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US justice department goes after Timeshare "donation" company Donate for a Cause

LannyPC

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Back to Original Topic

Now that somebody's bumped this thread, I thought I would put forth an interesting (at least in my opinion;)) observation. Since this topic was posted, I don't recall anybody coming on these boards inquiring about using Donate For a Cause's services. Before, it seemed like at least once a month a newbie was coming on these boards asking if he should use DFC.

Now, no more inquiries since the investigation. Coincidence? Perhaps. Maybe it's an indication that this part of DFC's operations has been shut down or it hasn't been aggressively marketing and advertising its services.:shrug:
 

dioxide45

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Now that somebody's bumped this thread, I thought I would put forth an interesting (at least in my opinion;)) observation. Since this topic was posted, I don't recall anybody coming on these boards inquiring about using Donate For a Cause's services. Before, it seemed like at least once a month a newbie was coming on these boards asking if he should use DFC.

Now, no more inquiries since the investigation. Coincidence? Perhaps. Maybe it's an indication that this part of DFC's operations has been shut down or it hasn't been aggressively marketing and advertising its services.:shrug:

I do still see them listing weeks for sale on EBay. Though that doesn't mean they haven't changed how they "sell" their services.
 

theo

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Since this topic was posted, I don't recall anybody coming on these boards inquiring about using Donate For a Cause's services. Before, it seemed like at least once a month a newbie was coming on these boards asking if he should use DFC.

Now, no more inquiries since the investigation. Coincidence? Perhaps. Maybe it's an indication that this part of DFC's operations has been shut down or it hasn't been aggressively marketing and advertising its services.:shrug:

It could be that DOJ has issued an injunction against DFAC's "donation" operations, or it could be that James Tarpey is voluntarily laying low on advice of counsel on the "donation / appraisal / deduction" part of DFAC operations. Either development would presumably have no particular impact on DFAC or "Project Philanthropy" advertised resales while, on a separate track, the questionable DFAC "donation / appraisal" matters get (...ah...er...ahem) "addressed" with / by U.S. Department of Justice. :shrug:
 
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ronparise

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... or maybe James Tarpey is just laying low on advice of counsel on the "donation / valuation" portion of DFAC's operations (which would presumably have no impact on DFAC resale efforts on eBay), while the questionable DFAC "donations / valuation" matters get (...ah...er...ahem) "addressed" with the U.S. Department of Justice. :shrug:

Im (...ah...er...ahem) still buying from them

Theo is right, they have to address the crime of generating bogus appraisals to justify their customers tax deductions, but there still are folks that have timeshares to sell and there is still a need for timeshare liquidation companies. .... and there are still scavengers like myself ready to pick them over.... and the Viking Ships still sail, albeit without their tax deductions.

You can still buy timeshares from the various Tarpey companies
 

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Im (...ah...er...ahem) still buying from them...
You can still buy timeshares from the various Tarpey companies

Okay so they still are selling TSs that they acquired. When this thread was started in November, I guess they had many that they needed to sell and still need to sell.

I just thought that it was an amazing (or interesting) coincidence that TUG stopped receiving inquiries from various owners asking about using DFC for disposal purposes after the article linked in the original post came out. Before that, it just seemed that once a month, or so, there was someone asking about DFC. Now, nary an inquiry.
 

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https://www.justice.gov/opa/pr/fede...lving-improper-deductions-donating-timeshares

appears to be an update

The orders permanently bar Tarpey, Donate for a Cause and Timeshare Closings from promoting or marketing any arrangement that involves charitable contribution deductions claimed on federal tax returns. The orders also bar Tarpey, Donate for a Cause and Timeshare Closings from preparing, or assisting others in preparing, any property appraisal that will be used in connection with federal taxes. The orders require Tarpey, Donate for a Cause and Timeshare Closings to post a copy of the injunction on websites that they use to advertise timeshare donations, including but not limited to www.donateforacause.org. The orders also require that Donate for a Cause notify all of its customers of the injunction and that Tarpey and Timeshare Closings notify their employees involved with timeshare donations of the injunction.
 

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They may have stayed in the gray area but they got greedy when their sales people started quoting values that were sometimes even higher than original full freight prices.
 
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Reads like a consent decree stating that they won't offer or encourage appraisals. I don't see anything else impacting the timeshare transfer portion of their business. They already moved away from the Donate for a Cause marketing, so they'll just have to make minor changes and start operating as a traditional transfer operation without the "tax benefit" marketing. Anybody else see this in a different light?
 

Saintsfanfl

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Reads like a consent decree stating that they won't offer or encourage appraisals. I don't see anything else impacting the timeshare transfer portion of their business. They already moved away from the Donate for a Cause marketing, so they'll just have to make minor changes and start operating as a traditional transfer operation without the "tax benefit" marketing. Anybody else see this in a different light?

I agree but if they accept a worthless timeshare as a "donation" for a large fee they run a big risk in violating the order. The entire notion of "donating" is implying that there is a tax deduction involved. They have to be very careful that they never imply that there is any tax deduction at all. To cover themselves they should probably have the customer sign something stating that there is no known tax deduction warranted and the donor should seek third party tax advice.

It is much safer if they abandon the charitable scheme entirely and go the traditional PCC route. This definitely impacts their business because their entire operation was built around the idea of being able to take a tax deduction for the timeshare donation.
 

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I agree that the charity itself will likely be closed down, and the "Donate for a Cause" brand will remain shuttered. However- I personally don't think the transition to a traditional "pay us to take your timeshare" operation will be that much of a stretch. If the prosecutors could have found more violations than the appraisals, the penalty would have been much stronger. Based on what I read there, it appears to me that the timeshare transfers themselves must have been found to be legitimate. There was no mention of straw buyers or abandonment, so it would appear that the transfer and liquidation aspects of their business are working.
 

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I agree that the charity itself will likely be closed down, and the "Donate for a Cause" brand will remain shuttered. However- I personally don't think the transition to a traditional "pay us to take your timeshare" operation will be that much of a stretch. If the prosecutors could have found more violations than the appraisals, the penalty would have been much stronger. Based on what I read there, it appears to me that the timeshare transfers themselves must have been found to be legitimate. There was no mention of straw buyers or abandonment, so it would appear that the transfer and liquidation aspects of their business are working.

That is because this was pushed by the Tax Division. They only care about the tax issues. They don't care about swindled timeshare owners. They are just protecting their own revenue from fraudulent tax deductions.
 

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Roger830

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I would think that someone with deep pockets could make an interesting case challenging the IRS disallowing the appraisal.

The local government does't use distressed sales prices as appraisals for property tax.

The former timeshare the Neptune in Hollywood Beach, FL used to sell prime weeks at $1500 for a 1-bed. Owners were paid $4000-$5000 when bought out. The IRS would have said that $4000-$5000 deduction was too high when they were selling for $1500.
 
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T_R_Oglodyte

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I would think that someone with deep pockets could make an interesting case challenging the IRS disallowing the appraisal.

The local government does't us distressed sales prices as appraisals for property tax.

The former timeshare the Neptune in Hollywood Beach, FL used to sell prime weeks at $1500 for a 1-bed. Owners were paid $4000-$5000 when bought out. The IRS would have said that $4000-$5000 deduction was too high when they were selling for $1500.

IMHO - the IRS is on pretty solid ground. The allowable deduction is Fair Market Value, which is is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. What the property is appraised at by local government isn't really a factor, and especially not when it comes to timeshare.

What is relevant is what the donor could get for the property if the donor were putting the property up for sale.

In the case of Nepture, an individual owner is not in a position to sell the whole property and get cashed out. All the owner can sell is their individual unit, so that is the only basis for a market value determination.

I think the exception would be if the owner were advised that the property had been sold, and they would be receiving $4000 as their cash out. At that point, I think it would be reasonable to claim a $4000 deduction.

But that is a valuation based on the circumstances at the time the deduction is make. I don't see where you could use a hypothetical scenario as the basis for a deduction - especially where the scenario isn't one that the owner could create on their own.
 
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I can't find fault your reasoning. At least for the small guy, the tax laws seem to be designed to raise revenue.
 

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IMHO - the IRS is on pretty solid ground. The allowable deduction is Fair Market Value, which is is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.

I'll agree with what you are saying but the argument that Tarpey raised here on TUG some years back was that (check the first phrase I bolded in your quote) the seller has to sell and do so quickly in order to avoid the next MF. When a seller is selling under such a circumstance, he won't get FMV.

Tarpey also mentioned that with (now the other phrase I bolded) a buyer buying based on only what he can see with an ad on the internet as opposed to physically being able to inspect the property, he won't be inclined to offer FMV. The only way he can have knowledge of the facts is by having a licensed real estate agent physically taking him through the property. The only way that can be done is with these TS sales presentations. Since people are paying tens of thousands for such a property under those circumstances, that should be the determining factor of FMV.

All that being said, however, I do agree that FMV for a property that people have to pay another party to take off their hands is zero.
 

theo

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<snip>... FMV for a property that people have to pay another party to take off their hands is zero.

This is the bottom line --- despite whatever convoluted reasoning and / or lame justifications the likes of James Tarpey might attempt to conveniently conjure up.
 

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I'll agree with what you are saying but the argument that Tarpey raised here on TUG some years back was that (check the first phrase I bolded in your quote) the seller has to sell and do so quickly in order to avoid the next MF. When a seller is selling under such a circumstance, he won't get FMV.

Tarpey also mentioned that with (now the other phrase I bolded) a buyer buying based on only what he can see with an ad on the internet as opposed to physically being able to inspect the property, he won't be inclined to offer FMV. The only way he can have knowledge of the facts is by having a licensed real estate agent physically taking him through the property. The only way that can be done is with these TS sales presentations. Since people are paying tens of thousands for such a property under those circumstances, that should be the determining factor of FMV.

All that being said, however, I do agree that FMV for a property that people have to pay another party to take off their hands is zero.

This is the bottom line --- despite whatever convoluted reasoning and / or lame justifications the likes of James Tarpey might attempt to conveniently conjure up.

Theo's point is correct. Tarpey was just trying to create a convoluted logic to try to establish that zero plus zero equals fifteen. The fact is that timeshares are often bought and sold without doing physical inspection in an arms lengths transaction between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts they need to complete the transaction. The reasonableness of the knowledge for the transaction is determined by the marketplace, and a FMV is established based on the available information.

An example. Let's say a house is coming on the market. Certainly the condition of the house is a significant factor in its valuation. If the house is sold "as is", it will not sell for as much than if it is sold with "warranty". That factor will be included in the appraisal value of the house at the time of sale. Applying Tarpey's "logic", one would say that the FMV of a house being sold "as is", is really the value of the house sold with "warranty". And that just isn't the case.

A similar example involves used cars. Again, the condition of the car and availability of warranty has a big influence on the value of the car. Let's say that I have a used car that a new car dealer would sell as a "certfied" used vehicle - with documentation of condition by a mechanic, clean CarFax, and a 50,000 additional mile train-to-train warranty. If I am selling the car myself, the best that I can hope for is a Blue Book sellers value for a car in good condition. The dealer can extract substantially more value from the car, because of what the dealer can offer that I can't. And there is a clearly established market for those two conditions.

Again applying Tarpey's logic, if I donate the vehicle to charity, I should claim a FMV that is what the car would sell on the dealer's lot, not the price that I would actually get if I put the car up for sale.

That's why Tarpey is busted.
 
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and the hits just keep on comin....still amazed none of these people have seen jail time yet!

http://www.military-technologies.ne...ornia-man-from-preparing-property-appraisals/


this little snipped however does not bode well for any "victims" of this company who claimed these fake writeoffs on their tax returns!

The court’s order also requires Broyles to identify all timeshare owners for which he prepared a timeshare appraisal since 2010, provide such information to the United States, and email, or mail, a copy of the court’s judgment to every timeshare owner for which he prepared a timeshare appraisal since 2010.

Scams that claim inflated charitable contribution deductions is one of the IRS’s Dirty Dozen Tax Scams for 2017.

The IRS recommends anyone who may have improperly claimed such deductions to consult a tax professional.
 

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and an update to this story.... what a scam!



The court found that the gross income amount that Tarpey derived from the entire scheme was at least $19,623,437, and this would lead to a penalty of over $9.8 million. However, the court agreed with the United States to limit the penalty against Tarpey to $8,465,000 (plus interest), the amount that the government had sought in its counterclaim.
 

pedro47

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and an update to this story.... what a scam!

Will this decision trigger an IRS audit to timeshare owners who donated their timeshare to this Tax Shelter Promoter ?
 
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Will this decision trigger an IRS audit to timeshare owners who donated their timeshare to this Tax Shelter Promoter ?
Knowing the IRS, I wouldn't be surprised if they do. If "Donate For A Cause" gave the tax filer a huge tax break, the IRS could say they owe those back taxes. But, because the filer thought it was legitimate, the IRS might offer a lower settlement.

TS
 

SmithOp

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IRS is still up to their eyeballs in paper returns and other audits, I doubt they would bother with in person audits. Maybe an automated letter…

IRS processing delays continue (12-08-21)

Although the IRS is making progress, there are still significant return processing backlogs, such as:

6.5 million unprocessed individual returns, as of November 19, 2021;
2.6 million unprocessed Forms 1040-X, Amended Individual Income Tax Returns, as of November 27, 2021;
3 million unprocessed Forms 941, Employer’s Quarterly Federal Tax Return, as of December 1, 2021; and
412,000 unprocessed Forms 941-X, Adjusted Employer's Quarterly Federal Tax Return, as of December 1, 2021.
According to the IRS, it may take 90–120 days to process original returns. The timeline depends on how quickly and accurately taxpayers respond to requests for additional information and “the ability of IRS staff trained and working under social distancing requirements to complete the processing of your return.” Taxpayers may access “Where’s My Refund” (www.irs.gov/refunds) or use their online account to check on the status of these returns.

The ETA for processing amended returns can be more than 20 weeks (although we have heard of far longer timeframes). The IRS has asked that taxpayers not file a second return or contact the IRS about the status of their returns. Taxpayers are directed to check “Where’s My Amended Return” (www.irs.gov/filing/wheres-my-amended-return) for the “most up to date processing status available” for Form 1040-X, or to check their online account.

For more information on the IRS delays, see:

www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue


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