Tips for Protecting Yourself when Making Charitable Contributions
When disaster strikes we tend to come together and open up our wallets to help the victims. Scammers know this well and use it as an opportunity to take advantage of our generosity. The IRS lists fake charities as one of its “Dirty Dozen” tax scams for 2019. By using the promise of a tax deduction, and our sincere desire to help the unfortunate, fake charities lure their victims into making donations which cannot be deducted and which will probably not even be used for charitable purposes.
The following tips may help you protect yourself from these scammers.
- Make sure you are dealing with a reputable charity before making a donation. Phony charities may use names that are similar to nationally-known organizations.
- Ask for the charity’s employer identification number. Legitimate charities will readily provide you with their IRS issued number.
- Use the IRS’s tax exempt organization search feature to verify the legitimacy of the charity. See https://www.irs.gov/charities-non-profits/tax-exempt-organization-search. The IRS will provide you information regarding whether donations made to the charity may be deductible, and whether the charity’s exempt status has been revoked. You can even see the charity’s tax return. Sometimes a “charity” spends so much on administrative costs, such as salaries, that very little is actually used for charitable purposes.
- Never give out personal financial information such as social security numbers. Since many donations are made via credit cards, it is important to make sure you are dealing with a legitimate charity or you will have given the scammer your credit card number and security code.
- Do not give or send cash to the charity.
If you have information that a charitable organization is engaged in fraudulent activity or is not in compliance with the tax laws governing charities, you can report the suspected activity to the IRS by submitting IRS Form 13909. If the government makes a recovery based on the information you provided in the complaint, you may make a claim for a reward under the whistleblower statutes.