The US House of Representatives yesterday unanimously passed H.R. 1104, the “Fair Treatment for All Gifts Tax Act.” In past years, the IRS has been caught applying improper scrutiny towards conservative organizations. This legislation addresses the agency inappropriately applying federal gift tax rules to contributions given to some non-profits.  

H.R. 1104, introduced by Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-Ill.) was part of a package of legislation passed yesterday that will make the IRS more accountable to the American people and put a stop to the politicized decision-making that has become all too frequent within the agency. H.R. 1104 passed unanimously and will now be considered by the US Senate.

In the past, the IRS has tried to assert that 501(c)(4) groups are “persons” under the tax code, and therefore any donations to them in excess of $14,000 should trigger tax consequences to the donor. But as ATR’s Ryan Ellis has previously pointed out “No serious tax expert would say that this interpretation holds water.”

The Fair Treatment for All Gifts Tax Act will prevent the IRS from assessing the gift tax on contributions to certain non-profit organizations. Americans for Tax Reform, as well as numerous other free market groups are organized under Section 501(c)(4) of the Internal Revenue Code, and were therefore affected.

This was a clearly a perversion of federal gift tax rules – the gift tax was never intended to affect voluntary donations to non-profit groups. In fact, this intimidation tactic occurred around the same time that Lois Lerner was denying conservative and Tea Party non-profits the ability to organize and get tax status, and so was a clearly an extension of the agency’s politicized targeting.

The passage of this legislation will put a stop to one pathway that the agency used to apply improper scrutiny to non-profits, and is a key victory for advocates of a fair and accountable political system. ATR applauds the unanimous passage of the Fair Treatment for All Gifts Tax Act, and urges the Senate to quickly pass this much-needed legislation.