Crossraods GPS, the 501c4 arm of American Crossroads, is spending $20 million over the next two months airing the embedded ad “Shovel Ready”, nationwide (the initial $5 million ad buy covered nine swing states). Thanks to an Internal Revenue Service opinion today, donors are now free to give money to Crossroads GPS to air more ads without paying the gift tax.
Donors had been giving money to c4s without paying the gift tax for years, but some IRS offices had begun to enforce the gift tax on donations to the organizations. Today's IRS letter acknowledges that the law is unclear on the issue, but then cites that uncertainty as justification for ending enforcement until an official IRS position is finalized. From the letter:
This is a difficult area with significant legal, administrative, and policy implications with respect to which we have little enforcement history. My office will be coordinating with the Office of Chief Counsel to determine whether there is a need for further guidance in this area. Until further notice, examination resources should not be expended on this issue. It is anticipated that any future examination activity would be after the coordination described above and would be prospective only after notice to the public. Thus, the Service should not expend examination resources initiating referral's or developing audits. Accordingly, all current examinations relating to the application of gift tax to contributions to I.R.C. § 501(c)(4) organi,zations should be closed.