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Subject Author Date
501(c)3 deduction disallowed Berkeley1 02-07-2007
Posted by Berkeley1 on February 7, 2007, 7:29 pm
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 I received a notice from the IRS disallowing a contribution
made to a 501(c)3 charity connected with the sale of my
home. The donation was made in 2003, but in 2006 the IRS
disallowed all similar charitable contributions. The IRS is
demanding payment plus penalties and interest. The amount is
not trivial -- it is a couple thousand dollars.

At the time of my donation, I did my due diligence, checked
out the charity and made sure it was legitimate. What are
my options here? If the charity is not legitimate, I want my
donation refunded. I can understand if the IRS decides a
particular contribution is no longer valid, but since they
allowed it at the time, If the charity was legitimate at
the time of my donation, then shouldn't the IRS allow it for
that particular year.

I am not sure how to respond to the IRS on this -- the
charity in question has not responded to my emails, and they
have removed all the tax deduction claims from their
website. So I am understandably feeling victimized here.

What are my options here? If I end up having to pay this
hefty fine, then I have been scammed by both the IRS and the
charity, and I would never be willing to trust a charity
again. If the IRS grants a charity 501(c)3 status but can
take that back at any time and turn donors into victims,
then that will eventually have an effect on American's
willingness to donate.

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Posted by Seth Breidbart on February 8, 2007, 7:58 am
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> I received a notice from the IRS disallowing a contribution
> made to a 501(c)3 charity connected with the sale of my
> home.

What does that mean? If all the connection means is that
you raised a lot of cash by selling your home and donated
cash to the charity, it's irrelevant where the cash came
from. Or was there some sort of complex transaction
involving the sale and the charity?

> The donation was made in 2003, but in 2006 the IRS
> disallowed all similar charitable contributions.

That sounds like it wasn't a simple cash donation.

> At the time of my donation, I did my due diligence, checked
> out the charity and made sure it was legitimate.

But was the form of the donation legitimate? Exactly what
transpired?

> I am not sure how to respond to the IRS on this -- the
> charity in question has not responded to my emails, and they
> have removed all the tax deduction claims from their
> website. So I am understandably feeling victimized here.

Again, that looks like there was a tax-shelter-scam being
run.

> If I end up having to pay this
> hefty fine, then I have been scammed by both the IRS and the
> charity,

Did the IRS tell you that the form of donation you were
making was allowed?

Seth

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Kreig Mitchell on February 8, 2007, 7:58 am
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> I received a notice from the IRS disallowing a contribution
> made to a 501(c)3 charity connected with the sale of my
> home. The donation was made in 2003, but in 2006 the IRS
> disallowed all similar charitable contributions. The IRS is
> demanding payment plus penalties and interest. The amount is
> not trivial -- it is a couple thousand dollars.
>
> At the time of my donation, I did my due diligence, checked
> out the charity and made sure it was legitimate. What are
> my options here? If the charity is not legitimate, I want my
> donation refunded. I can understand if the IRS decides a
> particular contribution is no longer valid, but since they
> allowed it at the time, If the charity was legitimate at
> the time of my donation, then shouldn't the IRS allow it for
> that particular year.
>
> I am not sure how to respond to the IRS on this -- the
> charity in question has not responded to my emails, and they
> have removed all the tax deduction claims from their
> website. So I am understandably feeling victimized here.
>
> What are my options here? If I end up having to pay this
> hefty fine, then I have been scammed by both the IRS and the
> charity, and I would never be willing to trust a charity
> again. If the IRS grants a charity 501(c)3 status but can
> take that back at any time and turn donors into victims,
> then that will eventually have an effect on American's
> willingness to donate.

The IRS is pretty flexible in abating or removing penalties
and (sometimes) interest. You should submit an abatement
request. Your tax advisor can help you with this.

Kreig Mitchell
www.irstaxtrouble.com
www.irstaxtrouble.com/blog.htm

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Phoebe Roberts, EA on February 8, 2007, 11:51 pm
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Berkeley1 wrote:

> I received a notice from the IRS disallowing a contribution
> made to a 501(c)3 charity connected with the sale of my
> home.

Was this the scheme wherein the seller increased the price
of the home, contributed the excess to a 'charity,' and the
charity then 'helped' a needy buyer by giving them money to
buy a home, which coincidentally belonged to the seller? As
described here:

http://www.usdoj.gov/tax/PartnersInCharity_1stAmendedCompl.pdf
or here:
http://www.partnersincharity.org/new_site/pic_irs_agreement.pdf ?

If it were me, I'd pay the tax and talk to an attorney.

Phoebe :)

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Harlan Lunsford on February 8, 2007, 11:51 pm
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Berkeley1 wrote:

> I received a notice from the IRS disallowing a contribution
> made to a 501(c)3 charity connected with the sale of my
> home. The donation was made in 2003, but in 2006 the IRS
> disallowed all similar charitable contributions. The IRS is
> demanding payment plus penalties and interest. The amount is
> not trivial -- it is a couple thousand dollars.
>
> At the time of my donation, I did my due diligence, checked
> out the charity and made sure it was legitimate. What are
> my options here? If the charity is not legitimate, I want my
> donation refunded. I can understand if the IRS decides a
> particular contribution is no longer valid, but since they
> allowed it at the time, If the charity was legitimate at
> the time of my donation, then shouldn't the IRS allow it for
> that particular year.
>
> I am not sure how to respond to the IRS on this -- the
> charity in question has not responded to my emails, and they
> have removed all the tax deduction claims from their
> website. So I am understandably feeling victimized here.
>
> What are my options here? If I end up having to pay this
> hefty fine, then I have been scammed by both the IRS and the
> charity, and I would never be willing to trust a charity
> again. If the IRS grants a charity 501(c)3 status but can
> take that back at any time and turn donors into victims,
> then that will eventually have an effect on American's
> willingness to donate.

I forget the name of that "charity", but the whole thing
was a scam, designed to disguise closing costs as charitable
contributions. the IRS has cracked down on it. something
like... promise... for America? can't remember the name of
it. What is the "charity" name?

ChEAr$,
Harlan Lunsford, EA n LA

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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