In these times of fierce partisanship, it is rare to find an issue on which two leaders from very different sides of the political spectrum can see eye to eye. However, on the issue of the Gift Tax, we agree the IRS is threatening the very foundation of our country and the great charitable organizations that serve as our foundation. It is because of this issue that we are deeply concerned for the future of our nation and the health of our communities.
In 2012, the IRS sent letters to many 501(c)(4) organizations threatening to impose the Gift Tax on donors of more than $12,000. Therefore, many donors merely capped their donations at $12,000, leaving many local organizations hurting for the funding they counted on to be able to make ends meet in years past. In 2012, the IRS targeted mostly tea party or heavily conservative organizations, but until the tax code is corrected, all organizations are under a heavy threat.
Whether it’s Oklahoma or Oakland, Calif., community organizations are of vital importance, especially in disadvantaged communities. They provide services that local governments often cannot, and provide a social fabric that weaves together the daily lives of citizens. They conduct events such as food drives, voter registrations and community events. These events and activities connect a community on many different levels and lead to a happier more prosperous society. In Oklahoma, the Education and Employment Ministries provides vital services to men and women who have fallen on hard times due to drugs or unemployment and help them recover or find gainful employment would be impacted adversely.
There are more than 85,000 501(c)(4) organizations in the U.S. ranging from the local Kiwanis Club to the local NAACP. In order to even qualify for status as a 501(c)(4), an organization “must be operated exclusively to promote social welfare.” This means that to even be considered a c4, the organizations must act to the benefit of the community. These organizations, such as local chapters of the Veterans of Foreign Wars who look after those who have served our country, provide a unique service, not to bureaucrats and politicians in Washington, but to real people. While the national level of these organizations are organized under the 501(c)(3) tax level, there is no guarantee that even these organizations will not be subject to eventual application of the Gift Tax.
The simple solution for this is to amend the tax code to guarantee the IRS cannot selectively choose to apply the Gift Tax at its own discretion. The IRS was created to be a tool of the people merely to collect taxes, not to decide them. It is the duty of our elected officials to determine tax policy, not the folks that serve below them.
Fortunately, this process has already been started. We would like to thank Illinois Rep. Peter Roskam for introducing HR 1104, The Fair Treatment for All Gifts Act, and the House for passing the bill. Rarely can the House leadership rally enough support to pass a bill on voice vote, so we’d also like to say thanks to folks like civil rights hero Rep. John Lewis, D-Ga., for speaking out on and supporting legislation on this important issue. Imagine both parties working together to address a common sense solution to a policy issue.
It is now up to the Senate leadership to follow the example set by the House. We appreciate Senator Rob Portman from Ohio introducing S 942, and we encourage Senate Majority Leader Mitch McConnell of Kentucky, future Democrat leader Charles E. Schumer of New York and the rest of the Senate leadership to get behind this bill and solve this problem once and for all.
Former Rep. J.C. Watts, R-Okla., served from 1994 to 2003 and was elected chairman of the House Republican Conference in 1998. Former Rep. Ron Dellums, R-Calif., served in Congress from 1971 to 1998 and served as the 48th mayor of Oakland, Calif.