Charity Contribution Tax Fraud
There have been instances in which schemers have committed charity contribution tax fraud in order to scam the IRS. Learn more about how to avoid this particular type of identity theft below.
The fraudsters pop up whenever there are natural disasters such as earthquakes, floods, etc., trying to coax your client into making a donation that will go into the scammer’s pockets and not to help the victims of the disaster. These same crooks might also steal your client’s identity for other schemes. They use the phone, mail, e-mail, websites and social networking sites to perpetrate their crimes.
When disaster strikes, you can be sure that scam artists will be close behind. It is a natural instinct to want to provide assistance right away but potential donors should exercise caution and make sure their hard-earned dollars go for the purpose intended, not to line the pockets of scam artists. You need to make your clients aware of this type of fraud. The following are some tips to avoid fraudulent fund raisers.
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Donate only to known and trusted charities. Be alert for charities that seem to have sprung up overnight in connection with current events.
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Ask if a caller is a paid fundraiser, who they work for, and what percentage of the donation goes to the charity and to the fundraiser. If a clear answer is not provided — consider donating to a different organization.
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Don’t give out personal or financial information — including credit card or bank account number — unless the charity is known and reputable.
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Never send cash: The organization may never receive the donation, and there won’t be a record for tax purposes.
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Never wire money to a charity. It’s like sending cash.
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If a donation request comes from a group claiming to help a local community agency (for example, local police or firefighters), ask the local agency if they have heard of the group and are getting financial support.
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Check out the charity with the Better Business Bureau's (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, or GuideStar.