July 07,2011

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Julia Lawless, Antonia Ferrier, 202.2244515

Hatch On IRS Decision to Stop Taking Action on Gift tax Enforcement

Utah Senator Says Unanswered Questions Remain, Maintains IRS Must Remain “Free From Even the Hint of Undue Political Influence”

WASHINGTON – Responding to concerns raised by Senate Finance Committee Ranking Member Orrin Hatch (R-Utah), the Internal Revenue Service (IRS) announced today that it will no longer invoke a rarely used provision enforcing the gift tax on contributions to 501c(4) organizations.

“This decision today ensures that the IRS remains free from even the hint of undue political influence,” said Hatch.  “It cannot be turned into an arm of political retribution or payback. It must remain independent.  While I commend Commissioner Shulman for making this decision, there are many unanswered questions that still need to be answered.  Namely, why did the IRS choose to enforce this in the first place?  And did politics play a role in that decision?”

In May, Hatch led a letter of 6 members of the Finance Committee to IRS Commissioner Douglas Shulman about this practice and asked for further information about what communications the IRS had had with the White House and other executive branch agencies regarding this decision, and how it could impact constitutionally-protected First Amendment rights.   

The Senators wrote, “This pattern of nonenforcement over a period of nearly three decades, coupled with the troubling issues regarding the adverse impact that enforcement might have on the exercise of constitutionally protected rights, raises important questions regarding the timing of the decision to enforce the gift tax on these contributions.  Retroactive enforcement of the gift tax in this highly politicized environment raises legitimate concerns and demands further explanation.”  

Joining Hatch on the letter were Senators Jon Kyl (R-Ariz.), Pat Roberts (R-Kan.), John Cornyn (R-Texas), John Thune (R-S.D.) and Richard Burr (R-N.C.).  The Senate Finance Committee has jurisdiction over the Internal Revenue Service.