The Internal Revenue Service is trying to collect millions of dollars in back gift taxes from Chicago millionaire W. Clement Stone and other major contributors to the 1968 and 1972 Nixon presidential campaign, according to Stone's lawyers.
IRS now contends that a then widely accepted practice of giving $3,000 or less to multiple campaign committees did not exempt the contributions from federal gift tax provisions. Under the law at the time, $3,000 was the maximum political contribution that could be made without paying a gift tax.
About 20 Nixon donors across the country have been sent "deficiency assessments," lawyers James T. Rhind and Douglas Walters said yesterday.
IRS also "has some Democratic cases in the works," Walters said, but added there were not as many substantial donors to the 1972 presidential campaign of George McGovern.
Stone's lawyers do not know why IRS is now pressing these cares, particularly since a 1974 law made all political contributions exempt from gift taxes.
They said yesterday the matter is being "orchestrated out of Washington."
A spokesman said the IRS would have no comment on the matter.
In the years up to 1974, major political campaigns set up hundreds of paper committees to which big donors directed their contributions after first dividing them into amounts of $3,000 or less.
Campaign treasurers for both major political parties used to explain to big donors the need to divide any contributions exceeding $3,000.
Stone, for example, gave more than $5 million to Nixon campaign organizations between 1968 and 1973. The money went to hundreds of organizations with cities ranging from Citizen Issue Committee for Good Government to National Issue Committee to Indepedent Reserach Committee.
After Richard M. Nixon got the Republican nomination in 1963, the different committees were identified only by number: No. 1 was the Nixon Television Committee and the list continued through No. 34.
Based on $7 million in political contributions between 1968 and 1978, IRS is now seeking additional gift taxes totaling $3.4 million from Stone and his wife.
Stone's lawyers contend some IRS officials began in 1973 to try to do away with "an always accepted practice" that permitted big donors to avoid the gift tax.Question about Stone's contributions were first raised in 1970, they said.
The point out that in June 1972, when the Nixon administration was in office and at the same time raising money in $3,000 amounts for Nixon's re-election campaign, IRS came out with a ruling that "codified what was accepted in practice."
That ruling permitted multiple donations when the individual officers were different on each committee even though all the committee supported the same candidate.
In late 1973, however, after protests following the publication of this big-donor practice in the Nixon campaign, IRS issued a new ruling, which said the variously listed officers had to actually serve in those positions.
In reaction to that ruling, Congress passed an amendment to a 1974 revenue act that exempted all political contributions from the gift tax.
"You can give $1 million today to a state candidate," Walters said yesterday, and not have to pay a gift tax. "This is an action that will only affect donors betwen 1968 and 1973."
Stone's case became public because he decided to fight the IRS assessment in Tax Court.
His lawyers said other donors are either waiting to see what happens to Stone or quietly paying.
Many do not want to fight because it means putting on the public record all the contributions they made during the years in question. That was not a problem for Stone, who made his own list public four years ago.
In addition to seeking additional taxes on the Stones' committee contributions, IRS also contends that $830,000 in loans by the couple to political candidates were, in fact, gifts - and subject to taxation.
Among the recipients are former Chicago sheriff Joseph Woods, the brother of Nixon's persona secretary. Rose Mary Woods. Stone loaned Woods' committee $254,941 in 1970 when the sheriff ran unsuccessfully for the presidency of the Cook County Board. Stone also donated $60,000 to the campaign. The loan is still outstanding. CAPTION: Picture, W. CLEMENT STONE . . . fighting $3.4 million assessment