Not All San Diego-Area Fire Relief Donations Qualify for IRS Tax Deduction
By Jennifer Vigil, The San Diego Union-Tribune Knight Ridder/Tribune Business News
Mar. 22 - Donors who supported causes related to the October fires should make sure their charity is properly registered with the IRS before claiming deductions on their taxes next month.Charities with long-standing status as 501©(3)'s, the government's designation for a portion of the organizations that are tax-exempt, include well-known groups such as the American Red Cross and the Salvation Army.
Those two groups played a large role in the immediate recovery efforts after the devastating Cedar and Paradise fires, which destroyed almost 2,500 homes.
But dozens of new organizations, mostly community-based, formed as long-term rebuilding efforts began to take precedence over emergency response.
The registration process for becoming a nonprofit can take up to nine months, said Raphael Tulino, a spokesman for the IRS in San Diego.
Deductions are unlikely to be disallowed if a taxpayer makes a "good faith effort" to verify a charity's status, he said, and a group's nonprofit status is retroactive to when it first set up business, not to when its IRS paperwork is approved.
Tulino said filers who itemize their deductions can check with the IRS or the charity, to make sure it is officially designated as a nonprofit or has an application pending to be deemed so.
Mariano Diaz, senior vice president for community partnerships at the San Diego Foundation, has studied the community groups that have cropped up in fire-devastated areas such as Crest, Harbison Canyon and Valley Center.
He said that of the 350 inquiries the foundation received about rebuilding efforts, about a third came from agencies that appeared to have no legitimate nonprofit status.
Some smaller groups, however, paired with fiscal agents, such as existing nonprofits, or churches. Once a fiscal agent agrees to this type of partnership, donations sent to the community group can be deducted.
Churches automatically receive nonprofit status, so any fire donations made through one can be taken as a deduction.
For more information on donations and taxes, see the IRS Web site, at www.irs.gov/charities/index/html.
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