Can You Believe This? The Newest on Fake Charities!
This post is to help anyone. I want to especially advise our seniors, and friends who may be challenged with speaking English. These matters.
There are charity causes created by disease, weather, disaster, and even war that are actively seeking help from the public. And they are not just local; they are everywhere. And it has become so easy for scammers who request donations while they pose as legitimate charities.
- The obvious downside to being “donor scammed” is that any payments or property will not go to those who need the help. Instead, some criminal stranger enjoys the windfall of intended donations.
- The not-so-obvious downside is that when fake charities scam people into believing to make donations, those kind-hearted people cannot deduct their donations on their tax returns.
That is a hard reality when the IRS audits your tax return over donations and other itemized deductions. But when an IRS auditor makes adjustments for donations, that loss just feels different than if it was an audit for gambling losses. Because there was not supposed to be any risk, just goodwill.
Somewhat related, here’s a great article and video on settling IRS taxes from gambling.
Free Charity Search Tool
The IRS actually did provide a helpful resource. Anyone considering making a donation should pre-screen legitimate charities by using the Tax-Exempt Organization (TEOS) search tool on the IRS website. (Can you believe this – the IRS actually helped!)
In addition to checking out whether the charity is legitimate, you can also use TEOS to learn more about a charity’s status, plus find out whether you can deduct the gift on your taxes.
Here Are a Few Scammer Tricks to Watch
- Be careful of names that sound or read like the names of actual charities. This one is especially difficult because the would-be donor may already trust the actual charity with the look-alike name.
- They like to rush you into making a donation. Don’t let that happen.
- Some will try to trick you into making a payment by “thanking you” for a previous donation. Of course, you never made that donation.
- Caller ID mirroring is when they make a call look like it’s from the area code of the number the scammer dialed. Don’t trust the caller ID.
- Some fake charities will claim that your donation is tax-deductible. Remember, those who get fooled also miss the expected tax deduction.
Here is What Else You Can Do
Before you donate, but after you have researched the charity:
- Avoid paying with wire transfers or gift cards. Scammers prefer these types of payment methods because they are hard to track.
- Plan to donate the safest way – by credit card or check. You can stop payment on these. Never donate by debit card unless you are absolutely certain the charity is legitimate.
- For online donations, check the webpage URL. It should have “https” in the web address where your payment information is entered. (Keep in mind that some scammers may also offer the “https” encryption.)
- If asked to donate only with cryptocurrency, just stop. The scammer wants an untraceable transaction for a reason.
- If the donation request is by a crowd funder (like GoFundMe), research who makes the donation request. Never just trust the list of social media friends. Ask a friend on that list what he/she knows about the request. Also, the donation may not be tax deductible.
- Not all “organizations” claiming to be police, fire, first responders, veterans, or active-duty military are genuine. Could you be fooled by the name “American Disabled Veterans Foundation”? (Yes, it’s a fake.)
Reporting Scammers that Also Commit Tax Fraud
Finally, there is a way to report scammers who actively commit tax fraud, along with their many other crimes. If you would like to speak about reporting a scammer in your life’s way, I can help guide your steps.
The process is not simple, and there are no “amendments”. Whether the documentation path is by IRS Form 211 or Form 3949-A, you will have no room for mistakes due to self-representation. (Errors mean that you will not be paid if the IRS recovers from your reported facts.)
In short, hire a reliable tax lawyer with a great reputation. Who knows? You might even make a profit for yourself!
And be careful out there!