Report: IRS sought gift tax on conservative group’s donors

The IRS tried to impose a gift tax on donors to a conservative group formed to support former President George W. Bush’s 2007 troop surge in Iraq, The Wall Street Journal reported Saturday.

{mosads}The timing of the effort coincided with the timeframe of the IRS’s scrutiny of Tea Party groups seeking tax-exempt status, and it began under the unit led by Lois Lerner, who is the subject of a congressional investigation into the Tea Party targeting.

The probe centered on a group called Freedom’s Watch and involved five separate audits, the Journal reported. It was halted in 2011 after an outcry from Congress, although the identity of the organization was not revealed at the time.

Freedom’s Watch is now defunct, but tax experts told the Journal that the effort to impose gift taxes on its donors was highly unusual. The IRS declined to comment in the story.

The report could add to the problems of the IRS, which is facing bipartisan outrage, a criminal investigation and multiple congressional inquiries on Capitol Hill after officials admitted to inappropriately targeting conservative groups for additional scrutiny.

Acting IRS Commissioner Danny Werfel late Friday acknowledged that an upcoming audit would find improper spending at a 2010 agency conference, calling it an “unfortunate vestige” from a time before the agency tightened its belt.

“While there were legitimate reasons for holding the meeting, many of the expenses associated with it were inappropriate and should not have occurred,” Werfel said in a statement.