IRS sews up donation loopholes

[deadparrot]

Those holey socks and worn-out toasters you've been giving Goodwill in exchange for tax deductions won't cut it anymore with the Internal Revenue Service, which is under orders from Congress to tighten its rules on donations of household goods.

From now on, used clothing and household items must be in "good condition" or better to earn a deduction, although "good" isn't defined. And the IRS now has the authority to deny deductions outright for near-worthless items, such as used socks and underwear.

We're not talking small change here: In the 2003 tax year, Americans claimed $36.9 billion in noncash charitable contributions, 48 percent of which came from clothing, according to the IRS.

Lawmakers also tightened reporting rules for cash donations and narrowed eligibility for certain historical preservation tax benefits. But they liberalized rules to encourage conservation land donations and payouts from individual retirement accounts to charities.

http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/1157077516259430.xml&coll=7

[MessiahRp]

1. must.... attack.... goodwill

must... let... corporate tax shelters go....

I see the logic. Gotta pay for the top 1%'s taxcuts, the massive corporate tax shelters and the SUV loophole somehow.

Rp

[elehhhhna]

2. This is not a bad rule, imo.

People "donate" garbage. Really. No one can resell old, shredded undies or hopelessly broken electronics, so donors taking retail cost deductions are LYING.

[Booster]

3. I agree with you to an extent, but we have to find out if this means

when you drop stuff off they inspect it right then, or does the IRS send you a letter after you've filed saying what you donated was worthless - it would be your word against theirs and you know who wins tose battles.

[davidwparker]

5. I agree with that. When I've given to charity, it's only been things that

I would still wear or use. I've tried to think how I would feel if I were the one receiving the item rather than donating it.

[sandnsea]

4. I always lose the little receipt thingy

The problem is they don't fill it out themselves so people can put any old amount in there that they want to. If the charities were required to take responsibility for the contribution amount, this wouldn't have been a problem to begin with. I am a bit surprised at the $36 billion amount, but it really is probably a drop in the bucket compared to what wealthy people stick into nonprofits as tax shelters, like Abramoff did. Let's not go after that scam, nah.

[DoYouEverWonder]

6. Don't they have better things to do

like go after corporate fraud?

[SoCalDem]

7. Silly rule.. Most charitable organizations do not inspect

the goods before you get your BLANK receipt.. They cannot afford to pay people to check for holes.. They cull out the bad, and sell the good.. It's up to the donor to describe what was donated..

I have always used a yellow pad to list what I've donated, and I am always careful to stay UNDER the threshold of suspicion..

I figure that this is stuff I would have tossed anyway, so why get "creative" and risk an audit :)

[cyberpj]

8. This legislation also gave tax-free IRA withdrawals for charity donation

"In addition to tightening the rules for deductions, the provisions also allow taxpayers 70 or older to withdraw up to $100,000 a year from an IRA without paying a tax if the money is donated to a charity. The break is temporary, though, and expires at the end of 2007."

Who has that kind of money they would donate to a charity from an IRA? Oh, yeah... Republicans. Think Delay, Frist, Sensenbrenner, Bush, and so on. They donate it to charities of friends and families in order to get jobs or kickbacks or writeoffs to reduce profits and pay fewer taxes. Anyone remember Mama Bush donating to her son's Katrina charity?

Bush. You just gotta hate him don't ya?