IRS Cautions Taxpayers about Fake Charities

It seems like every day we receive pleas from charities to make donations for their cause.  Some we recognize;  others, well, you may never have heard from them before.  Especially with the topsy-turvy world we have been experiencing with Covid-19, most legitimate charities have noticed a decline in contributions. 

It is sad for those legitimate charities who may suffer because of the fake charities.  The IRS continues to observe criminals using a variety of scams that target honest taxpayers. In some cases, these scams will trick taxpayers into doing something illegal or that ultimately causes them financial harm. These scammers may cause otherwise honest people to do things they don’t realize are illegal, or they prey on their good will to steal their money.

The IRS does investigate when someone reports a scam they have been victim to.  Some of the stories are unbelievable, but unfortunately, people do have the time and creativity to create such scams.  And, when there is a tragedy or a disaster, there is more tugging of heartstrings of people to help the victims – often being unknowingly scammed by a fake charity. 

Many times, these scams come via phone call.  There is pressure for you to give and to give NOW!  The caller may be calling from a number that looks real on your caller ID, but isn’t real. 

Don’t be afraid to ask questions if you get a call.  What is the charity’s exact name, website and mailing address?  And, make certain that they don’t confuse you with a similar name to a well-known charity.  If you are still engaged in the call, tell the caller to call you back in a few days and you will give them your decision.  This will allow you to investigate whether the charity is real or fake. 

If the charity is legitimate, they can provide you with written materials as to their cause which would state that they are an approved charity by the IRS as a Tax Exempt Organization.  It is only a contribution to a qualified charity that a taxpayer can claim the donation as a deduction for income tax purposes.  If you are not certain about a charity, visit irs.gov and search for Tax Exempt Organizations.  All qualified organizations recognized by the IRS will appear.  You may even find an organization that has a cause you believe in, but never knew the organization existed.  Remember, no individual or political donations are deductible. 

Finally, be careful how a donation is made.  If you are asked to wire money or to give via a gift card – heads up that it may be a fake charity.  And, unless and until you are sure that the charity is real, don’t give out your bank account or credit card information. 

You can be generous, but be cautious. 

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About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Fiduciary Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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