April 8, 2011 | Read Time: 1 minute
As tax season ticks down, the IRS is warning Americans not to abuse deductions for charitable giving.
The IRS, in its annual list of the year’s “dirty dozen” tax scams, says that attempts to abuse charitable organizations and deductions are among the most common efforts to skirt the tax code.
In some cases, this means that taxpayers are using charities to shield income from taxation, often by inflating the value of donated assets or income from donated property.
The tax agency said it has also been investigating schemes involving the donation of products and other noncash items by multiple groups that claim the full value for giving and receiving the same contribution. These donations are often highly overvalued—therefore allowing a bigger tax deduction—or the recipient allows the donor to repurchase the items at a later date.
