US justice department goes after Timeshare "donation" company Donate for a Cause

[TUGBrian]

http://www.bozemandailychronicle.co...r.it&utm_medium=twitter&utm_campaign=bozchron


we have warned against using the awful tax advice given by most timeshare "donation" companies, but it usually falls on deaf ears.

hope this opens some eyes...and I REALLY hope they dont dig into client records to trigger audits for folks that took these illegal deductions!

 

[TUGBrian]

In one example, a customer transferred a timeshare to Donate for a Cause that had originally been purchased for around $10,500. James appraised the timeshare for $8,700 and the nonprofit then used eBay to sell the timeshare for $81.

that article is amazing.

 

[TUGBrian]

cannot tell people enough how utterly AWFUL an idea it is to engage in a "donation" of your timeshare for disposal purposes.

ebay is literally full of $1 no reserve auctions from "charities" that all took thousands of dollars from owners who are all likely to be claiming huge deductions based on these ridiculous appraisals.

this could end up very very badly for many owners...especially with this line in the article:

In addition, the IRS determined that the defendants caused more than $19.4 million in “improper non-cash charitable contribution deductions” between 2010 and 2012.

this reads to me that they can (and have) determined exactly how many folks have filed for these deductions.

 

[presley]

While I can only see the deduction as being the actual amount the timeshare was sold for, I do think the appraisal amounts are a gray area. If you look at resales listed at the actual resorts, the appraisals are probably correct. However, if you look at overall sold from all angels, the appraisals would be very low.

I'm thinking about a timeshare I bought for $53. on Ebay. I had been looking for it for a couple years and the resort has foreclosures for sale. I think the cheapest they sell for is around $9000. I don't understand their logic, as wouldn't it be nicer for us all if they just sold the units and let people pay the MFs, but I digress...... I am saying is that by looking only at what the resort values the property at, you can get some crazy high amounts. However, I think a tax donation should be for whatever the unit was actually sold for.

We'll have to see how this all plays out. I would still use them if I needed to unload something in a hurry. I wouldn't plan on taking a tax donation for it, though.

 

[Ty1on]

However, if you look at overall sold from all angels, the appraisals would be very low.

The angels give away their timeshares and pay all costs

 

[presley]

The angels give away their timeshares and pay all costs

Oh, yes. I forgot.

 

[TUGBrian]

heh, you are assuming the owners have any idea what the timeshare sold for on ebay...or that it was even listed on ebay in the first place....instead these folks were sold on the fact that they would be out of their timeshare, and could take a huge tax deduction based on the depreciation. Why else would anyone pay thousands of dollars, if these "charities" told the truth upfront, noone would ever use them.

We argued endlessly with owners that this was 100% false and inaccurate...but many simply ignored the warnings.

there is no way the DOJ came up with 19 million bucks in "unallowed deductions" if everyone was writing off the final sale amount as the donation amount!

 

[presley]

there is no way the DOJ came up with 19 million bucks in "unallowed deductions" if everyone was writing off the final sale amount as the donation amount!

Sadly, I think the article only says it looked at 2010 - 2012. If they look at more years, there will be lots more where that came from. Hopefully, everyone is ready to make some hefty payments.

 

[TUGBrian]

oh im sure someone somewhere at the IRS will be tasked with expanding the search to include more years, and other "charities" that take in timeshares.

 

[LannyPC]

What's really funny is that, at the bottom of the article, there's a Google ad that says "End Your Timeshare Burden
Donate the week to your favorite Charity. As seen on TV.":hysterical:

 

[PigsDad]

I know this may sound really harsh, but frankly, I don't feel too sorry for these people who took these huge tax deductions on their taxes. I mean, if you have to pay a company to get rid of your timeshare, wouldn't it raise a HUG red flag in your head that the timeshare is worthless? Why else would you have to pay to get rid of it?

I know those sales-slime at those "donation" companies can be persuasive, but at some point people have to hold themselves accountable when something sounds too good to be true. A prudent person would question the outrageous claims, talk to their tax preparer, do some research, etc. before blindly take a huge tax deduction on their personal taxes.

I think greed (on both sides of the table) was a major contributor in these situations, and now the US Justice Department is coming for one side, and the IRS is coming for the other side. I'm actually glad the US Treasury will recover some of their losses here.

Kurt

 

[theo]

I guess Tarpey may have an opportunity to put that law degree to good use, although it has been said that an attorney who represents himself has a fool for a client.

 

[theo]

I know this may sound really harsh, but frankly, I don't feel too sorry for these people who took these huge tax deductions on their taxes. I mean, if you have to pay a company to get rid of your timeshare, wouldn't it raise a HUG red flag in your head that the timeshare is worthless? Why else would you have to pay to get rid of it?

I know those sales-slime at those "donation" companies can be persuasive, but at some point people have to hold themselves accountable when something sounds too good to be true. A prudent person would question the outrageous claims, talk to their tax preparer, do some research, etc. before blindly take a huge tax deduction on their personal taxes.

I think greed (on both sides of the table) was a major contributor in these situations, and now the US Justice Department is coming for one side, and the IRS is coming for the other side. I'm actually glad the US Treasury will recover some of their losses here.

Kurt

Well said --- and ditto here to your expressed thoughts.

Further, I for one sincerely hope that an active effort is undertaken by Uncle Sam to lay governmental claim to some / most / all of the millions of dollars that Tarpey's "activities" have allegedly generated.

I've repeatedly stated within these forums over some years that I have no use for James Tarpey ---but I am sincerely glad that Uncle Sam apparently now does.

 

[presley]

I know those sales-slime at those "donation" companies can be persuasive, but at some point people have to hold themselves accountable when something sounds too good to be true. A prudent person would question the outrageous claims, talk to their tax preparer, do some research, etc. before blindly take a huge tax deduction on their personal taxes.

I agree and I don't feel sorry for them if they didn't consult their own attorney or CPA before taking the deduction.

My totally uneducated guess is that the appraiser said it was worth $$$$, but in the signed paperwork it says somewhere to make sure you consult your own attorney as they cannot guarantee any current tax laws. We know that people don't usually read contracts when it comes to timeshare stuff.

 

[ronparise]

heres what it says on their website

So who is responsible for the tax fraud. The individuals that take a b.s. deduction or the outfit that suggested that a deduction might be possible.

***************************************************************


"Upon transferring ownership of your timeshare, we will send you a receipt as proof of your donation, which you can then use to qualify for a tax write-off. The amount of your tax write off will be determined by the value of your property, which should be assessed by a licensed third party appraiser.

If you simply want to donate without first getting your property appraised, the tax code allows donors to take a deduction of up to $5000 without a formal appraisal. The donor must still provide support for their claimed value.

Once you receive your receipt, you should discuss its use with your accountant (or whomever you use for tax advice). You can also review the IRS web site regarding charitable donations at www.irs.gov/pub/irs-pdf/p526.pdf."

 

[vacationhopeful]

My "I am really smart" former friend ... who knows ALL (as he told me so) ... I think he dump his 2 or 3 timeshares via Donation taking the BIG tax deduction.

Karma: what goes around, comes around ...

 

[DeniseM]

So who is responsible for the tax fraud. The individuals that take a b.s. deduction or the outfit that suggested that a deduction might be possible.

Ron - Did you read the article?

DFC didn't "suggest" that a deduction might be possible - DFC actually PROVIDED "independent appraisers" and bogus appraisals.

Appraisers, including Thor and Broyles, would illegally assign a “grossly” inflated value to the property, thus giving customers larger tax deductions.

This may be before your time, but an employee for this company once openly posted on TUG that they could provide an "independent" appraiser who would give the donor a "favorable," appraisal.

It was only a matter of time before this caught up to them.

 

[TUGBrian]

and on top of that, the "appraisal" was an additional fee paid to the "charity"

 

[DeniseM]

Here is another gem from the article:

James originally attempted to form Donate for a Cause in 2005, but was denied nonprofit status due to potential benefits he would receive. A year later, he formed Project Philanthropy, which later became Donate for a Cause, hiding his involvement by installing his brother, Matthew Tarpey, as president.

James has earned “millions of dollars” from the scheme, according to filings.

 

[Murphiavelli]

My take

Yes whatever you claim on your taxes is your responsibility. Dollars in and dollars out for tax purposes are always on the individual. Now where the argument will split has to do with:

Did the individual pay a retail price above the write off amount? In other words can the individual prove that they paid in the first place which then puts the blame back onto Donate for the false appraisal?

There is a grey area to this debate, and I would also suggest that Donate likely cannot provide documentation for each individual transaction. In other words, it may not make sense to go after individuals if the records are inadequate. The effort may not be worth the trouble...

Donate however has documents that show that they were giving false appraisals for fees, selling contracts while donating the improper amount, and making money on facilitating the transfers through Resort Closings....that is all actionable it seems.

Look at how the Gibbs trial sorted itself out though (WA timeshare collectors)...who knows what the final monetary damages will actually be.

 

[DeniseM]

Did the individual pay a retail price above the write off amount? In other words can the individual prove that they paid in the first place which then puts the blame back onto Donate for the false appraisal?

The original retail price has no bearing on the tax deduction.

Here is an excerpt from an article written by an expert on timeshares and taxes, with more info:

If donating a deeded timeshare, the deductible contribution amount will normally be equal to the Fair Market Value (FMV) on the date of donation. That’s the price that an arms-length buyer and seller in the timeshare resale market would agree upon, not what the developer is charging for that same week. If the FMV exceeds $5,000, you’ll need a written appraisal that meets IRS guidelines. If the sale of the property would have resulted in a short-term gain, the FMV must be reduced by this amount.

http://www.tug2.net/timeshare_advice/TUG_Taxes_and_Timeshares.html

 

[Jason245]

http://www.bozemandailychronicle.co...r.it&utm_medium=twitter&utm_campaign=bozchron


we have warned against using the awful tax advice given by most timeshare "donation" companies, but it usually falls on deaf ears.

hope this opens some eyes...and I REALLY hope they dont dig into client records to trigger audits for folks that took these illegal deductions!

As a tax payer I hope that the company and all those that participated ("clients") are audited and forced to pay penalties and back taxes and interest. If they used a cpa for their returns they will be fine and able to go after the preparer.

Ultimately, this is like donating a 15 year old car and claiming it is worth half of what you paid thanks to a bogus appraisal.

Sent from my SAMSUNG-SM-N910A using Tapatalk

 

[pedro47]

Sadly, I think the article only says it looked at 2010 - 2012. If they look at more years, there will be lots more where that came from. Hopefully, everyone is ready to make some hefty payments.

Amazing most auditors would only look at the past 3 tax years. A huge red flag must have pop up on their federal tax returns.

 

[Jason245]

Amazing most auditors would only look at the past 3 tax years. A huge red flag must have pop up on their federal tax returns.

Statue of limitations is 7 years for this type of infraction.

Sent from my SAMSUNG-SM-N910A using Tapatalk

 

[ronparise]

Ron - Did you read the article?

DFC didn't "suggest" that a deduction might be possible - DFC actually PROVIDED "independent appraisers" and bogus appraisals.



This may be before your time, but an employee for this company once openly posted on TUG that they could provide an "independent" appraiser who would give the donor a "favorable," appraisal.

It was only a matter of time before this caught up to them.

Yes I read the article why would you think otherwise
And I also read the website

What I have not been able to do is read the contracts that the doners signed.

I'm suggesting that the individuals that took the deductions bear some of the responsibility. Maybe all of it