The IRS Dirty Dozen 2015, #7: Fake Charities

The New York Post recently reported that the founder of “Boobies Rock!” a fake breast cancer charity, was ordered to return $1.89 million he collected and will also have to pay $4 million in penalties.

The media is full of stories about fake charities so it is no surprise that they made the IRS Dirty Dozen tax scam list for 2015. 

Fake charity red flags 

There are some signs that the money you are being asked to give will not be used for charitable purposes. Watch out for:

  • People who call you or come to your door asking for a contribution – never give these people your personal or financial information
  • Requests for cash donations – make sure that your donation can be tracked and documented (this is difficult when you hand out cash)
  • Contributions sought exclusively through emails and websites – some scammers use  charitable solicitations in order to obtain credit card information for identity theft purposes or to install software on your computer or mobile phone that will enable them to control your device
  • Individuals unknown to you who are asking for money on Facebook, Craigslist and various online crowdfunding websites – many of these appeals involve fake victims
  • So-called charities that have names that sound like well-known, respected organizations
  • Solicitations from unknown individuals and organizations that connect themselves with a highly publicized crisis – scammers tend to focus on local and international disasters that have significant emotional appeal

Tips to ensure that your donation goes to the right people

There are many worthwhile charitable organizations that utilize most if not all of the money they receive for valid charitable purposes. After deciding what issue means most to you, do some research on organizations dedicated to that purpose:

  • Check to make sure that they are a valid charity through IRS Exempt Organizations Select Check
  • Ask for a copy of their 501(c)(3) determination letter from the IRS – this will ensure that your donation is tax deductible (note that this is not an absolute requirement for churches and other religious organizations)
  • Take a look at the charity’s annual 990 information returns to the IRS, available on The Foundation Center and Guidestar websites, among others (note that not all charities need to file a 990)
  • Get to know the organization – Ask to be informed of their activities. Maybe write a small check to start with and see how they respond. Did you receive a prompt thank-you note? An update on how your donation was used? Are there opportunities to see them at work?  What are the outcomes of their efforts?

Be a wise donor and make sure that your hard-earned money goes to a valid, responsible charity.  To learn more about sensible, effective and tax-deductible charitable giving methods, contact the tax professionals at Moskowitz LLP today.  

#8 on the IRS “Dirty Dozen” list of tax scams is Hiding Income with Fake Documents-will we describe those in our next blog post in this series.