For decades there has been a risk and concern whether the IRS would seek to apply the gift tax to contributions made to a Section 501(c)(4) social welfare organization. In May the IRS confirmed that it had sent letters to five donors who had not filed gift tax returns in connection with a contribution to a Section 501(c)(4) in order to determine if returns should have been filed and if the gifts were taxable. Obviously, the impact of taxing contributions to Section 501(c)(4) organizations is substantial and arguably represents a deviation from “industry” practice.
On July 7, the IRS Deputy Commissioner for Services and Enforcement announced that any current audits should be closed and that his office will be coordinating with the Office of Chief Counsel to determine whether there is a need for further guidance in this area. Click here to read his full statement. The IRS website was also