Gregory Crist of the National Timeshare Owners Association in America has highlighted a scheme which a Federal Judge has shut down called Donate for a Cause. In this scheme timeshare owners paid a Montana company to donate and transfer their timeshares in exchange for tax deductions.
Prosecutors called it an “abusive timeshare donation scheme”, the Judge Sam Haddon ordered that Project Philanthropy which was also doing business as Donate for a Cause to turn over a list of all clients names, addresses, phone numbers and social security numbers for timeshares donated, going back to 2010. In the six years, thousands of owners have allegedly been provided with improper tax deductions for donated timeshares which promised generous tax savings.
The scheme relied on appraisals which overvalued by huge amounts the donated timeshare rights, which customers would use to claim large charitable tax deductions. According to the Justice department owners were encouraged to donate their ownership rights to Donate for a Cause.
It would appear that Donate for a Cause was only a conduit being used to briefly hold title to timeshares, before being sold at a fraction of the appraisal amount. One example includes a client who transferred a timeshare to Donate for a Cause which originally cost $10,597.50, this was then sold on ebay’s charity platform for only $81, yet the value it was given for tax purposes was $8,740.
The IRS (tax department) estimates that since 2010, the defendants (donate) have received over 5,523 timeshares donated to the scheme. The IRS estimates that the defendants have caused more than $19.4 million to be deducted from tax improperly.
The company´s CEO and President have both agreed to being permanently barred from marketing or promoting charitable contribution deductions and the defendants have also been prohibited from preparing property appraisals connected to federal tax returns.
It would seem that in the US another timeshare scam has been thwarted, it is not one that we are familiar with in Europe, due to the different tax laws we have. But I wonder how long it will be before some bright spark comes up with a similar scheme here?
Thank you to Gregory Crist and Irene Parker for this story, the full article by Greg is below in PDF form.
Click here to go to the original article.