Trophy Donations Tax Scam

Today TaxMama hears from the Humane Society with a warning about phony museum donations by hunters. The press release is below. I won’t read it to you – but I will summarize it.

You’re going to see some words in the following press release that will trigger all kinds of hostility and negative reactions, no matter who you are. There are words like ‘hunters’, Humane Society, shooting exotic animals, big game, trophy, and more. Please, read the release. And please read it with an open mind.

This isn’t about discouraging or banning hunting. Some hunting is perfectly sensible, keeps species in balance, and puts food on the table. (Though, having been brought up as an Orthodox Jew, I know there is a more humane way to kill an animal you’ll be eating than to shoot it.) This isn’t about an interfering environmental organization out to protect some endangered species you don’t care about at the expense of your job or livelihood.

This is about blatant, bald-faced tax fraud, boldly and arrogantly promoted by excessively wealthy people, laughing all the way to the bank. They’ve taken deductions of at least $1.25 billion dollars!

They are encouraged, by two groups that each stand to make millions by promoting these deductions: An appraisal association who’s gotten rich by providing over 250,000 appraisals of trophy animals donated to non-existent museums located in the owners own home or cabin, or in some musty, never visited warehouse or storage unit. (Imagine, if the appraisal firm received only $500 per valuation, they’ve earned $125 MILLION. If they charged $1,000 each, that’s a quarter billion dollar industry!)

To say nothing of the income generated by the safari organization that sells their trips on the basis of their being tax deductible. Assuming 2 animals shot per hunter per trip, that’s 125,000 trips, at a modestly estimated cost of $5,000 per – that safari company has sold over $625 million worth of trips.

There’s money in this for these guys!

Senator Grassley has proposed legislation to put a stop to this bogus contribution deduction. Please support it. Even if you’re in favor of guns and hunting. This isn’t about hunting. It’s about tax fraud.

So, please read the release below. And let the Conference Committee know that you’re aware they’re letting their friends get away with this shocking tax loophole – and that you want this stopped. https://community.hsus.org/campaign/2005_taxscam4

Remember, you’ll find answers to questions about tax fraud and all kinds of tax issues, free. Where? Where else? At TaxMama.com

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TAX ADVISORY:
THE HUMANE SOCIETY OF THE UNITED STATES WARNS
TAXPAYERS AND TAX PREPARERS
AGAINST DEDUCTIONS FOR TROPHY HUNTING

WASHINGTON (March 23, 2006) – As millions of Americans file their taxes, The Humane Society of the United States (HSUS) has a warning: a loophole that allows writing off donations of trophy hunted animals to pseudo-museums is under scrutiny like never before.

A two-year investigation by The Humane Society of the United States revealed that trophy hunters are shooting rare animals around the world and donating their mounted prizes to phony museums in order to take a tax deduction. It doesn’t matter if the pseudo-museum is set up in the hunter’s own living room. HSUS investigators even found 800 “donated” trophy mounts gathering dust in an old railroad car in Nebraska.

Thanks to Senate Finance Committee Chairman Charles Grassley (R-Iowa), Congress now has a proposal before it to stop this scam, and Americans should urge their elected representatives in Washington to vote for it.

The safari swindle involves a big-game hunter shooting an exotic animal in Asia, in Africa, or at a drive-through “canned hunt” here in the U.S.—and writing off his vacation at the expense of the IRS and American taxpayers. This trophy hunting boondoggle bilks the federal Treasury of untold millions of dollars, and encourages more killing of our precious wildlife, including rare species.

“The Humane Society of the United States is urging taxpayers and tax preparers to think twice before claiming deductions for these dubious donations that are fleecing our treasury and encouraging trophy hunters to kill rare animals around the globe,” said Michael Markarian, HSUS executive vice president for external affairs.

Chicago Appraisers Association

The Chicago Appraisers Association, which has been implicated in this tax scheme, has made a cottage industry of appraising big-game mounts for hunters’ tax deductions. The CAA claims it has appraised more than 250,000 game mounts for hunters who want to donate their animals to a museum. Its promotional materials entice hunters with “the seven secrets of tax-deductible hunting,” telling clients they can “hunt for free,” and even boasting that IRS acceptance is guaranteed.

The appraisals of trophy animals are extraordinarily generous, and often made by viewing photographs without even seeing the actual mount. Just calculate the cost of airfare, guide fees, licenses, hunting permits, skinners, trackers, shipping, taxidermy, tips for guides and other expenses, and you can make each hunt pay for the next. In an ironic twist of so-called conservation, the more animals that are hunted, the more rare the species becomes, and thus the higher “replacement value” of the animal and tax break to the hunter. The CAA recommended values of up to $5,000 for a zebra, $13,500 for a brown bear, and $45,000 for a desert sheep.

Shipping the trophy to a warehouse, letting hunting buddies see your prized animals in your living room, or even just promising to donate your mounts sometime in the future, all can earn hunters big tax breaks. The trophy hunting organization Safari Club International has held seminars titled “SCI, the IRS, and You,” and has offered tips on how hunters can consider themselves “museum curators” for charitable purposes. They even suggest turning part of your house into a “wildlife museum”.

After donating the trophies to fake museums, the hunters who shot them and donated them in the first place can buy them back at auction, at bargain basement prices. Trophies typically sell for 10 to 20 percent of their appraised value—a fraction of what the hunter earned as a tax deduction.

The Trophy Hunting Tax Loophole

Congress can curb this abuse now. The Senate’s version of the Tax Relief Act of 2005 includes language specifying that trophy mount donations now must have “comparable sales data” to accompany IRS tax forms claiming the donation. So instead of claiming the cost of flying to Africa to kill an antelope and writing off the expense of the trip, a donor could only claim what it would cost to buy the antelope trophy on the open market, a figure that will be considerably less. The language passed by the Senate also prohibits hunters from writing off the travel costs associated with their donations.

For donations over $5,000, donors would have to obtain an appraisal by the IRS Art Board or by a certified agent, again using comparable sales figures. These steps will dramatically reduce the vast majority of abuses of the system, and are estimated to save the country at least $43 million over the next decade.

The Senate passed its version of the tax bill with the Grassley taxidermy language included, but the House of Representatives passed a version without it. The differences will soon be ironed out in a conference committee.

“Congress should be commended for putting this trophy hunting tax scam in the crosshairs,” Markarian said. “Our leaders should save millions of dollars and stop wealthy trophy hunters from getting a free ride on the backs of American taxpayers, by retaining the Grassley language in the final tax bill. It’s time to shoot down the taxidermy tax scam.”

The Humane Society of the United States is the nation’s largest animal protection organization with more than 9.5 million members and constituents. The HSUS is a mainstream voice for animals, with active programs in companion animals, wildlife and habitat protection, equine protection, animals in research and farm animals and sustainable agriculture. The HSUS protects all animals through education, investigation, litigation, legislation, advocacy, and field work. The nonprofit organization is based in Washington and has field representatives across the country. On the web at www.hsus.org.

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