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TAX MAN: Beware of Lahaina scammers, taking advantage of aloha

Instead of “here today, gone to Maui,” it really was, “here today, (Lahaina is) gone tomorrow.” It is a tale of devastation and heartbreak that is still unfolding as residents and authorities gradually pick up the pieces.

We in Hawai‘i tend to be generous people. Across the news and social media, there are many heartwarming tales of people opening their hearts to the victims, of coming together as a community to be helpful.

But there is a darker side.

Whenever people are motivated to give, there are others who are motivated to take.

Those of you with generous hearts need to keep some things in mind to make sure that you don’t become another victim.

First, donate to charities you know and trust. If you think you know the charity but haven’t dealt with them before, you can search on the Exempt Organization Search tool on IRS.gov (https://apps.irs.gov/app/eos/).

Your charity has to be on “Publication 78” for you to be able to take a deduction for your charitable contribution on your income tax returns (federal and state). There are reputable and well-known organizations, such as the Chamber of Commerce of Hawai‘i, that can be found on the Exempt Organization Search but are not on Publication 78.

You need to know that if you make a contribution to such an organization, it does not qualify as a charitable contribution and can’t be deducted on that basis. (If you are a business, you might be able to deduct a contribution made to a non-charity as a business expense under some circumstances. Check with your tax professional.)

It goes without saying, then, that if the “charity” you are being asked to donate to doesn’t even show up on the list, you should ask a few more questions before you open your wallet.

You can also get important information about a charity from the Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, or GuideStar.

Be alert when giving to individuals on crowdfunding sites. Depending on the site, crowdfunding campaigns can be set up by anyone. The “disaster victim” who set up the campaign might not in fact be a disaster victim, and the name on the campaign might be fake.

And then, be extremely cautious if the so-called donee insists that the contribution be made by cash, gift card, wired funds or cryptocurrency. Making payment by one of these methods pretty much guarantees that you’ll never get the funds back even if the donee is scamming you. If you want to donate, pay by credit card. That form of payment gives you more protections. (And maybe a few more award miles.)

And, finally, if someone does try to scam you, report it whether or not the scammer succeeded in taking your money. A good place to start would be ReportFraud.ftc.gov, which goes to the Federal Trade Commission and is then shared with more than 2,800 law enforcers. Reporting the issue increases the chances that the perpetrators will be caught and prevented from scamming others.

For some of the big-hearted of us, it’s “here today, and some money, or goods, or other necessary things are gone to Maui.” Let’s make sure they go where they’re supposed to.

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Tom Yamachika is president of the Tax Foundation of Hawai‘i.
Source: The Garden Island

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