Dirty Dozen: IRS warns about fake charities exploiting taxpayer generosity

The IRS has issued a recent advisory alerting the public to the emergence of fake charities. These entities aim to exploit the goodwill of individuals, especially following natural disasters and other crises. By tricking people into donating to non-existent causes, these fake charities not only steal donations but also risk identity theft by gathering personal and financial information.

This warning is part of the IRS’s “Dirty Dozen” list for 2024, which identifies the top tax scams threatening taxpayers and businesses today. Among these, fake charities stand out as a significant concern. They exploit people’s emotional responses to disasters, illegally collecting money and sensitive information.

IRS Commissioner’s Statement

IRS Commissioner Danny Werfel emphasizes the importance of vigilance when donating to charitable causes. He notes the unfortunate trend of scammers exploiting tragic events to set up fake charities. Werfel urges donors to conduct research and donate to well-established charities, cautioning against the pressure to give immediately and the risks of sharing personal information with unverified sources.

How to Identify and Avoid Fake Charities

The IRS provides several tips to help taxpayers identify legitimate charities and avoid scams:

• Take time to research and confirm the legitimacy of a charity before donating.
• Be wary of charities that pressure you to donate immediately.
• Use the IRS’s Tax Exempt Organization Search tool to check the charity’s status.
• Avoid giving out personal financial information to unknown or unverified charities.

Taxpayers are encouraged to report suspected fake charities and other tax scams to the IRS to help protect others from becoming victims.

Recognizing the Signs of a Fake Charity

To further protect yourself, be aware of the signs that might indicate a charity is not legitimate:

• Overly Aggressive Solicitation Methods: Legitimate charities will not pressure you to donate immediately or make you feel uncomfortable about your decision.
• Vague Explanations of Donation Usage: Genuine charities are transparent about how donations are used and can provide detailed information upon request.
• Charities That Appear Overnight: Be cautious of organizations that seem to have formed overnight, especially in response to recent natural disasters or global events. These are often scams designed to capitalize on the momentary surge of empathy.

Protecting Yourself from Identity Theft

Given that fake charities can serve as a facade for identity theft, it’s essential to safeguard your personal information diligently. Here are steps to protect yourself:

• Limit Personal Information Sharing: Be cautious about sharing personal details, especially sensitive information like Social Security numbers or banking details, unless you’re confident in the charity’s legitimacy.
• Monitor Your Financial Accounts: Keep an eye on bank and credit card statements for unauthorized transactions. Regular monitoring can help catch identity theft early.
• Use Secure Payment Methods: When donating, opt for payment methods that offer fraud protection, such as credit cards or secure online payment platforms.
• Know What to Do If Compromised: If you suspect identity theft, immediately report it to the appropriate financial institutions, the Federal Trade Commission, and the IRS.

Legal Recourse for Victims of Charity Scams

Victims of charity scams have several avenues for legal recourse:

• Report the Scam: Immediately report any suspected charity scam to local law enforcement and the Federal Trade Commission (FTC) through the FTC Complaint Assistant. This can help authorities take action and prevent further victimization.
• Contact State Regulators: Many states have specific agencies or offices dedicated to overseeing charities and charitable solicitations. Reporting the scam to these regulators can initiate state-level investigations.
• Utilize Consumer Protection Laws: Victims may find recourse under various consumer protection laws. Consulting with a legal professional can help determine the applicability of these laws and the potential for legal action against the fraudulent organization.
• IRS Reporting: Additionally, report the scam to the IRS using Form 13909, Tax-Exempt Organization Complaint (Referral) Form, to help the agency investigate and potentially revoke the fraudulent organization’s tax-exempt status.