In one February letter reviewed by Roll Call, an IRS examiner told a donor “your contribution [to a 501(c)(4) organization] in 2008 should have been reported on your 2008 Federal Gift Tax Return.”
Some attorneys say a compelling argument can be made that the gift tax, which was meant as a backstop to prevent taxpayers from circumventing estate taxes by giving away money early, was never meant to be applied to any sort of tax-exempt organization. But if Congress does not draft another gift-tax exclusion, as it did with 527 organizations, the only recourse for a donor facing an audit would be taking the matter to court.
“One of the things that is most interesting is that if the donors choose to contest it then they’ll no longer be anonymous, which is interesting considering that the whole benefit to giving these organizations is that you’ll remain anonymous,” Gilbert said.
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