Charity Abuse One of IRS's "Dirty Dozen" Tax Scams

March 14, 2008

Charity Abuse One of IRS's "Dirty Dozen" Tax Scams

Once again, the misuse of nonprofit organizations to shield income or provide fake tax breaks has appeared on the Internal Revenue Service’s Dirty Dozen, the agency’s annual list of the top 12 tax scams in the United States.

Most of the abuse stems from people giving money or property to donor-advised funds or similar programs while retaining too much control over the donations. The IRS also warns charities to watch out for people overestimating the value of donated property, such as land or artwork, so that the donors can take an excessive tax break.

In addition, the IRS says that an old scam — claiming that private tuition payments are donations to a nonprofit group or religious organization — continues to grow. The agency noted on last year’s Dirty Dozen list that the scam had returned, and this year it notes that it has gained popularity.

— Sam Kean

Comments

How about collecting donations to enhance the lifestyle of the top administrators? This might not make the IRS top scams , but it is a scam that is certainly appearing more frequently.Public institutions are not receiving the scrutiny,much like the telelevangelists,where the institutions collect money to “fight cancer” ,“important medical reserach”,or “developing treatments”. The stories coming out regarding UT Southwestern Medical Center in Dallas are very disturbing,with regards to the use of donated funds.No donor would ever provide funds to pay for a $500 bottle of wine,gifts for the large donors,trips to Europe,or pay for the top administrator’s every meal.It is even more alarming that this unethical use of funds is not only defending by the university,but they have their own internal auditor “rubber stamp” the validity of their claims.There is no oversight, save the “fox that guards the hen house”. Neither the state officials (because they receive donations from the top administrators) nor the UT System officials ( because they probably condone this behavior) have even talked about an outside audit or investigation. All that is left is to file IRS form #3949 to report the misuse of funds. This will only take a few years….

— Brent Mar 15, 08:36 AM #

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