On October 24, 2023, the Internal Revenue Service (IRS) issued a warning that donors should be aware of criminals who falsely pose as legitimate charities. These fake charities may scam good-hearted donors into making gifts that are for the purpose of helping those in need. However, these contributions to fake charities are not deductible on the donor’s tax returns.
The IRS helps taxpayers on IRS.gov by offering a way to gather information on legitimate charities. There is a helpful Tax-Exempt Organization Search (TEOS) tool. It shows the existence of the charity, notes that it is eligible to receive tax-deductible contributions and lists the tax-exempt status and filings. Not all eligible charities will appear in this tool, and some religious organizations may not be searchable. You can find that information here.
The Federal Bureau of Investigation also has resources on “Charity and Disaster Fraud.” This information also gives guidelines on protecting yourself. You can find that information here.
Be particularly aware whenever there is an international crisis, such as a disaster or conflict as criminals take advantage of the generous spirit of Americans to create a bogus charity. They will not only seek gifts, but they also ask for personal information to assist them in identity theft.
Strategies used by the fraudsters and scammers are:
- Using names similar to legitimate charities
- Contacting individuals using emails or phone calls
- “Spoofing” their caller ID to make it look like a real charity
- Targeting individuals who are seniors or have limited English proficiency
- Asking for immediate payment or large donation via a gift card or wire transfer
If you are uncertain about a call or email, ask the fundraiser for the exact charity name, website and mailing address and phone number. This information can be used to confirm charity is a legitimate nonprofit.
Victims who make gifts to fraudulent charities do not qualify for an itemized charitable deduction. Only gifts to qualified tax-exempt nonprofits are deductible.
At theKFORDgroup, we are here to help, so contact us if you need additional information at 210-340-5351 and speak to one of our tax professionals.