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TickledToDeath
09-07-2009, 06:03 PM
If one person claims him/her self to be a charity case and asks for donations, subsequently receiving say for sake of the question or argument, 1 million dollars. Does that person have to pay taxes on it?
Part two, if said person pays to have himself "ordained" claims his home to be a "place of worship", he, officially can be tax exempt.
I know personally certain....ethnic races who do indeed do this and get away with it! Our taxes are higher because of them.

TTD

friedo
09-07-2009, 06:10 PM
If one person claims him/her self to be a charity case and asks for donations, subsequently receiving say for sake of the question or argument, 1 million dollars. Does that person have to pay taxes on it?


Usually not. If the gifts are in excess of the gift tax exemption, then the donors would be liable for gift taxes.


Part two, if said person pays to have himself "ordained" claims his home to be a "place of worship", he, officially can be tax exempt.


A person can not be tax exempt. Religious organizations can be exempt from income taxes and in some cases property owned by religious organizations can be exempt from property taxes. The latter depends on local property tax law.


I know personally certain....ethnic races who do indeed do this and get away with it! Our taxes are higher because of them.


If you suspect someone is engaged in tax fraud, report them to the IRS or relevant local authority.

Zoe
09-07-2009, 10:29 PM
Such schemes are not limited to any particular ethnic "race." They don't get away with it for long.

This one (http://www.encyclopediaofarkansas.net/encyclopedia/entry-detail.aspx?entryID=4224) actually managed to live in a mansion on one of the wealthiest streets in our city. You might remember him as a televangelist.

Trying to bring his wife back from the dead for six months got a lot of attention.

Zoe
09-07-2009, 10:34 PM
Duplicate

Colibri
09-07-2009, 11:31 PM
Edited title to better indicate subject.

TickledToDeath, welcome to the boards. However, please try to make your thread titles more descriptive. You will get a better response that way. I've noticed that your recent thread titles have been very brief and don't indicate the subject clearly.

Colibri
General Questions Moderator

IAmNotSpartacus
09-07-2009, 11:34 PM
A person can not be tax exempt.
Minor nitpick, but employees of foreign governments are exempt from US taxes (income, sales, excise and otherwise). I doubt they would be soliciting donations as a charity case, but I know from my own business experience that dealing with foreign consulates requires the collection of a great deal of documentation to support the sales and use tax exemptions they enjoy.

Munch
09-08-2009, 07:38 AM
I know personally certain....ethnic races who do indeed do this and get away with it! Our taxes are higher because of them.


Or, to be more accurate, you heard it from a friend (who heard it from a friend who read it on the internet), so it HAS to be true! It's not.

suranyi
09-08-2009, 10:34 AM
If one person claims him/her self to be a charity case and asks for donations, subsequently receiving say for sake of the question or argument, 1 million dollars. Does that person have to pay taxes on it?
Part two, if said person pays to have himself "ordained" claims his home to be a "place of worship", he, officially can be tax exempt.
I know personally certain....ethnic races who do indeed do this and get away with it! Our taxes are higher because of them.

TTD

To meet the IRS's designation as "charitatble organization", the benefit must not go to a specific individual.

Cite, from the IRS itself:

http://www.irs.gov/charities/charitable/article/0,,id=123297,00.html

Duke
09-08-2009, 10:41 AM
This one (http://www.encyclopediaofarkansas.net/encyclopedia/entry-detail.aspx?entryID=4224) actually managed to live in a mansion on one of the wealthiest streets in our city. You might remember him as a televangelist.

Trying to bring his wife back from the dead for six months got a lot of attention.

Tony Alamo! I haven't heard that name in some time.

This thread is timed well...in a few hours I'm off to teach a class on fundraising and one of the topics is "Which types of organizations can qualify as a 501(c)(3) non-profit entity?" Needless to say, private individuals aren't one of them. But "Friends of (Person X)" entities can be, so long as they're designed for payment of that person's medical care. Those organizations are very common here in Western New York.

However, the IRS does keep an eye on those organizations and if they turn in a shady PF-990 form--that being the non-profit's annual report to the IRS--they will be audited. After 9/11 the IRS started looking very carefully at organizations "for benefit of so-and-so" because some organizations were allegedly funneling money to terrorists through them. Needless to say, they're also happy to pick up people who use foundations or charities to pay for Doritos or luxury cars if they happen to spot that while they're auditing.

Raza
09-08-2009, 12:13 PM
A section 501(c)(3) organization must not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals,(...)
"Which types of organizations can qualify as a 501(c)(3) non-profit entity?" Needless to say, private individuals aren't one of them. But "Friends of (Person X)" entities can be
Duke's post and suranyi's link seem to be at odds, as a "Joe's Cancer Fund" designates Joe individually.

Munch
09-08-2009, 12:20 PM
Duke's post and suranyi's link seem to be at odds, as a "Joe's Cancer Fund" designates Joe individually.

Nope. Joe's Cancer Fund pays for Joe's medical bills, it doesn't hand over a canvas bag filled with cash to Joe.

Duke
09-08-2009, 12:24 PM
Nope. Joe's Cancer Fund pays for Joe's medical bills, it doesn't hand over a canvas bag filled with cash to Joe.

Right. And if there are leftover funds in the fund (an extremely rare event, IME), those funds can't go to Joe. Usually they're donated to some other charity.

SmartAlecCat
09-08-2009, 12:30 PM
If you suspect someone is engaged in tax fraud, report them to the IRS or relevant local authority.

Through the IRS Whistleblower program you can even get significant rewards:
http://www.irs.gov/newsroom/article/0,,id=167542,00.html.

Raza
09-08-2009, 03:30 PM
Duke and Munch, please don't take this as being argumentative; I'm really trying to square your statements with the research I've done. I'm a Director of a small (tiny?) charity, so the "right" answers are very important to me.

From here: http://www.irs.gov/publications/p526/ar02.html#en_US_publink100049649
You cannot deduct contributions to specific individuals, including the following.

Contributions to fraternal societies made for the purpose of paying medical or burial expenses of deceased members.

Contributions to individuals who are needy or worthy. This includes contributions to a qualified organization if you indicate that your contribution is for a specific person. But you can deduct a contribution that you give to a qualified organization that in turn helps needy or worthy individuals if you do not indicate that your contribution is for a specific person.

Example. You can deduct contributions for flood relief, hurricane relief, or other disaster relief to a qualified organization. However, you cannot deduct contributions earmarked for relief of a particular individual or family.
(...)
Payments to a hospital that are for a specific patient's care or for services for a specific patient. You cannot deduct these payments even if the hospital is operated by a city, state, or other qualified organization.

To me, it seems clear from the above that donations given to a charity that are earmarked for a specific individual or family - even if they are not given cash directly - is non-deductible. I would be happy to be wrong, but I just don't see the wiggle room.

TickledToDeath
09-08-2009, 04:37 PM
Or, to be more accurate, you heard it from a friend (who heard it from a friend who read it on the internet), so it HAS to be true! It's not.

No actually this is pretty common knowledge and not through a long grape vine.
I do not wish to start a religious war here or seem to be a bigot or racist in any shape or form because I am not.
I will say this however, happening predominantly in a certain race or ethnic group or religious group. They have themselves ordained, call their home a place of worship and live property tax free and their savings are passed on to the rest of the community to make up the lost revenue.
There is also a loop hole as it were where they also save big on school taxes as well. That however is a whole other political issue.

TTD

Canadjun
09-08-2009, 05:44 PM
No actually this is pretty common knowledge and not through a long grape vine.
I do not wish to start a religious war here or seem to be a bigot or racist in any shape or form because I am not.
I will say this however, happening predominantly in a certain race or ethnic group or religious group. They have themselves ordained, call their home a place of worship and live property tax free and their savings are passed on to the rest of the community to make up the lost revenue.
There is also a loop hole as it were where they also save big on school taxes as well. That however is a whole other political issue.

TTD

Examples? (or, to use the rallying cry of SDMB members world-wide, cite?)

TickledToDeath
09-08-2009, 07:13 PM
Examples? (or, to use the rallying cry of SDMB members world-wide, cite?)

Ok example and cite.

Pardon if the spelling is ....misspelled.
Hasidic Jewish(Ha-sid-ik)...make claim that they are either ordained and or their house is a place of worship. ding exempt from property taxes.
No they are not all Rabbis either yet they say their HOME/ HOUSE is a place of worship and get away with it.
Near to where I live, they scooped up a large hunk of acreage. There was a general election on whether or not to allow this. For several months there was a large outcry to not allow this to happen...they were to build dorms and a school for religious training etc....they would have this acreage tax free! Most of the town here supposedly voted against it and now they(the Hasidic community is attempting to sue the town for discrimination.
I do believe it is still in courts.

dracoi
09-09-2009, 01:32 AM
Well, we all know those Hasidic Jews are primarily motivated by the need to save a buck or two. No chance there are serious religious beliefs that might justify the position. :)

Seriously, this is what audits are for, and if you want to crack down on rampant abuse of the tax code, home churches are not the target. Something like $20 billion dollars are unlawfully claimed through the Earned Income Tax Credit. And around ten times that is the estimated amount of self-employment income that goes unreported.

Fuzzy Dunlop
09-09-2009, 07:47 AM
Ok example and cite.

Pardon if the spelling is ....misspelled.
Hasidic Jewish(Ha-sid-ik)...make claim that they are either ordained and or their house is a place of worship. ding exempt from property taxes.
No they are not all Rabbis either yet they say their HOME/ HOUSE is a place of worship and get away with it.
Near to where I live, they scooped up a large hunk of acreage. There was a general election on whether or not to allow this. For several months there was a large outcry to not allow this to happen...they were to build dorms and a school for religious training etc....they would have this acreage tax free! Most of the town here supposedly voted against it and now they(the Hasidic community is attempting to sue the town for discrimination.
I do believe it is still in courts.

Obviously it's worse when the Jews do it. :rolleyes: But buying land for building dormatories and classrooms for a religious school is exactly within the spirit of tax-exemption for religious organizations or non-profits. I think it's common for people to be annoyed by tax exempt organizations, even ones not run by Jews, because they don't contribute to the local tax base but still use local services. I know a local fire chief who is always whining about the local colleges not paying any property tax yet he has to respond to calls whenever scented candles set off alarms or drunk frat boys pull the alarm as a joke.

He knows it's not fraud, it just bugs him anyway. That seems to be the case with TickledToDeath's Jewish religious school.

legalsnugs
09-09-2009, 10:53 AM
Duke and Munch, please don't take this as being argumentative; I'm really trying to square your statements with the research I've done. I'm a Director of a small (tiny?) charity, so the "right" answers are very important to me. From here: http://www.irs.gov/publications/p526/ar02.html#en_US_publink100049649 To me, it seems clear from the above that donations given to a charity that are earmarked for a specific individual or family - even if they are not given cash directly - is non-deductible. I would be happy to be wrong, but I just don't see the wiggle room.

You are confusing two separate income tax payers. Duke and Munch, and this thread, are talking about the tax exemption status of charitable organizations and your cite is talking about what donations an individual can deduct from his/her own income taxes.

Raza
09-09-2009, 11:02 AM
When I'm involved, confusion is always a possibility. However, the IRS rules on forming 501(c)(3) organizations specifically say that the organization itself cannot be formed for the purpose of benefitting an individual or specific group of individuals (such as a family).

Related (and in line with my cites) is that an otherwise-properly-formed 501(c)(3) cannot say "hey! donate $20 and we'll spend it on Joe's cancer treatment" and have that contribution be tax-deductible.

legalsnugs
09-09-2009, 11:54 AM
When I'm involved, confusion is always a possibility. However, the IRS rules on forming 501(c)(3) organizations specifically say that the organization itself cannot be formed for the purpose of benefitting an individual or specific group of individuals (such as a family).

Related (and in line with my cites) is that an otherwise-properly-formed 501(c)(3) cannot say "hey! donate $20 and we'll spend it on Joe's cancer treatment" and have that contribution be tax-deductible.

If the 501(c)(3) charity cannot be formed to specifically benefit Joe, then of course you could not say "give to Joe through the charity and it's tax deductible." You can say "give to the charity and we will assist poor people who are having cancer treatments," and Joe can be one of your recipients and that contribution would be tax deductible.

I used to work at a 501(c)(3) college and rich relatives were always trying to fund their niece's education, but they wanted a tax deduction for it. We would have been happy to take the contributed funds for a scholarship, but had to tell them that there was no tax deduction if the donor specifies the recipient. Nope, it's a gift, just not a tax deductible gift.

TickledToDeath
09-09-2009, 05:58 PM
Well, we all know those Hasidic Jews are primarily motivated by the need to save a buck or two. No chance there are serious religious beliefs that might justify the position. :)

Seriously, this is what audits are for, and if you want to crack down on rampant abuse of the tax code, home churches are not the target. Something like $20 billion dollars are unlawfully claimed through the Earned Income Tax Credit. And around ten times that is the estimated amount of self-employment income that goes unreported.

Oh I fully understand and know there are bigger fish to fry but it just gets me riled knowing my school taxes and property taxes are so high and I don't even have kids in this school district( but that is another issue) and they are living free counting the money they are saving. As for those $20 billion unlawfully claimed etc etc. again that is also another issue parallel to the one at hand.

TTD

Raza
09-10-2009, 01:01 PM
If the 501(c)(3) charity cannot be formed to specifically benefit Joe, then of course you could not say "give to Joe through the charity and it's tax deductible." You can say "give to the charity and we will assist poor people who are having cancer treatments," and Joe can be one of your recipients and that contribution would be tax deductible.
We agree. This is an issue that comes up a lot (both from contributors and potential recipients), and we have to dance carefully.

muttrox
09-10-2009, 03:13 PM
No they are not all Rabbis either yet they say their HOME/ HOUSE is a place of worship and get away with it.

Perhaps you do not fully understand the role of the Rabbi in Judaism. You do not need one to have a ceremony "count".

Munch
09-10-2009, 03:38 PM
Perhaps you do not fully understand the role of the Rabbi in Judaism. You do not need one to have a ceremony "count".
Nor the role of a Rectory for parish priests (Catholicism).

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