Law Enforcement Cracks Down on Charitable-Giving Abuses

A recent criminal case highlighting abuses in charitable tax write-offs serves as a warning to potential donors, reports The Wall Street Journal.

The government is investigating more than 100 donors with possible links to a solicitation effort that raised millions of dollars and promised donors the return of large portions of their gifts, while not reducing the value of the tax deduction they could claim, the paper said.

Donors can also be led astray by professional tax preparers or accidentally violate complex tax-law provisions, and the Internal Revenue Service has increased its law-enforcement efforts accordingly to track misconduct ranging from fabricated deductions to improper valuations for noncash gifts.

According to the most recent data released by the agency, more than 41 million individual income-tax returns claimed charitable donations for 2006 for a record total of about $173-billion, up 0.6 percent from the prior year.