GOP senators: We want gift tax details

Senate Republicans have expressed concern that politics played a role in a recent look at whether to tax donations to certain advocacy groups — and is asking the IRS for details on its discussions of the matter. 

Six GOP members of the Senate Finance Committee noted in a letter to Doug Shulman, the IRS commissioner, that the idea of taxing contributions to 501(c)(4) groups relied on a rarely invoked provision, and that President Obama and White House staffers had sharply criticized politically influential groups organized as 501(c)(4)s. 

The letter comes after the agency told media outlets that it had informed five taxpayers that prior donations to 501(c)(4) groups, nonprofits named for their section in the tax code, could be taxed as gifts. The IRS did not name the five contributors. 

501(c)(4)s have become a popular way for some politically minded groups to organize. The groups are not required to publicly name their donors, but most of their work cannot be classified as political. 

The IRS has indicated that its move was made by “career civil servants,” that the decision-making process happened solely within the agency and that the new examinations were not part of a broader look at 501(c)(4)s. But the six GOP senators — who include Orrin Hatch of Utah, the Finance panel’s ranking member — still appear skeptical. 

“We would expect that decisions regarding particular enforcement actions would be made by career civil servants,” wrote the senators, who also sounded concerned about the possible retroactive enforcement of the gift tax. “The more pressing question, not answered to date, is whether political appointees inside or outside the IRS were involved in any way in the decision to prioritize this category of cases.”

The Finance senators asked for the names of IRS officials who worked on the issue, as well as any correspondence between the agency and the White House and Treasury Department. They also are seeking, by the end of the month, any examination of First Amendment implications of enforcing the gift tax on 501(c)(4)s by the IRS . 

In addition to Hatch, the GOP letter was signed by Sens. Jon Kyl of Arizona, the chamber’s No. 2 Republican; Pat Roberts of Kansas; John Cornyn of Texas, the chairman of the National Republican Senatorial Committee; John Thune of South Dakota; and Richard Burr of North Carolina, the panel’s newest member.