From the Department of Justice this week:
FOR IMMEDIATE RELEASE
TUESDAY, NOVEMBER 8, 2005
WWW.USDOJ.GOV
TAX
(202) 514-2007
TDD (202) 514-1888
JUSTICE DEPARTMENT SUES ILLINOIS DOWN-PAYMENT ASSISTANCE ORGANIZATION
Partners in Charity, Inc. Allegedly Promotes Multi-Million Dollar Housing Program by Falsely Advising Sellers They Can Claim Tax Deductions
WASHINGTON, D.C. – The Justice Department announced today that it has filed a civil injunction lawsuit in the U.S. District Court for Northern District of Illinois, in Chicago, seeking to bar Partners in Charity, Inc. (PIC) from making false and misleading statements in promoting to house sellers a program that assists buyers to fund the purchase of a house.
According to the government complaint, PIC is a tax-exempt organization, based in West Dundee, Illinois, that enters into contracts with house sellers under which PIC agrees to provide funds to assist house buyers in making down-payments on the purchase of a house: a practice known as “down-payment assistance.” PIC advertises that its program benefits sellers by providing sellers with a larger pool of potential buyers, the complaint states. In consideration for sellers’ participation in the program, PIC requires sellers to “reimburse PIC for the amount of the down-payment . . . assistance plus an administrative fee,” according to the complaint.
The suit alleges that in marketing and operating this scheme, PIC falsely advises house sellers and others that the sellers may claim charitable deductions on their federal income tax returns for amounts they are contractually obligated to pay PIC. According to the court filing, seller’s payments are not deductible charitable contributions, because they do not proceed from “detached and disinterested generosity,” but rather the payments are made in order to “facilitat[e] the sale of the seller’s house.”
According to the government complaint, a significant portion of house sellers participating in the PIC program have improperly claimed a charitable deduction on their federal income tax returns. The suit asks the court to order PIC to provide the government with a complete list of the sellers’ names, addresses, telephone numbers, e-mail addresses, and Social Security numbers.
“Putting a stop to abuse of tax-exempt status is a high priority for the IRS and the Justice Department’s Tax Division,” said Eileen J. O’Connor, Assistant Attorney General for the Department of Justice’s Tax Division. “The IRS will not tolerate schemes that mislead honest home sellers and tarnish the image of charities,” said IRS Commissioner Mark W. Everson.
