Using other person's personal check for charitable contribution

wrote

Let's see if I have this right. You are going to solicit friends to make contributions to a charitable organization and put your contributor ID number in the memo area of the check. Thus, they have copies of their checks to support charitable contribution deductions on their tas returns. As a bonus, the charity sends you an annual givings receipt to support your 'double pumping" of the deduction on your tax return.

Read the above paragraph again and ask yourself "If I was on the tax evasion jury hearing this case, how would I vote?"

Let's see who loses here. The charity gets very bad PR in the news media. Your friends lose a day or two at work so they can be deposed and so they can testify at your trial. Not only do you get fired, but you also get a punitive fine and possibly a sabbatical in a federal slammer.

Your cost-benefit analysis should include attorney fees, the personal costs of being audited on future returns, and your highly likely inability to get another job with a charitable organization.

If you do not involve your spouse in this, he/she can claim "Innocent Spouse" status for the penalties, interest, and back taxes you will owe.

wrote

The records of the charity are not enough to take the credit. Your records need to also match the claimed deductions for charitable contributions. Since you don't have sufficient records (ie: canceled checks) to prove your contributions, those allegedly made with your friends check, will be disallowed. If the dollar amounts claimed in such a fashion are large enough, the IRS may initiate an audit on your friend, and if the facts warrant, initiate a criminal investigation. Make ~your~ charitable contributions from ~your~ checking account.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

Loopholes are not illegal so this is not a loophole.

I would call it fraud rather than a loophole.

No. Acknowledgement from the charity is not required for all deductions, only those over $250. What is required for all, effective 2007, is proof of payment via a bank record or receipt from the charity.

Forget for a moment what tax law requires. What charity hoping to hear from the contributor in the future wouldn't make sure it was sending the acknowledgement to the right donor? I've processed contribution acknowlegements, and I'd have been horrified if I sent one to the wrong person. I don't know of any requirement for the charity to "police" its donors. That said, one layman's definition of "ethical" is behaving yourself when no one's looking. If I got a check in the name of a donor I'd never heard of with a donor ID number I had, I'd find out what's going on.

-- Phil Marti Clarksburg, MD

You hit the nail on the head alright. Your friend cannot use his checks for a double dipping deduction (DDD). I hope he will not try to bamboozle either IRS and/or his own tax preparer. ChEAr$, Harlan Lunsford, EA n LA

The donation was made by your friend, not you - regardless of whose number you wrote on the check. After all, it was HIS check and HIS funds that were donated to this charity. Even if the charity credits you, and sends a receipt to you, they are wrong. They need to correct their verification process.

Just think of other possibilities for similar double dipping: Property taxes, medical expense, casualty loss, etc, etc. Of course, a consequence of such activity might well be to spend some years in the slammer. It is not a loophole. Taking advantage of loopholes is perhaps sometimes immoral; but it is not illegal. Bill

The OP ask about manipulating a charitable contribution so that two different people could take deductions for it. This reminded me of the following scenario that took place in a church.

Collections were taken at each of five Sunday services. Cash/checks were separated from their envelopes which were given to a volunteer to enter parishioner donations into the computer.

The new pastor ran totals on loose cash, envelope cash, and loose cash and found that while total contributions remained the same, loose cash was under by the same amount envelope cash over.

He let his data entry volunteer go and refused to issue him an annual receipt.

Dick

It was his check, but not necessarily his funds.

Suppose he owed me $200 and I told him to send it to the charity (in my name) instead of paying me. (Sure, I could have him pay me and then I'd pay the charity; but it's Dec.

durn it - I thought I was supposed to be the sarcastic commentator here ___________________________________

-----> real address on hobokeni or hobokenx

You could (in theory) take the deduction as long as you claim the income. Stu

No, but there IS time for me to write my own check (to be paid next year of course), take it to the post office and get it postmarked in time. That cements the deduction. ChEAr$, Harlan

You take his check and deposit it in your bank AND you put your check to the charity in the mail. Holiday weekends are not a problem with clearing of checks.

Of course if it was a bet that caused him to owe you $200, that's income to you and must be included in your income to justify the deduction.

Dick - I spent 11 years teaching Auditing. I educated bastards.

Furthermore, IRS since 2006 requires either a written receipt from the charity or a bank record, meaning your bank record, and not that of another person. ChEAr$, Harlan

The charity will send me the contribution letter, since that's what he specified. Seth

There's no income, I lent him the money last month.

Seth

In 06, I got a call from a charity, and said "yes". Somehow, I got a package in the mail and was expected to solicit my neighbors for donations. 8 neighbors, $80 goal. I wrote a check for $100, and did not take a deduction as it looked like money I collected. It was a lesson learned (A fast yes on a call can get you into something you weren't expecting) and as it was a good charity anyway, I just consider this a done deal. Not worth it to try to explain how it 'was really my money', even though it was, who can prove it, either way? And every solicitor gets "please put me on do not call list" before they start talking. JOE

Do you have a record of the loan, and a receipt showing that this donation was made on your behalf to pay off the loan? If not, it's your word against his -- he says he was making a charitable contribution, you say he was paying you back. I suppose the notation on the check saying that it should go towards your account with the charity would weigh against his claim. If he were actually making the donation for himself, why would he write your account number on the check?

-- Barry Margolin, snipped-for-privacy@alum.mit.edu Arlington, MA