IRS Offers Bonus Charitable Deductions For A Limited Time

It appears that the Internal Revenue Service (IRS) is taking Congress’ edict to “do more with less” very seriously. In a move that’s sure to raise some eyebrows, the federal agency has announced that it will allow taxpayers to claim an enhanced “bonus” charitable deduction for contributions made directly to the agency for a limited time in 2017. There is a catch: to avoid the appearance of impropriety, contributions must be “in kind” and must be immediately useful to the agency.

The move is in response to President Trump’s budget blueprint issued last month which proposes to cut an additional $239 million from last year’s budget. The IRS has already been slogging through cut after cut over the past few years. The number of IRS staffers has dropped 31% over the past 19 years: those numbers have plunged 16% just since 2005. The budget for the last fiscal year was $900 million less than its budget for the fiscal year 2011.

What does that mean for the agency? The situation is not ideal, according to an agency spokesperson. She explained that it was hard to detail exactly how much the draconian cuts have impacted the agency. She suggested instead that I tour the Capitol Street offices in Washington, D.C. so that I could see firsthand how bad things have gotten at the agency.

Outside, the IRS building looks like any other federal building. But inside, it’s a different story.

After passing through security, we ventured down the hallway to the main office area. I nearly tripped over an agent sitting on the floor. Since there are not enough desks or chairs for IRS personnel to use, many IRS representatives choose to sit cross-legged on the floor or on bean-bag chairs. Others opt into a “desk lottery” where they can land the opportunity to sit at a real desk for a week.

Noting my surprise, the spokeswoman explained that the current budget did not allow for the purchase of new furniture. That’s why, she said, when faced with more cuts, the IRS Commissioner decided to take matters into his own hands. For a limited time, the agency will accept “in kind” contributions of office furniture and office supplies from the public in exchange for a charitable deduction worth twice the market value.

“We’re looking for good quality desks and chairs for our staff,” she explained. “But not IKEA. I mean, we’ll accept IKEA furniture that is already put together but not parts in a box. We don’t have the time to train staff for that.” Besides, she said, “These are tax and finance-oriented people. They can’t tell an IVAR system from a NORDEN series.”

Next, she rattled off a list of office supplies that the agency is hoping to score, including fax paper. “You have no idea how hard it is to get your hands on that stuff,” she said, “since nobody uses fax machines anymore but us.” As a tax attorney who has sent over a fax or two to the IRS in my day, I agree.

Also on the list? Toilet paper. A luxury, the spokeswoman explained. It’s rationed out at the beginning of the week to employees, and there are no free refills. “It’s not all bad, though,” she told me. “Federal holidays count towards our allowance so we can really stock up over the holidays. It’s one of the perks of being a federal employee.”

While beggars can’t be choosers, the IRS has imposed some restrictions on the bonus charitable deduction. To qualify, contributions must be new or in excellent condition and delivered directly to the IRS offices. There is no cap on the value of goods that can be donated but to avoid any semblance of impropriety, only goods can be donated: no cash will be accepted. Receipts will be issued by IRS in exchange for the charitable contribution noting the bonus deduction values: the regular charitable contribution rules otherwise apply.

After we left the main office area, the spokesperson directed me towards the break room, down the hall past row after row of bookshelves stocked with Federal Registers. “I’ll let you in on a secret,” she offered. Lifting up a cardboard facade molded to look like books, she confessed, “It’s fake. We don’t actually buy the books anymore.” When I questioned what that might mean for taxpayers in terms of accuracy, she merely shrugged, “We just make up the rates. Nobody reads those notices anyway.”

The break room wasn’t as dreary as I had anticipated. I did, however, notice that the fridge wasn’t plugged in. “Shh,” she hushed me. “They don’t know that,” she said, pointing at the employees munching away on their brown bag lunches. “And fridges are one of the most energy-inefficient appliances. They cost a lot of money to keep turned on.”

“The microwave?” I queried. “It’s a refurbished Easy-Bake oven,” she replied. “We just painted over the pink bits.” That might explain why one of the employees had been waiting five minutes to reheat a muffin.

And the stack of magazines in the reading corner? “We cut the dates out of the covers,” she said, shrugging her shoulders, “so that the employees think they’re current. It’s worked out for us pretty well since the Kardashians are always fighting and people still blame Angelina for the break-up of Jen’s marriage so it’s hard to tell that it’s old news.” Noting that one of the outdated People magazines had a smiling Prince on the cover, she added, “We just have to keep the estate auditors out of the break room or they’ll ruin everything.”

It was all a bit much to take in. I asked what the agency would like to see most in terms of contributions. “We could really use coffee,” the spokeswoman said, noting that the agency is currently restricted to tea and forced to re-use the bags for refills. “I hear the Department of Defense has a Keurig,” she whispered dreamily.

I had known that the cuts were bad – but this bad? “Aren’t they worried,” I asked, “about the effect on employee morale?” At that point, the spokeswoman cracked a smile for the first time all day. And then the smile bubbled into a full on laugh. “Girl,” she said, catching her breath, “That train left the station a long time ago.”

To qualify for the special bonus charitable deduction, donations must be made on or before April 1, 2017, otherwise known as April Fool’s Day.

In case it wasn’t quite obvious, this is my April Fool’s Day post. I have fun with my April Fool’s Day posts every year. You can catch some of the prior posts by clicking below:

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