Shared Sacrifices and Balanced Approaches

So here comes the “Budget Control Act of 2011.”  Imagine that – Obama has never met a budget that he could control, but there you have it.

In utterances after he signed this disappointing legislation, he noted, “Since you can’t close the deficit with just spending cuts, we’ll need a balanced approach where everything is on the table.  Yes, that means making some adjustments to protect health care programs like Medicare so they’re there for future generations.  It also means reforming our tax code so that the wealthiest Americans and biggest corporations pay their fair share.  And it means getting rid of taxpayer subsidies to oil and gas companies, and tax loopholes that help billionaires pay a lower tax rate than teachers and nurses….Everyone is going to have to chip in.  It’s only fair.  That’s the principle I’ll be fighting for during the next phase of this process.”

The next time we hear about millionaires and billionaires, please forgive us if we head for the vomitorium.  This incessant class warfare nonsense has got to stop.  And maybe that means the country begs for a real statesman to return to control.

We can already hardly wait for December 23, 2011 (almost Christmas Eve) when the Joint Select Committee on Deficit Reduction will have rendered its report, and both houses of Congress will have to sign off – no amendments allowed.

And while we’re on the subject of our esteemed leader and his minions, how about the fact that six Republicans on the Senate Finance Committee recently wrote to the IRS Commish, asking him to explain why the IRS is examining donors who put up bucks to IRC Section 501(c)(4) exempt organizations, without paying gift tax (What???)

Gift tax is typically due when one transfers wealth to another humanoid (generally a family member) as opposed to a legitimate charity – an IRS approved tax exempt organization.  That’s what IRC Section 501 is all about.

In their May 18, 2011 letter to Commish Shulman, the Senators say, “We note, therefore, with particular interest the recent accounts from the IRS concerning enforcement action against individuals who have made previous donations to 501(c)(4) tax exempt organizations.  The unusual character of these enforcement actions was enough to attract the interest of the New York Times.  According to that report, ‘IRS Moves to Tax Gifts to Groups Active in Politics,’ the IRS is ‘invoking a provision that had rarely, if ever, been enforced,’ informing a handful of individuals that their contributiions to 501(c)(4) organizations may be subject to federal gift taxes……President Obama and his White House staff have made it clear that they view these organizations with deep hostility.”

And there you have it.  Let’s hope the Committee gets what it wants, like the names of folks at IRS who contributed to this decision, correspondence generated by IRS in this matter, and any analysis generated, requested, or obtained by IRS regarding the First Amendment implications of applying the gift tax to 501(c)(4) contributions.

CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.

Jeff Quinn, the author of this article, is a shareholder of Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno.  He may be reached at 831-7288, welcomes comments at jquinn@ashleyquinncpas.com, and invites readers to consider his other commentary at http://blog.nolo.com/taxes/.