Explainer: More U.S. states eye donations to evade Trump tax changes

Reuters ^ | January 24, 2018 | Karen Pierog

[C19fan]

Legislation that first surfaced in California to give taxpayers a way to avoid the new cap on state and local tax (SALT) deductions by making charitable donations has popped up in four more states so far, with others reviewing alternative methods. Changes to the U.S. tax system signed into law by President Donald Trump in December have sparked a furious search in states with high income and property taxes for loopholes to help residents replicate the benefits taken away by the $10,000 cap on federal SALT deductions.

[Governor Dinwiddie]

#8: "a very large segment of our population … would vote for the Democrat party even inside the electrified barbed wire."

Heck, they would pull the lever for the Democrats even as the Zyklon B was billowing around them in the gas chamber.
 

[Kartographer]

Just like there is a large segment that would allow an NFL player walk up to them pee in their beer, take their wallet and have their way with their woman and they would still be there watching the game the next Sunday.

[Smedley]

“To a large extent the IRS relies on intimidation. If states en mass pull this l think they might get away with it.”

Perhaps, but when inappropriate deductions are made, the IRS just rejects the deduction and re-does your taxes for you.

[faithhopecharity]

if it is charity then California can’t force citizens to contribute to it

and any contributions or portions of contributions which California receives and then offsets (deducts) against a citizen’s state income tax obligation.... cannot be deducted by said citizen from his/her federal income taxes

this is federal tax law, has been my entire life, it is certainly nothing new.. any lawyer or CPA or EA can confirm this fact.

[100American]

States are not charities so then it seems like simple reasoning that any “donations” made to an organization that is not cannot be deducted, they are not a 501(c)3

[Newbomb Turk]

Perhaps, but when inappropriate deductions are made, the IRS just rejects the deduction and re-does your taxes for you

Wait till these California dupes get the penalty addition the IRS adds to your unpaid federal taxes. In many cases its three or more times the amount of taxes you owe and they will freeze your bank accounts.

My ex wife deducted taxes from our employees paychecks while I was in Iraq and never sent it to the IRS. That cost me about 40 grand plus the 8 grand of actual taxes.

Thats one of the many reasons why she's the ex.

[DaxtonBrown]

“U.S. States Eye Donations”

I see a whole bunch of Libs with eye patches

[Monorprise]

I think leftist judges have already declared states are charities. Of course you can expect liberals injustice to vote party line in each of these cases as well.

This means realistic it will be many years before these people actually pay taxes.

[Jim Robinson]

If the government compels a man to pay a certain amount for an insurance contract he neither wants or needs, it’s a tax. If the government compels a man to pay a certain amount he doesn’t want to pay to the state, it’s not a tax.

[pfflier]

What may happen is that the IRS takes on the state, not the individual.

Also the US Treasury has the withholding funds, not the individual. I have received refunds corrected by the IRS after I submitted my taxes. I got what they gave me based on their calculations.

[Gay State Conservative]

Simple...to get around this obvious scam by Rat-controlled states redefine “charitable organization” to 1) exclude entities that fund things that once were done by state and local government and 2) set up tests to determine if “contributions” are,in fact,totally voluntary rather than compelled.

[shawnlaw]

IRC Section 170 (c) Charitable contribution defined

For purposes of this section, the term “charitable contribution” means a contribution or gift to or for the use of—

(1) A State, a possession of the United States, or any political subdivision of any of the foregoing, or the United States or the District of Columbia, but only if the contribution or gift is made for exclusively public purposes.

[Jim Robinson]

But it’s not a contribution or gift if the state decides the amount and forces you to pay it.

[shawnlaw]

True dat, but the states will probably create returns that give the taxpayer the option of paying a tax of X% and gift to the state of Y% similar to the check the box elections for contributions to the election fund or pay Z% in tax with no deduction.

The choice is voluntary on the part of the taxpayer and the circuit courts in each jurisdiction with this scheme will most likely allow it. Tax court and SCOTUS may hold differently and ultimately the Congress would change IRC 170 to exclude “gifts” and “contributions” that are related to the states taxation of its citizen. It’s going to be a fun year for us tax lawyers!

popcorn please...

[Monorprise]

Isn’t the definition of a tax money sent to the Government for it’s constitutionaly autherized duties?

Not money forcefully sent directly to a 3rd party outside of the constitution?

Forcing people to donate to a spesfic Charity is a corrupt tax not a Charity. If it were we could all sell our services as a charity with required donation

[cherry]

how is the charity deduction going to work?...is it added as a credit which would make sense or do you add it in with your usual deductions...still, wouldn’t you have to have at least the $24 thousand to deduct for it to help you at all?