February 23, 2006 | Read Time: 1 minute
The Internal Revenue Service has issued its annual warning of the “most notorious” tax scams that Americans should avoid. On this year’s list: abuse of charitable organizations and deductions.
The IRS said it has observed an “increased use of tax-exempt organizations to improperly shield income or assets from taxation.”
This can occur, the IRS said, when a person moves assets or income to a donor-advised fund, a popular technique that allows people to give assets to special accounts, claim a tax deduction, and recommend charities to receive the gift. The technique goes awry if a donor maintains control over the assets or income, the IRS said, “thereby obtaining a deduction without transferring a commensurate benefit to charity.”
The IRS announcement is available online at http://www.irs.gov/newsroom/article/0,,id=154293,00.html.
