(Bloomberg News) House Ways and Means Committee Chairman Dave Camp has asked the Internal Revenue Service to explain how it decided to examine the returns of five taxpayers who made contributions to a type of non-profit advocacy organization increasingly involved in political activity.
In a letter released today, Camp told IRS Commissioner Douglas Shulman that he found the agency's lack of transparency about its gift tax audits "deeply troubling."
"Not only does this threaten political speech, it casts doubt on the IRS' credibility as an impartial enforcer of the nation's tax law," the Michigan Republican wrote in the letter, dated June 3. "The IRS's ability to effectively enforce tax law and work with taxpayers to ensure compliance is not served by auditing unsuspecting taxpayers for violating tax laws the IRS has not acknowledged for decades."
The IRS confirmed last month that it was auditing five donors who didn't file gift tax returns for contributions in 2008 to advocacy groups organized under section 501(c)(4) of the U.S. tax code. The top gift tax rate is 35 percent, after exemptions for annual and lifetime donations.
Such groups are allowed to accept donations of any size without publicly disclosing donors' names, which has made them an attractive vehicle for political activity in recent years.Audit Decisions
In a statement today, the IRS said the inquiries were part of gift tax enforcement efforts, not attempts to examine donations to 501(c)(4) organizations.
"The IRS is an apolitical and non-partisan agency," the statement said. "We are committed to fairly administering the nation's tax laws. We fully intend to respond to the committee's request for information and look forward to working with them on this issue."
The IRS, which is legally prohibited from disclosing individuals' tax returns, hasn't identified the taxpayers under review or the groups to which they made donations.
Camp's letter asks for more details than a similar query sent to the commissioner last month by six Republican members of the Senate Finance Committee.
He is seeking the names of the employees who decided to apply the gift tax to these donations, data on the number of audits of gift and estate tax returns and IRS internal memos on applying the gift tax to donations to 501(c)(4) organizations.
Camp asked the IRS to respond by June 17.