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Could the Koch Brothers' Money Express Run Afoul of the IRS?

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opednews.com Headlined to H3 5/17/11

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Cross Posted at Legal Schnauzer

The Obama administration seems to have done little to slow down the influence-buying, election-stealing, political-prosecuting arm of the Republican Party. But the Internal Revenue Service might be willing to apply the brakes to some big-money donors, on both sides of the political aisle.

The IRS has sent letters to five donors, stating that their contributions might be subject to gift taxes, according to a report in The New York Times. George Soros, a prominent backer of liberal causes, could be targeted. But it appears that the IRS action might be of more concern for donors on the right. In fact, a liberal watchdog group brought the issue to the forefront last fall.

As we reported in March, Louisiana Governor Bobby Jindal is one of several Republicans in the Deep South who has made ample use of nonprofit advocacy groups. Now the IRS is taking notice on a national scale.

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Reports Stephanie Strom of The New York Times:

These advocacy groups have been drawing more scrutiny, from President Obama as well as others, as they have proliferated and funneled vast sums of money in support of campaigns and causes, without having to publicly disclose their donors.

During the midterm cycle, for example, groups like Crossroads GPS, which has ties to the Republican strategist Karl Rove, and Americans for Prosperity, backed by [David] Koch and his brother Charles, were heavily involved in politicking, spurring campaign finance watchdogs to complain that they were flouting election and nonprofit laws.

Campaign Accountability Watch (CAW) applauded the IRS' action, calling it "a good first step" toward reigning in the free flow of advocacy dollars. In a press release, CAW stated:

CAW sent a letter on October 25, 2010 to Attorney General Holder seeking a special prosecutor for the misuse of non-profit organizations to hide the source of electoral donations.

The letter specifically highlighted the provision in the law that the IRS is now addressing:

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. . . press reports indicate that these same 501c(4) organizations are not advising their donors that their donations are taxable as a 'federal gift tax' at a rate of 35%, thereby both misleading the donors and depriving the federal government of potentially hundreds of millions in tax revenue.

"We are thrilled that the IRS is now addressing the concerns we raised by enforcing the gift tax against donors to these fraudulent non-profits," said Kevin Zeese who signed the letter to Attorney General Holder last October and is spokesperson for Campaign Accountability Watch.

"The IRS needs to continue to take action against these organizations by denying their non-profit tax status. They are misusing the tax laws to avoid disclosure required by federal campaign laws. The IRS should put a halt to this practice. These non-profits should be required to disclose the identities of all their donor."

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I live in Birmingham, Alabama, and work in higher education. I became interested in justice-related issues after experiencing gross judicial corruption in Alabama state courts. This corruption has a strong political component. The corrupt judges are (more...)
 

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