Baucus, Grassley Further Question Abusive Tax Transaction
To: Reporters and Editors
From: Carol Guthrie for Finance Committee Chairman Max Baucus (D-Mont.)
Re: Jill Gerber for Finance Committee Ranking Republican Member Chuck Grassley (R-Iowa) abusive tax transactions involving contribution of non-cash property
Finance Chairman Baucus and Ranking Republican Chuck Grassley wrote to Treasury Secretary Henry Paulson today regarding a type of abusive tax transaction involving the contribution of non- cash property to tax-exempt organizations. Baucus first wrote the Treasury Secretary regarding the transaction in April of this year. The IRS has indicated knowledge of the abusive tax tactic, but has not yet determined whether to make it a listed tax shelter transaction. Today, Baucus and Grassley are seeking information on the entities employing this abusive tax shelter and clarification of the response of the Internal Revenue Service (IRS).
“The IRS is clearly aware of this shell game involving contributions of property to tax- exempt entities, but I’m not satisfied that enough is being done quickly enough to stop this abusive transaction,” Baucus said. “We want to know how widespread the problem is and who’s playing fast and loose with the tax code in this way. The IRS needs to take timely action to stop deals like this from proliferating.”
Grassley said, “The IRS must send a clear signal that charities cannot engage in these types of transactions and expect to continue to receive the benefits of tax-exempt status. The agency needs to use all of the tools it has to police the charities – big and small -- that engage in these transactions.”
The text of the Senators’ letter is below, followed by Baucus’s original query to the IRS. 3 response of Acting Commissioner Kevin Brown is attached in PDF.
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