Every year, the IRS compiles a list of tax-related scams called the Dirty Dozen. I’ll highlight the scams over the next couple of weeks. One of the Dirty Dozen this year is fake charities. The IRS commissioner reports:
Fake charities set up by scam artists to steal your money or personal information are a recurring problem. Taxpayers should take the time to research organizations before giving their hard-earned money.
The IRS offers these tips if you make charitable contributions.
- Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. IRS.gov has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible. Legitimate charities will provide their Employer Identification Numbers (EIN), if requested, which can be used to verify their legitimacy through EO Select Check. It is advisable to double check using a charity’s EIN.
- Don’t give out personal financial information, such as Social Security numbers or passwords, to anyone who solicits a contribution. Scam artists may use this information to steal identities and money from victims. Donors often use credit cards to make donations. Be cautious when disclosing credit card numbers. Confirm that those soliciting a donation are calling from a legitimate charity.
- Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.
The IRS also notes that many people are defrauded by fake charities following disasters.
The scams work several ways. The most common is to persuade unsuspecting individuals to donate to bogus charities. Another is to use the appeal as a way to collect personal information that can be used for identity theft.
Please do not be dissuaded from continuing to contribute to worthy causes. However, be aware of the potential for fraud and be vigilant. There are resources to help you make good decisions about charitable contributions under the Resources tab on www.elycpa.com.