Will Camp Find Nefarious Motives in 501(c)(4) Examinations?

Will Camp Find Nefarious Motives in 501(c)(4) Examinations?

Is the IRS attacking constitutionally protected political speech in its current investigation of "targeted" contributions to 501(c)(4) organizations?  First of all, are the gift tax examinations of five donors to section 501(c)(4) nonprofit organizations actually "targeted" missions, indicative of selected enforcement generated by polItically motivated factors and forces? It looks very much like House Ways and Means Committee Chair Dave Camp, R - Mich., thinks so.  Camp is apparently convinced there is much more to the story than a benign movement to collect revenue on taxable gifts.

The audits of interest have captured attention against the backdrop of elections for public office and the role 501(c)(4) organizations play in campaign funding. The examinations emanated from a so-called "internal referral" by an IRS employee. The anonymity of 501(c)(4) politicial campaign contributions prompts calls for intensified gift tax enforcement, and the Service is responding. Meanwhile, tax attorneys are crafting strategies to keep political contributions under the gift taxation radar.

As reported today in TaxAnalysts® Tax Notes, Camp makes his suspicions clear in his recent letter to IRS Commissioner Doug Shulman. Camp is exercising his authority under IRC § 6103 to review the integrity of IRS conduct in these isolated examinations. Camp's skepticism is obvious in the tone of his letter to Shulman and in his request for an extensive laundry list of information, which looks very much like a quest for damning evidence that the Service is indeed on a political mission. 

For his part, Shulman provided assurances just a few days before Camp sent his letter that the examinations of interest are nothing more than "...on-going work that focuses broadly on gift tax non-compliance." Shulman's letter to Senator John Thune, R - SD, insists that "there was no involvement by any political appointee, inside or outside the agency..." and stands by the integrity of the Service as "apolitical and non-partisan."

In addition to being great political theater, there are serious consititutional questions in this matter. The drama is still unfolding. Camp wants the information he requested from Shulman on June 17th.

Stay tuned.


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