More Debits & Credits Posts

Cat Lady Beat IRS in Court, but Loses Cats Anyway

January 20, 2012

Cat rescuer Jan Van Dusen won a case against the Internal Revenue Service last June when the U.S. Tax Court agreed that she could write off most of the $12,068 that she claimed in charitable contributions on her 2004 tax return for caring for over 70 abandoned cats.

However, fast forward a few months, and now Van Dusen has reportedly been relieved of her feline charges. Animal control officers raided her Oakland, Calif., home last October and removed 93 cats and two dogs, euthanizing 16 of the cats, according to the San Francisco Chronicle. The 60-year-old cat lover was also charged with one felony count of animal cruelty because many of the cats were reportedly suffering from malnutrition, parasites, diarrhea and other afflictions. Her next court date is on Monday, where she faces up to three years in prison and a $20,000 fine.

Still, while local authorities may have confiscated her cats, Van Dusen did beat the federal authorities in her precedent-shattering case last year. The Tax Court ruled that her foster cat expenses qualified as unreimbursed expenditures incident to the rendition of services to a charitable organization, in this case a local 501(c)3 tax-exempt organization known as Fix Our Ferals.

At the New York State Society of CPAs’ 34th Annual Nonprofit Conference on Thursday, attorney Michael Cooney, a partner with the law firm Nixon Peabody LLP, cited the Van Dusen case as a personal favorite from last year as he reviewed the past year’s most significant legal decisions affecting not-for-profits. He noted that the judge had done a big favor for cat lovers and volunteers everywhere, not to mention their accountants.

“I have this image of this lovely lady going to Costco and walking out with three tons of cat litter,” he said. “It makes you wonder about the state of affairs in America. With all these opportunities to touch your clients, it’s people like Jan Van Dusen who can work their cat magic and make America a better place.”

Comments (1)
I have given 2 local seminars here in Houston TX to local animal welfare organizations on this very case, which were well received. The case has very significant impact on all 501(c)(3) organizations whose volunteers incur expenses in furtherance of the chartitable purpose of the organization. The case not only makes clear that those expenses are to be treated as deductible charitable contributions, but also specifies the supporting documentation required to be maintained in case of audit (including obtaining an acknowledgement letter from the charity for expenses of $250 or more, issued prior to the due date of the return).
I'm sorry Ms. Van Dusen has lost her cats, but her determination and courage in fighting the IRS has been a service to all charitable volunteers who incur expenses for their charitable organization!
Rhett Buck CPA, Esq.
Posted by | Monday, January 23 2012 at 11:25AM ET
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