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ARTICLE · 26 MAY 2011

Can Donations Be Taxed?

Farella Braun & Martel
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You may have recently heard news reports that the IRS will begin subjecting individuals' contributions to IRC Section 501(c)(4) organizations - commonly known as social welfare organizations -- to gift tax (currently set at 35%).

United StatesTax
Evan Abrams
Evan Abrams
Barbara Murphy
Barbara Murphy
Deborah Tellier
Deborah Tellier

You may have recently heard news reports that the IRS will begin subjecting individuals' contributions to IRC Section 501(c)(4) organizations - commonly known as social welfare organizations -- to gift tax (currently set at 35%). For example, the NY Times recently reported that five individuals are being investigated by the IRS for contributions to such nonprofit advocacy groups.

While the Constitutionality of taxing such contributions is far from clear, we wanted to alert you to the new interest the IRS is showing in this area and alert you that donors should consult tax counsel prior to making any such contributions in this climate of IRS heightened scrutiny of IRC 501(c)(4)'s and its donors.

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