IRS Drops Investigations of Big Donors to Advocacy Groups

In a surprise about-face, the Internal Revenue Service announced that it has dropped any consideration of enforcing gift taxes on donations made to nonprofit advocacy groups.

Several big donors to advocacy groups had reported this spring that they had received questions from the IRS about whether they should have paid gift taxes. Many advocacy groups, classified under Section 501(c)(4) of the tax code, spent heavily on political ads in the 2010 election cycle.