Washington (March 24, 2004) --Sen. Chuck Grassley, chairman of the Committee on Finance, and Sen. Max Baucus, ranking member, have advanced their review of in-kind charitable contributions by asking the Internal Revenue Service to explain its actions to prevent abuse and for key documents detailing such contributions.
"Car donations are getting the most headlines because the General Accounting Office and the Treasury Department agree that the amounts of taxpayers' deductions often substantially exceed the fair market values of the donated vehicles," Grassley said. "But cars aren't the only charitable gift in this category. Donations of land, art and intellectual property are all raising concerns. It appears we're just scratching the surface. It's important to get a good handle on all areas of abuse to allow taxpayers to take the deductions they've earned rather than what they've inflated."
Baucus added, "It appears that a significant number of audits are falling through the cracks at the Internal Revenue Service when it comes to follow-up on charitable donations. While tax breaks have helped increase giving to charities by encouraging more people to donate, the structure is also a magnet for tax abuse. And that's where the IRS should come in."
"But it's clear that there's a problem when no action is taken by the IRS in 2001 and 2002 regarding the thousands of cases that were referred for audit due to potential noncompliance on charitable donations involving at least $5,000," said Baucus. "Not a single examination was conducted nor dollar collected. We can no longer ignore the abuses taking place involving our tax laws."
The senators are working to advance reforms of vehicle and intellectual property donations through their foreign sales corporation/extraterritorial income act bill, which is pending before the full Senate. They plan to develop additional reform proposals as needed.
-- WebCPA staff
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