Paul L. Caron
Dean



Tuesday, April 28, 2015

IRS Seeks To Tax $50k Raised From GoFundMe For Cancer Treatment For Car Crash Victim

Go Fund MeKETV, IRS: Cancer Survivor Owes $19,000 in Taxes From Donations:

Two years after surviving a terrible car crash and battling cancer, Casey Charf never imagined she’d be fighting a new battle with the IRS.

KETV first met Casey in March of 2013, just weeks after she survived a crash that broke her neck and back in several places. ... Paramedics flew Casey to the hospital after the crash ... During tests and scans to check for accident injuries, doctors discovered tumors hidden throughout Casey’s body.  She had no idea she had cancer.

Her story went viral, reaching doctors and donors across the nation.  Health experts offered to treat Casey’s rare cancer, pheochromocytoma, including a leading physician with the National Institute of Health.  Hundreds of people in the Omaha metro area attended fundraisers for the Charf family to help with travel and medical expenses.  Her sister also set up a GoFundMe account online, and more than a thousand people around the world donated to the Charfs, raising nearly $50,000.

In the last two years, Casey has traveled to Maryland and Louisiana for treatment, and received chemotherapy and radiation here in Omaha as well.  So far, efforts to find ‘Casey’s Cure’ have shown little progress; the cancer is still there. ...

Just weeks ago, Casey and her family began a new battle. “Two years later, we get a letter saying we owed like $20,000 in taxes,” said Casey.  March 30, 2015, the IRS notified the Charfs that what they’d collected through the GoFundMe account should’ve been claimed as income. Of the nearly $50,000 the government wants $15,457 in back taxes, and another $3,676 in penalties and interest. In total, the letter indicates the Charfs owe the IRS $19,133 by April 29th. “We've already used that money for my doctors’ bills and everything that I've needed,” said Casey. “It's donations, it's not income. So how can they tax you on that? I don't get it.”

GoFundMe has posted on the website ‘while this is by no means a guarantee, most donations on GoFundMe are simply considered to be personal gifts which are not taxed as income in the US.’ ...

At least one local tax expert tells KETV these donations are no different than a cash donation you make in person in a jar on a counter. “This is a gift.  She's going to have no tax consequence, or should not,” said Chad Brown, President of Liberty Tax Service franchises in Omaha and Iowa.  Brown is not the Charfs’ accountant, but offered a professional opinion based on the information KETV provided.  He says crowdfunding sites often use a third party to pay out donations, and that anything more than $20,000 annually require those businesses to legally file a 1099 with the IRS.

“They’re saying, we received this document that you received payments,” said Brown.  “I think it's really going to open the IRS's eyes, the more and more you see this on the news, Facebook, social media--it's becoming more and more popular.”

https://taxprof.typepad.com/taxprof_blog/2015/04/irs-seeks-to-tax-50k-.html

IRS News, Tax | Permalink

Comments

Probably an IRS computer sent that letter. Was it Bryan Camp who recently wrote something on how computers do almost all of the work of the IRS? The 1099's have to match the returns. One hopes, though, that when the Charfs explained the situation to a human being at the IRS, the human being said, "Forget about it, you don't owe". Probably on the IRS letters they ought to say "This is a computer-generated letter. If something looks wrong, don't hesitate to write us and tell us why you think it is wrong. The computer does make mistakes sometimes."

Posted by: Eric Rasmusen | Apr 29, 2015 3:56:20 AM

IRS needs to come up with clear guidance on this as soon as possible.

Posted by: La Rusa | May 5, 2015 5:50:17 PM