any comments - IRS action related to 501(c)(4) org

[mwcpa]

www.nytimes.com/2011/05/13/business/13gift.html?_r=1&pagewanted=all

personally, I believe that IRS review of the "loophole" used by some of these organizations that could be in violation of the law is a good thing....

[ugonow]

I think their lawyers will successfully fight any attempt to tax them for past donations,and in the future launder the money a bit better. ;D

[Deleted]

Well, this is over my head, but-- politics aside, which is obviously what this is geared toward-- wouldn't this affect legitimate charities that do good things with their money? Charities are under attack lately as the move toward the nanny state marches on. This article throws out big political names, of course, but what about legit charities that don't exist to buy political power? Answer if anyone knows it. We all know gov't hates charity, especially faith based charity, because real charity limits the control gov't has over people.

[billisonboard]

May 19, 2011 8:28:18 GMT -5 @krickitt said:

... wouldn't this affect legitimate charities that do good things with their money? ...

No.

[Deleted]

How not? It says large donations written off as charitable donations? Some rich people give huge money to charity out of philanthropy, for tax deductions, whatever, it is legit donations. Why won't this affect them? Or are they just picking and choosing to target the wealth going toward politics?

[ugonow]

Why should we overlook abuse of the tax system, but not of the food stamp system?

[billisonboard]

May 19, 2011 8:53:48 GMT -5 @krickitt said:

...Or are they just picking and choosing to target the wealth going toward politics?

Yes, that is the target.

It is not about "deductions", it is about a gift tax. To be subject to the gift tax:

In general, individuals incur gift taxes of 35 percent on any amount exceeding $13,000 in a year, with a limit for couples of $26,000.

So to give away that amount of money one has to be doing fairly well.

What the non-profit organization does with its money comes into play also:

These organizations were established as nonprofit corporations under a section of the tax law, 501(c)(4), and the rules governing them say their primary purpose cannot be political.

There is only a small group of these organizations which have a primary purpose which is political.

So it concerns people who give larger sums of money to non-profits doing particular things.

[Deleted]

Well, I would be okay with that-- as long as this is not an attack on churches and other charitable organizations that do what they are supposed to do with donations. Just seems these days when ANYthing is done there are layers and layers of hidden attacks buried inside things, cloaked in something people would fall for, like attacks on guys like Soros and Koch, or national security, or other buzz words.

[mwcpa]

"wouldn't this affect legitimate charities that do good things with their money"

not necessarily since "legitimate charities" as I think you are inferring are covered under IRC 501(c)(3)... they have different rules related to disclosure and the like...

under the tax law, charities are prohibited, with certain caveats and costs assessed, from most lobbying efforts.... it's one of the reasons IRS get a little up in arms over religious groups that get "political" since they are granted really special tax treatment, no disclosures what so ever...

you cannot have your cake and eat it too...

the problem as I see it, is that a few have set up 501(c)(4)s over the last few years playing the "IRS won't look at me strategy" since they did not for a long time.... now IRS has interest in it and a few are upset.... it's like anything.... something is set up with good intentions... then a few bad apples exploit it.... then the reactive (not proactive) government says hey, we have a rules against that behavior and now we are going to enforce it...

[Deleted]

Interesting thread. As I said, a bit (way) over my head, so I will just read from here on unless I see something I understand. Seems it really is about money, I guess, because going after... say... Soros and Koch would pretty much cancel them out against each other politically. I guess.

[fairlycrazy23]

Another reason to move to the fairtax
www.fairtax.org

[fairlycrazy23]

This message has been deleted.

[bean29]

Personally, I don't think Churches should be tax exempt if they tell their members how to vote.

If your primary purpose is not charitable this is a no brainer. tax the donations.

[Deleted]

And here we go............................

[pepper112765]

A church can't tell anybody to do anything. They say people should fornicate, you think that stops them?

[pepper112765]

should = should not

[Deleted]

Some think people that go to church can't think for themselves.. a common mis-perception. If church people vote similar it is because they gather with like minded people, not because a bunch of strangers wondered in to a church and got brainwashed by the guy at the pulpit.

[mwcpa]

actually, in the tax law, the issue related to church groups and politics only has to do with the special tax treatment that they are afforded... these rules have been in place for decades but have only been raised to the level that they are now out of political motives of a few.... the IRS does not pick on church groups just because....

the tax law allows for a church to what it is be a church (it should not be a platform for any political view, left, right, backward, forward, etc). They are provided the benefit of not having to pay income tax or report anything about its operations and contributors to the IRS or generally any government agency (unlike other public charity groups, who at a minimum are required to report on forms 990N, 990EZ or 990 and in some states must make reportings to the state attorney generals or taxing agencies).

If a church wants to cross a line and express views that are political in nature then they should be treated just like every other not for profit that engages in political activities. You cannot have your cake and eat it too. (the range of "penalties" for a qualified not for profit organization in regards to politics is that they pay a little tax, or if they fail to disclose such actions lose their tax exempt status... special tax treatment comes with special rules and restrictions)

The religious organization exemptions and rules in the tax law have been around for decades, these are not new concepts, to the misconception of many who profess there is a witch hunt against groups.... I work with a few churches related to various tax and accounting matters, so I am speaking from experience.

[Deleted]

actually, mw-- I can see that... the politics thing. Just posting this because I think most people are under the impression that churches are all pushing conservative ideas-- and they hate that. This is my old church that I used to LOVE for their open mindedness and diversity. THEN they went crazy political. They are now actively involved around town in gay, Palestinian, illegal immigrant issues and others, they march, rally, protest.... I don't think many people that don't go to church are aware it is not always what they consider "holy-rollers" "shoving their religions" down people's throats. Some churches are quite liberal and radical.
www.stfrancisumc.com/
No idea what is in the website at this moment, but THIS particular church is very political..

[marshabar1]

Oh dear, this is bound to affect the terror efforts against the west. With more scrutiny how are all those donations supposed to be slipped through?? They'll have to rely more on drugs and American banks now.

This is bound to hurt Obama's reelection. Perhaps they will reconsider?

[marshabar1]

Oh carp! What am I thinking?? Of course Muslim mosques and charities will be excluded from scrutiny. ;D

[fairlycrazy23]

There should be no, none, nada, zilch tax exempt entities , I don't care if they are providing care to cancer stricken puppies. If you tax one tax all.
So, just don't tax any.

[mwcpa]

this seems to have gotten sidetracked to the "church" aspect of things... so might as well go with it as there appears to be no nasty posts...

.... this is the part of 501(c)(3) that gets them (and other groups) into trouble...

"no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h) ), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office."

subsection h allows for some, albeit small, amounts of certain types of political stuff in a 501(c)(3).... lack of disclosure of the activity is what gets people in trouble... which is why church groups of all denominations need to be careful... just as many "Muslim" organizations probably get scrutinized as others or do we forget recent history and the group that wants to build a mosque close to the World Trade Center site...

and no church can avail themselves of subsection h...

"Disqualified organizations. For purposes of paragraph (3) an organization is a disqualified organization if it is— (A) described in section 170(b)(1)(A)(i) (relating to churches), (B) an integrated auxiliary of a church or of a convention or association of churches, or (C) a member of an affiliated group of organizations (within the meaning of section 4911(f)(2) ) if one or more members of such group is described in subparagraph (A) or (B) ."

[Deleted]

Not wanting to open up a can of worms on your thread, I'll just say that from what you just said, I have to agree that churches should be closely watched.
Now-- the point of your thread that I couldn't quite grasp-- could you expand on that? Thx.

[marshabar1]

Organizations receiving 501 exemptions are supposed to be apolitical, krickitt. Does not describe Soros or Koch. Nor the Council on American-Islamic Relations.

FEDERAL JUDGE CONFIRMS THAT C.A.I.R. SUPPORTS HAMAS TERRORIST ORGANIZATION

www.libertynewsonline.com/article_301_29735.php

[Deleted]

AAHHHH-- so I did kind of get it, was just thinking more of the innocent ones than "the others." Of course, the innocent ones have nothing to fear.

[mwcpa]

could you expand on that?

The IRS is going to look at gifts to a certain type of tax exempt organization that makes political ads...

the article notes the following

"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 Mr. Koch and his brother Charles, were heavily involved in politicking, spurring campaign finance watchdogs to complain that they were flouting election and nonprofit laws.

Spokesmen for the Koch brothers and for Mr. Soros would not comment as to whether they had paid gift taxes on these types of donations, or whether they had received letters from the I.R.S.

These organizations were established as nonprofit corporations under a section of the tax law, 501(c)(4), and the rules governing them say their primary purpose cannot be political. "

I wanted to know what other felt about the IRS going after the funders of these organizations.... but I guess since it's a complex subject people are staying away....

I am not sure what the hamas statement above has to do with anything related to IRS looking at 5 unnamed funders of 501(c)(4) groups that went a little too far.... a few Senators sent the IRS commissioner a letter yesterday basically complaining about this.... all the Senators had a "R" next to them... blogs.wsj.com/washwire/2011/05/18/gop-senators-step-up-criticism-of-irs/

[Deleted]

I would think both parties would be complaining. They BOTH make out like bandits from these elite rich people. Even so the "thing to do" is to let Rs take the fall for everything at this time. Seems to flip with the parties, same old, same old, different people. JMO.

[Deleted]

The Hamas statement is about LOTS of tax exempt money ending up in the hands of terrorists. There's that can of worms. Comes up pretty often on this board.

[AgeOfEnlightenmentSCP]

May 19, 2011 7:14:18 GMT -5 mwcpa said:

www.nytimes.com/2011/05/13/business/13gift.html?_r=1&pagewanted=all

personally, I believe that IRS review of the "loophole" used by some of these organizations that could be in violation of the law is a good thing....

I think a complicated tax code that lets statists on either side of the aisle to arbitrarily target their political opponents and grant favors to their supporters-- is ALWAYS a bad thing.

EVEN IF that's not what's happening-- it can. And that's bad.