Interesting articles in the Washington Post:
- Senators Urge Bush to Help Block Tax Loophole HHS Secretary’s Deductions for Gifts to Family Group Prompt Call for Action, by Jonathan Weisman:
Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) and the committee’s ranking Democrat, Max Baucus (Mont.), urged President Bush yesterday to help shut down a tax loophole that allowed his secretary of health and human services to claim more than $1 million in tax deductions for "gifts" that have been used to further his family’s interests.
Grassley and Baucus, responding to a report in yesterday’s Washington Post, wrote Bush to ask for his support in saving a provision in an embattled pension bill that would rein in what they called an abuse of the charity tax code. And they said the issue could be taken care of through regulatory changes in the Bush administration’s control.
- HHS Secretary’s Fund Gave Little to Charity, by Jonathan Weisman:
The Leavitts used nearly $9 million of their assets to set up the foundation in 2000 under an obscure provision of the federal tax code. But unlike standard private foundations, which are required to give away at least 5% of their assets to charitable causes, the Leavitt organization donated less than 1% of its assets in 2002, 2003 and 2004. The donations jumped to 6.3% of total assets last year, after the sale of family water interests that also allowed the foundation to increase its lending to Leavitt business interests.
While Mike Leavitt alone has claimed about $1.2 million in tax write-offs since 2000, the foundation gave away only $49,000 in 2002 and $52,000 the next year, according to tax returns and other documents filed by the foundation. Meanwhile, the foundation’s assets have been used for a $332,000 loan to Leavitt Land and Investment Inc., in which the secretary owns a significant stake, and other secured loans for insurance and real estate deals, said Alan A. Jones, a trustee of the organization….
The tax structure used to create the foundation is called a Type III supporting organization. The Internal Revenue Service has said the category is rife with abuse, designating "supporting organizations" this year as one of its "Dirty Dozen" top tax scams, along with Internet identity theft and offshore banks. Use of the tax structure could be significantly reined in under a tax provision that was inserted into pension legislation passed by the Senate and now under negotiation with the House.
See also:
- Grassley-Baucus Letter to President Bush
- 2006 Dirty Dozen Tax Scams
- Panel on the Nonprofit Sector, Proposed Reform of Type III Suporting Oranizations
- Associated Press: HHS Secretary Defends Family Charity, by Kevin Freking
- New York Times: Health Secretary Is Questioned on Use of Family Foundation, by Robert Pear
- UPI: HHS Chief Benefits From Charity
