Donors should be wary of schemes that promise "too good to be true" tax benefits for charitable giving.
Split-Dollar Life Insurance
In this scheme, a donor gives money to a charity, which then uses the funds to pay premiums on a life insurance policy that benefits the donor or their family. The donor claims a charitable deduction for the "gift," even though they are the ultimate beneficiary.
IRS Crackdown
The IRS has issued notices stating that these transactions are abusive. Charities participating in them risk losing their tax-exempt status, and donors face disallowance of deductions and penalties.