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Goldburd McCone LLP
New York City Tax Lawyers

Is that charity organization really tax exempt?

The holidays are a time in which you might feel the need to give to those who are less fortunate. As the season of good tidings approaches, you realize that you’ve had a blessed year for your family and business, and now you want to contribute money, food or toys to a charity organization. Donating in-kind is an easy way to give back to your community and, in turn, earn a tax deduction as the year ends. But, how do you ensure that the organization asking for your resources is really tax-exempt and supporting the cause they claim?

According to the New York Council of Non-Profits, there are nearly 100,000 tax-exempt organizations in the state. There’s no shortage of groups who could put your donation to good use, but with the prevalence of charity and wealth comes the nefarious people who want to take advantage of it. Further, the Internal Revenue Service carefully scrutinizes the groups that apply for and maintain non-profit status. A group that makes a mistake like missing a filing deadline could turn good intentions into a legal quagmire.

How do I know my money is going to a good cause?

Both the IRS and the Federal Trade Commission provide tips for individuals and businesses seeking to make donations to worthwhile charities. If something seems fishy about the charity’s structure, solicitations or collections you should follow your instincts in investigating their legitimacy and tax-exempt status.

Here are a few tips from the FTC on spotting a fake charity organization:

  • They don’t provide basic information such as their address, mission or how much of your donation will go to helping people.
  • The group isn’t willing to show proof of their claims to tax-exempt status.
  • Asks for donations in only cash or wire transfers.
  • Promises a sweepstakes entry in exchange for a donation.

You can take steps to protect yourself and your business from fake charity organizations including:

  • Write a check or use a credit card when donating so you have documentation of the gift.
  • Search the IRS database for tax-exempt organizations.
  • Plan out the groups you want to donate money to and estimate how much you want to give at the beginning of the fiscal year.

Your gift to charity is appreciated by everyone involved. Taking steps to ensure that your hard-earned resources are going to the right charity keeps the holiday spirit alive. For comprehensive resources year-round, reach out to the attorneys of Goldburd McCone LLP.

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