George Soros, The Koch Brothers and the Internal Revenue Service

Robert R. Barker
Donations to bona fide charities and many non-profit organizations are tax deductible. Donations to political groups are not.  This has led the fund raisers and money men of politics to form organizations with charity in their charters but political advocacy as the real intent.

Tax authorities have been lax in pursuing these abuses of the tax law, that is to say they were lax until the controversial Koch brothers emerged on the national scene.  No longer is George Soros the only nationally known figure seen to be giving major financial support to political causes.  On May 13, 2011, The New York Times published an article headlined IRS Moves to Tax Gifts to Groups Active in Politics.  According to Times, the Internal Revenue Service has sent letters to five major donors warning them that they may be required to pay taxes on such donations.

Whoa!  Aren't taxes something you pay on income?  Since when must one pay taxes on donations?  What we have here is a case of using a loophole to close a loophole.  A loophole is a means of tax avoidance that is legal, but outside the original intent of the law.  In this case, the donor is using the charitable deduction as a loophole to circumvent the law that disallows a deduction for money given to support political advocacy.  For their part,  the IRS is resorting to a loophole by warning they may apply the Unified Gift and Estate Tax rules to certain charitable donations.  This might seem to be an example of two wrongs making a right. 

There is just one problem.  Who were the five donors who got the letters and how were they chosen?  The IRS did not disclose it.  A warning letter is a polite method of intimidating donors; but it's the organizations who are abusing the rules, not the donors.  The proper way to deal with this is to levy fines against the organizations.  In the most egregious cases, their tax status as a charity should be revoked.

Going after selected donors is a method prone to bias and corruption.  Instead, enforcement should focus on monitoring the organizations to make sure they adhere to the charter they proffered to qualify for their tax exempt status in the first place.  Not only is this a more direct approach, it is more effective as well.  It would catch all abuses, not just that coming from major donors. 

Be forewarned, the article in the New York Times gives much more attention to Republican donors and organizations than it does to those on the left.  That is to be expected of the liberal leaning New York Times.  More importantly, one is left to wonder, and to hope, that such is not the case with the IRS.

Robert Barker writes for RandomThots.org and invites you to go there for a look at his effort which is driven by love of country and concern for it people, both present and yet to be.
Donations to bona fide charities and many non-profit organizations are tax deductible. Donations to political groups are not.  This has led the fund raisers and money men of politics to form organizations with charity in their charters but political advocacy as the real intent.

Tax authorities have been lax in pursuing these abuses of the tax law, that is to say they were lax until the controversial Koch brothers emerged on the national scene.  No longer is George Soros the only nationally known figure seen to be giving major financial support to political causes.  On May 13, 2011, The New York Times published an article headlined IRS Moves to Tax Gifts to Groups Active in Politics.  According to Times, the Internal Revenue Service has sent letters to five major donors warning them that they may be required to pay taxes on such donations.

Whoa!  Aren't taxes something you pay on income?  Since when must one pay taxes on donations?  What we have here is a case of using a loophole to close a loophole.  A loophole is a means of tax avoidance that is legal, but outside the original intent of the law.  In this case, the donor is using the charitable deduction as a loophole to circumvent the law that disallows a deduction for money given to support political advocacy.  For their part,  the IRS is resorting to a loophole by warning they may apply the Unified Gift and Estate Tax rules to certain charitable donations.  This might seem to be an example of two wrongs making a right. 

There is just one problem.  Who were the five donors who got the letters and how were they chosen?  The IRS did not disclose it.  A warning letter is a polite method of intimidating donors; but it's the organizations who are abusing the rules, not the donors.  The proper way to deal with this is to levy fines against the organizations.  In the most egregious cases, their tax status as a charity should be revoked.

Going after selected donors is a method prone to bias and corruption.  Instead, enforcement should focus on monitoring the organizations to make sure they adhere to the charter they proffered to qualify for their tax exempt status in the first place.  Not only is this a more direct approach, it is more effective as well.  It would catch all abuses, not just that coming from major donors. 

Be forewarned, the article in the New York Times gives much more attention to Republican donors and organizations than it does to those on the left.  That is to be expected of the liberal leaning New York Times.  More importantly, one is left to wonder, and to hope, that such is not the case with the IRS.

Robert Barker writes for RandomThots.org and invites you to go there for a look at his effort which is driven by love of country and concern for it people, both present and yet to be.