IRS cautions taxpayers on scams involving disasters, charitable causes
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The Internal Revenue Service encouraged taxpayers to be alert to scam groups masquerading as charitable organizations.
Using a tax deduction as bait, these fake charities often lure victims into making ineligible donations, ultimately leaving the unsuspecting donor in the lurch.
“Scam artists commonly use charities as a cover to lure honest people into providing money and sensitive personal information,” said IRS Commissioner Chuck Rettig. “Protect yourself, and make sure you are dealing with a reputable group before making a donation.”
Fake charities are one of the “Dirty Dozen” tax scams for 2019.
Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter all year round. Many of these schemes peak during filing season as people prepare their tax returns or hire others to prepare their taxes.
Perpetrators of illegal scams can face significant penalties, interest and possible criminal prosecution. To help protect taxpayers, IRS Criminal Investigation works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.
The IRS offers these basic tips to taxpayers making charitable donations:
- Be wary of charities with names that are similar to familiar or nationally-known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. IRS.gov has a search feature, Tax Exempt Organization Search, that allows people to find legitimate, qualified charities to which donations may be tax-deductible. Legitimate charities will provide their Employer Identification Number (EIN), if requested, which can be used to verify their legitimacy through the IRS search tool.
- Don’t give out personal financial information, such as Social Security numbers or passwords, to anyone who solicits a contribution. Scam artists may use this information to steal identities and money from victims. Donors often use credit cards to make donations. Be cautious when disclosing credit card numbers to those seeking a donation. Confirm that those soliciting a donation are calling from a legitimate charity.
- Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the donation.
- Consult IRS Publication 526, Charitable Contributions, available on IRS.gov. This free booklet describes the tax rules that apply to making tax-deductible donations. Among other things, it provides complete details on what records to keep which helps taxpayers at tax time.
Impersonation of charitable organizations
Another long-standing type of abuse or fraud involves scams that occur in the wake of significant natural disasters. The IRS encourages taxpayers to donate to recognized charities established to help disaster victims. Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers.
Some scammers operating bogus charities may contact people by telephone or email to solicit money or financial information. And bogus websites may solicit funds for disaster victims.
Another trick by scam artists is directly contacting disaster victims and claiming to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.
Remember, fraudsters may attempt to get personal financial information or Social Security numbers that can be used to steal victims’ identities or financial resources.
Taxpayers can find legitimate and qualified charities with the Tax Exempt Organization Search tool on IRS.gov.
Individuals may report suspected fraudulent activity to the IRS on Form 13909, Tax Exempt Organization Referral (Complaint).
Alfredo Gaxiola has worked on numerous IRS problem cases and has successfully settled with the IRS to release liens on houses, bank accounts and wages and, if needed, setting a payment installment plan that is not burdensome for the client. He has conducted appeals before the U.S. Tax Court and obtained favorable resolutions in reducing the tax debt of his clients. Mr. Gaxiola served as Treasurer of Camara de Empresarios Latinos, one of the largest and strongest Hispanic organizations in the city of Houston. He has conducted financial and accounting seminars for the Houston Small Business Development Corporation, as well.
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