501 C (3) Question

[Gregg]

In one of my other endeavors, I have found a guy who is promoting a charity tied to Iraqi Dinars and contributing to a claimed 501 C (3) that, upon a little digging turns out to be an LLC and big surprise, not registered as a charity with the IRS.

Granted, he's in a lot of trouble, but out of idle curiosity, when this all goes bad, are the principals of the LLC liable for the tax deductions taken by the contributors? Are the contributors ultimately responsible for the taxes?

[LaVidaRoja]

IIRC, if you take a deduction for monies given to an organization the is not a qualifying 501(c)3, you are SOL on the contribution on your personal return. I doubt that unless your ties to the non-qualifying organization are very close, there is any other problem.

[Pottapaug1938]

We set my Scout troop up as a 501c3 organization specifically so that donations to the troop could be claimed as a tax deduction by the donors.

[Gregg]

Thanks for the answers, I knew the donors were more or less screwed, I was more interested in what's going to happen to the scumbag telling people that their contributions to HIM that he says are for charity and aren't.

Can we use sticks?

[Famspear]

Thanks for the answers, I knew the donors were more or less screwed, I was more interested in what's going to happen to the scumbag telling people that their contributions to HIM that he says are for charity and aren't.

Can we use sticks?

A few random thoughts.....

If his LLC really is not tax-exempt under section 501 of the Code, then whatever federal taxes are owed by the LLC (or its member-owners) on the receipts better be reported as income.

It's a long shot, but if it could be demonstrated (1) that he was telling donors that their contributions were tax deductible when he knew that they were not, AND (2) that he was somehow willfully trying to defeat the assessment or payment of even a PORTION of any DONOR'S federal income tax, he could be guilty of section 7201 attempted tax evasion.

Also, there is 18 USC 1001, which is only rarely used in federal tax cases:

Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully—

[ . . . ]

(2) makes any materially false, fictitious, or fraudulent statement or representation; or

[ . . . ]

shall be fined under this title, [or] imprisoned not more than 5 years [ . . . ]

My understanding is that under this provision, almost ANY materially false or fraudulent statement regarding federal taxes (whether oral or written, and whether under oath, under penalties of perjury, or not) made to ANYONE (regardless of whether the recipient works for the Government or not) could be construed to involve a "matter within the jurisdiction" of the Government, and could therefore be the basis for a conviction under section 1001 if made knowingly and willfully.

This is not my area of expertise, and I assume any attempts to use 26 USC 7201 or 18 USC 1001 would be long shots.

EDIT: Correction - I did a quick check, and it appears that at least one commentator (who knows a heck of a lot more about this than I do) indicates that section 1001 may be interpreted to apply only to statements made to government personnel.

[wserra]

EDIT: Correction - I did a quick check, and it appears that at least one commentator (who knows a heck of a lot more about this than I do) indicates that section 1001 may be interpreted to apply only to statements made to government personnel.

Not so. Courts have held 18 USC 1001 (universally called simply "thousand-one") applicable to statements to non-federal-government actors who would typically then turn these statements over to govt, even if they never did. United States v. Dick, 744 F.2d 546 (7th Cir. 1984). And to statements to non-federal-government actors who don't even have a duty to turn these statements over to govt. United States v. Meuli, 8 F.3d 1481 (10th Cir. 1993). And to statements to non-federal-government actors in any matter that involves federal funds. United States v. Baker, 626 F.2d 512 (5th Cir. 1980).

Think "federal statute". Were there a basis for jurisdiction, it would apply to yak herders in Tibet.

[Famspear]

EDIT: Correction - I did a quick check, and it appears that at least one commentator (who knows a heck of a lot more about this than I do) indicates that section 1001 may be interpreted to apply only to statements made to government personnel.

Not so. Courts have held 18 USC 1001 (universally called simply "thousand-one") applicable to statements to non-federal-government actors who would typically then turn these statements over to govt, even if they never did. United States v. Dick, 744 F.2d 546 (7th Cir. 1984). And to statements to non-federal-government actors who don't even have a duty to turn these statements over to govt. United States v. Meuli, 8 F.3d 1481 (10th Cir. 1993). And to statements to non-federal-government actors in any matter that involves federal funds. United States v. Baker, 626 F.2d 512 (5th Cir. 1980).

Think "federal statute". Were there a basis for jurisdiction, it would apply to yak herders in Tibet.

Thanks, Wes.

[Gregg]

I'm 15 minutes after an Ambien, and in that past that has led to some writing that needed an interpreter for Planet Yusuf Islam, so if I go all astralplane on you, feel free to give me a full contact edit

what was the question?

ah phuck it. I think a minute ago I had a point, but it's lost now until time makes my blood holy again.....