Tax Law Blog | IRS Tax Attorneys

A tax break meant to spur donations to Haitian earthquake relief has received unanimous approval from the Minnesota House.

It should reach Gov. Tim Pawlenty’s desk sometime this week. The Senate needs to take one more vote to line up two slightly different versions.

The bill would allow donors to deduct charitable contributions from their 2009 state income taxes. It would apply to donations made specifically for Haiti relief efforts.

Corporations could also deduct Haiti donations from corporate franchise taxes.

The legislation would match up state and federal tax law.

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The Internal Revenue Service’s investigations into alleged tax violations by two Minnesota-based churches, Living Word Christian Center (LWCC) and Warroad Community Church, have been thwarted by internal procedural problems.

These cases highlight the special tax-exempt status churches receive by law, but they also underscore problems at the IRS. In effect, the IRS has been unsuccessful in investigating allegations of tax violations by churches because years of conflicting congressional action have made it impossible for the IRS to follow its own rules.

And while the IRS has undertaken the potentially months-long process to reform its broken system, the religious right is seeking to exploit it by encouraging churches to flout the law and endorse candidates from the pulpit next month.

More: IRS Loopholes Gets Minnesota Churches Off Tax-Violation Hook