donor, Don’t Forget The 35% Gift Tax

[highplainsdem]

http://blogs.forbes.com/williampbarrett/2010/10/14/hey-secret-big-political-donor-dont-forget-the-35-gift-tax/

William P. Barrett
Informer
Hey, Secret Big Political Donor, Don’t Forget The 35% Gift Tax
Oct. 14 2010 - 7:21 pm

In the run-up to next month’s elections, a big and controversial development has been the ability of tycoons to make unlimited political donations without any public disclosure whatsoever. This is done by giving the money to certain 501(c)(4) organizations–so-named for the tax-code provision establishing their status. Right now the best-known 501(c)(4) is Crossroads Grassroots Policy Strategies, or Grassroots GPS, set up by conservative political operative Karl Rove (right).

The Grassroots GPS Web site makes clear that such contributions are not deductible by the donor from personal federal income taxes. But that may not be the whole story from a tax perspective. A Los Angeles tax lawyer is telling clients such gifts could be subject to the federal gift tax, which is a hefty 35% this year but is scheduled to rise to a weightier 55% on January 1.

-snip-

In an interview with Forbes, Lion said donors later hit with a gift tax assessment might have no effective way to challenge it other than through a lawsuit, which would strip them of their confidentiality while necessitating big legal fees. To forestall accuracy-related penalties, Lion recommends that donors to 501(c)(4)’s get a legal opinion now–if they can–that no gift tax is owed on the contributions.

Lion writes that there is no indication now the IRS intends to collect the gift tax on 501(c)(4) contributions, and that there might be First Amendment issue if it tried. But he notes the agency wouldn’t have a difficult research task. While there is no public disclosure of donors to a 501(c)(4)–a presumed part of the appeal for many–federal law requires 501(c)(4)’s to reveal to the IRS the names of all donors of $5,000 and up. The easy-to-use lists would be a “treasure trove” for the IRS, Lion declares.

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[dkf]

1. Oh yeah!

Hey if they have to pay big taxes maybe I don't mind these shenanigans so much.

[lostnfound]

2. Maybe we could make a nice dent in the deficit in they taxed it.nt

[myrna minx]

3. K&R n/t

[highplainsdem]

4. kick

[Winterblues]

5. Wouldn't apply to all those overseas companies that are donating.

It would in fact give even more influence to foreign entities..