This bill amends Section 2252 of the monolith that is the IRS tax code. As you might expect, this is the section that outlines what kinds of organizations people can make tax-deductible donations to. The ones already on that list include:
- The U.S. government;
- A fraternal or social organization that is using the donation solely for charity;
- A veterans’ organization, providing none of the donation goes to a shareholder or private individual;
- A foundation, fund, corporation or trust dedicated to religion, amateur sports, education, science, literature, the prevention of cruelty to animals, the prevention of child abuse or other kinds of charity.
In his press release, Sponsoring Rep. Peter Roskam (R-IL) explains that his legislation is a response to a letter sent by the IRS wherein it threatened to tax large donations to non-profits. The IRS has been under Republican scrutiny since 2010, when it was revealed that it was specifically telling employees to look for Tea Party organizations to investigate with harsher scrutiny.
But while donations to non-profit groups might seem innocent, a particular type of donation has recently come under its own scrutiny by government transparency groups. 501(c)4s, the “civic organizations” mentioned above, have become major sources of campaign money that don’t have to reveal their donors. Giving them an exemption from taxes could make these shadowy backers even more powerful.
Sponsoring Rep. Peter Roskam (R-IL) Press Release
CBO Cost Estimate
The Washington Times
Summary by James Helmsworth
(Photo Credit: Flickr user masha_k_sh)