Hey ,
The IRS shared important information about a potential tax scam involving art donations.
According to the IRS, some promoters may try to lure you into buying art at a discounted price and then donating it to a charity for a much higher value. They may promise you a huge tax deduction and even arrange the appraisal and donation for you.
Sounds too good to be true, right?
Well, it is. The IRS warns that these schemes are abusive and illegal. They can result in audits, penalties, interest, and even criminal prosecution.
The IRS has a team of experts who review the valuation of art donations and advise the agency on whether they are legitimate or not.
So, how can you avoid falling for these scams? Here are some tips from the IRS:
- Be wary of buying multiple works by the same artist that have little to no market value outside of what the promoter might be
advertising.
- Be careful of using appraisers who are recommended by the promoter or who fail to adequately describe the art and its value characteristics.
- Keep records of your art purchases and donations, including receipts, acknowledgments, appraisals, and photos.
- Follow the IRS rules for claiming charitable contribution deductions for art donations, which vary depending on the amount
of the deduction. You can find more details on the IRS website or in Publication 561.
- Report any suspicious activities or promoters to the IRS using Form 14242 or by calling 800-366-4484.
If you have any questions about these or other tax credits and deductions that can affect
your 2023 tax returns, please feel free to call my office at 202-618-1297.
I am always happy to help you with your tax planning
needs.
