We always say there is no one season for tax scams; however, certain times of year bring an increase in different types of scams. And with the month of August upon us, we’ve officially entered peak Atlantic hurricane season, which lasts from early August through the end of October. You may be wondering what hurricane season has to do with being vigilant about tax scams. The answer: fake charities. Criminals and scammers love to take advantage of taxpayers who genuinely want to help victims of natural disasters, like hurricanes. In fact, the IRS recently issued a warning to taxpayers to stay alert for scams that “undoubtedly pop up when and if a hurricane occurs.” So, how does one safely donate to a charity and what are the guidelines for charitable contribution tax deductions? Axcet HR Solutions Payroll Administrator Herman McDaniel answers in this Ask the Payroll Expert Q&A.
When news of a natural disaster breaks, it spreads quickly across the internet, local and national news, radio and print. Scammers take advantage of this and masquerade as charitable organizations collecting aid for victims from unsuspecting, well-intentioned taxpayers. Initial contact is typically made through an unsolicited phone call, social media, e-mail or in-person. Additionally, fake charities may have websites with similar names as legitimate charities to trick people into submitting their banking information or to send funds. In addition to obtaining financial information, these criminals will try to obtain other private information from taxpayers. Fake charities operate year-round and go well-beyond natural disasters. In fact, one of the largest charity scams involved four fake cancer charities run by extended members of the same family. Between 2008 and 2012, donors located across the country were conned out of $187M.
How to Safely Donate to Charitable Organizations
Fear of scammers should not stop you from donating to charitable organizations. By following a few simple guidelines, you can better protect yourself and be sure your donations actually go to a legitimate cause. If one of your goals of donating is to receive a tax deduction, be sure to review the IRS’ guidelines for charitable contributions found here.
- Investigate before you donate. The IRS has made it easy to search for, verify and donate. Through the IRS’ website, taxpayers can use the public Tax Exempt Organization Search feature. Other resources include Forbes’ list of The 100 Largest U.S. Charities and Charity Navigator, which features data on 1.8M nonprofits and ratings for approximately 10,000 charities. Donations to verified charities may be tax-deductible. Tip: most charitable organizations will have websites ending in .org NOT .com.
- Don’t trust everything you see on social media or the internet. Scammers create credible looking social media accounts and circulate social media posts. In addition, these criminals are known to create websites that look like those of well-known charities to increase credibility, capture your personal information and take your money. Be aware of the internet giving platform GoFundMe and other crowdfunding sites, which scammers regularly use.
- Only open attachments from known senders. Scammers are known to attach files claiming to be photos of a disaster area when soliciting donations for their fake charity. These files often contain viruses and once clicked infect your computer or electronic device.
- Never trust solicitors who show up at your door asking for money. Oftentimes, scammers will even present fake identification.
- Avoid cash payments, instead pay by check or credit card. Remember, valid organizations will never solicit payments via money wire services or pressure you to donate.
As a general rule, if in doubt, assume it’s a scam.
Fake charities are one of many scams present year-round. For more information visit Tax Scams and Consumer Alerts on IRS.gov.