The Internal Revenue Service has warned taxpayers about groups claiming to be charitable organizations to entice contributors to make donations. This scam has been added to the “Dirty Dozen”, a list of common scams that the IRS compiles annually.
“When making a donation, taxpayers should take a few extra minutes to ensure their hard-earned money goes to legitimate and currently eligible charities,” stated IRS Commissioner John Koskinen. IRS.gov has the tools taxpayers need to check out the status of charitable organizations.
Illegal scams can result in significant penalties and interest, as well as, criminal prosecution. Hence, IRS Criminal Investigation works closely with the Department of Justice to shut down scams and prosecute the perpetrators.
The IRS specifically mentions a long-standing scam that generally occurs following a natural disaster. The taxpayer is contacted by a scam artist who impersonates a charity and uses a variety of tactics to obtain the taxpayer’s money, financial information, or personal information such as the Social Security number. Some scammers may even contact disaster victims directly and claim to be working for or on behalf of the IRS to assist them in filing casualty loss claims and obtaining tax refunds.
To protect taxpayers from scams, the IRS has offered the following basic tips to those making charitable contributions:
- Be cautious of charities with names that are similar to nationally known organizations. It is common for false charities to use names or websites that sound or look like those of legitimate organizations. Taxpayers should use the search feature on the IRS website (www.irs.gov) to find legitimate charities that qualify for tax-deductible contributions.
- Avoid providing personal financial information, such as Social Security numbers or passwords, to anyone soliciting a charitable contribution. The scam artists may use such information to steal the taxpayer’s identity.
- Taxpayers should make charitable contributions by check or credit card for security and substantiation purposes. They should not give or send cash.
If you have been approached by a charity and question its validity, please contact your Marcum tax advisor who can assist you in verifying if its authentic.