FEDERAL COURT BARS DOWN-PAYMENT ASSISTANCE ORGANIZATION FROM MAKING FALSE TAX BENEFIT CLAIMS

Partners in Charity, Inc. Agrees to Court Order Prohibiting it from Falsely Advising Sellers They Can Claim Charitable Tax Deductions

WASHINGTON, D.C. - The Justice Department announced today that Partners in Charity, Inc. (PIC) based in West Dundee, Illinois—a down payment assistance organization— and its president—Charles M. Konkus of Barrington, Illinois—have been permanently barred from making false and misleading statements in promoting their down payment assistance program to house sellers. PIC and Konkus agreed to the civil injunction order, which also requires them to post a copy of the injunction on PIC’s website and to give the Justice Department relevant information about participants in PIC’s program.

According to the government’s amended complaint, PIC enters into “down-payment assistance” contracts with house sellers. Under these contracts, PIC agrees to provide the down payment to people who buy the sellers’ houses, and the sellers agree to reimburse PIC for the down payment and to pay PIC an administrative fee. The suit alleges that in marketing and operating this scheme, PIC and Konkus falsely advised house sellers and others that the sellers may claim charitable deductions on their federal income tax returns for the amounts they pay PIC under these contracts.

Sellers’ payments are not deductible charitable contributions; the injunction requires the defendants to refrain from falsely stating that they are. The government’s court filings had stated that the payments did not proceed from “detached and disinterested generosity,” but rather were made in order to “facilitat[e] the sale of the seller’s house.” The amended complaint also stated that a significant portion of house sellers participating in the PIC program improperly claimed a charitable deduction on their federal income tax returns.

“The Tax Division of the Department of Justice has made it a high priority to put an end to the business of providing false tax advice,” said Eileen J. O'Connor, Assistant Attorney General for the Tax Division. “Anyone receiving tax advice should verify the motives and qualifications of those giving it, even those claiming to be charitable organizations.”

“We’re starting to see instances where charities facilitate and encourage inappropriate deductions,” said IRS Commissioner Mark W. Everson. “Maintaining the integrity of charities and ensuring they operate for the public good is an enforcement priority for the IRS.”

This case is part of the IRS’s and Justice Department’s initiative to stop abusive tax schemes. More information about this case can be found at http://www.usdoj.gov/tax/txdv05600.htm. More information about the initiative is available at http://www.usdoj.gov/tax/taxpress2006.htm. For more information about the Justice Department’s Tax Division, go to http://www.usdoj.gov/tax/index.html.