What is Charitable Deduction Fraud? What to Know When Facing IRS Scrutiny

Charitable deduction fraud involves improperly claiming federal tax deductions for donations (or purported donations) to non-profit organizations. It can expose taxpayers to civil or criminal penalties—in addition to liability for unpaid taxes and interest. As a result, when facing IRS scrutiny, it is critical to make informed decisions based on the advice of an experienced Maryland tax evasion attorney.

While U.S. taxpayers can use charitable deductions to reduce their federal income tax liability, they must ensure their charitable deductions comply with federal law. From adjusted gross income (AGI) caps to restrictions on qualifying non-profit organizations, several limitations apply. Improperly claiming charitable deductions can trigger scrutiny from the Internal Revenue Service (IRS), which can lead to substantial civil or criminal penalties.

As a result, Maryland tax evasion attorney Kevin E. Thorn, Managing Partner of U.S. International Tax Advisors, explains that taxpayers residing in the U.S. and abroad must prioritize compliance. This starts with understanding what the IRS characterizes as charitable deduction fraud.

What Does the IRS Characterize as Charitable Deduction Fraud?

Under the Internal Revenue Code, charitable deduction fraud can take many different forms. For example, all of the following have the potential to trigger an IRS audit and expose taxpayers to significant liability:

• Claiming charitable deductions for payments or gifts that do not qualify as charitable donations
• Claiming charitable deductions in excess of the applicable AGI cap
• Claiming charitable deductions for contributions made to non-qualifying organizations
• Inflating the fair market value (FMV) of donated personal or real property
• Inflating the total amount of cash contributions made to qualifying organizations

Ultimately, any improper charitable deductions can trigger additional liability for U.S. taxpayers. If the IRS has reason to believe a taxpayer willfully claimed improper charitable deductions, this can lead to federal criminal charges as well.

How U.S. International Tax Advisors Can Help

For U.S. taxpayers facing IRS scrutiny over charitable deductions, avoiding unnecessary consequences starts with experienced tax counsel. Here are just some of the ways U.S. International Tax Advisors can help in this scenario:

• Conducting a comprehensive and unbiased assessment of charitable deduction compliance
• Determining what documentation is available to substantiate compliance
• Interfacing directly with the IRS throughout the audit process
• Working to facilitate a favorable resolution that avoids unnecessary and unwarranted liability
• Challenging the outcome of the IRS’ audit if necessary

We provide these services to taxpayers residing in the U.S. and worldwide. If you need experienced legal representation for an IRS audit involving charitable deductions, contact us promptly for more information.

Schedule a Call with Maryland Tax Evasion Attorney Kevin E. Thorn

Is the IRS scrutinizing your charitable deductions? If so, we can help—as long as you contact us in time. To schedule a call with Maryland tax evasion attorney Kevin E. Thorn, Managing Partner of U.S. International Tax Advisors, as soon as possible, call 240-235-5096 or tell us how we can reach you online now.