American Jobs Creation Act includes handouts, charity reform
From ANIMAL PEOPLE, November 2004:
WASHINGTON D.C.–The most flagrant case of politics making
strange bedfellows in the last days of the 108th Congress may have
been the American Jobs Creation Act.
Combining nonprofit reform with pork barrel politics, the
American Jobs Creation Act was passed by the House of Representatives
on October 8, cleared the Senate on October 11, and was signed by
President George W. Bush just six days before the November 2 national
election.
The act gave $137 million in tax breaks and subsidies to
Republican-favored industries, including hunting, fishing,
greyhound and horse racing, and indigenous whaling.
The framework of the act repealed $49.2 billion in export
subsidies for U.S. goods, held to be in violation of World Trade
Organization rules. This helped Democratic presidential nominee John
Kerry to accuse Bush of subsidizing losses of U.S. manufacturing jobs
to overseas competitors.
To win support for repealing the export subsidies on the eve
of the election, Congress gave the act a misleading title, then
loaded it with giveaways to the point that Arizona Republican Senator
John McCain called it, “The worst example of the influence of
special interests that I have ever seen.”
Alaska Senator Lisa Murkowski, in a tight race against
former Alaska Governor Tony Knowles, won $28 million in tax breaks
for the cruise ship industry, plus a clause sought since 1999 by the
Alaska Eskimo Whaling Commission that allows 154 whaling captains in
10 villages to claim up to $10,000 in tax exemptions apiece for
whaling-related expenses.
“The act gives a $27 million tax break to encourage
foreigners to gamble at U.S. horse and dog racetracks, and $9
million in tax breaks to U.S. makers of bows and arrows,” reported
Sumana Chatterjee of Knight-Ridder Newspapers.
The American Jobs Creation Act also reduced the federal
excise tax rate on fishing tackle boxes from 10% to 3%.
“A major beneficiary is Plano Molding Co. of Illinois, which
is headquartered in Republican House Speaker Dennis Hastert’s
district. The cost to taxpayers is $11 million, according to the
budget watchdog group Taxpayers for Common Sense,” wrote Chatterjee.
Hastert won re-election by a 2-1 margin over Democratic
challenger Ruben Zamora.
But the American Jobs Creation Act was not entirely a
giveaway. Buried deep within it was language sought by the Treasury
Department to limit the tax deductions that can be claimed by donors
of used cars and corporate donors of intellectual property to
charities.
Formerly, only individual donors of property such as
patents, trademarks, copyrights, and works of art, were required
to support their claims to a deduction with a formal appraisal of the
income-producing value of the gift. This enabled some corporations
to reduce their tax liability by hundreds of millions of dollars per
year by creating bogus charities, to which they donated patents,
trademarks, and copyrights that might once have been of value, but
no longer are.
The amendment to the rules governing donations of
intellectual property are unlikely to have much effect on animal
charities. Only a handful of animal-related nonprofits have received
much intellectual property, and the few that have are significantly
benefiting from continuing royalties, chiefly on computer software
patents.
Used cars
Used car donors, formerly able to claim “Blue Book” value,
now will be able to claim a tax deduction only for the what the
charity nets after selling the vehicle, unless the “Blue Book” value
is under $500 or the charity decides to keep the vehicle instead of
selling it.
Many animal charities have used car donation programs– and
many such programs have become suspect.
In October 2001 ANIMAL PEOPLE received a tip about a used car
donation program run by an apparently bogus pit bull terrier rescue
group in the Lucerne Valley, near Los Angeles. The operation
vanished after ANIMAL PEOPLE made inquiries about it.
On July 24, 2003, Connecticut attorney general Richard
Blumenthal and Connecticut Department of Consumer Protection
commissioner James T. Fleming sued the Animal Health Care Fund,
Connecticut Auto Auction, and their operators, Rocky Guarnieri and
Christy Kochanowicz, for alleged car donation fraud.
“Mr. Guarnieri is the owner of Connecticut Auto Auction and
served at the same time as the president of the Animal Health Care
Fund, which did not even maintain a separate checking account,”
Blumenthal and Fleming said in a joint statement.
“Mr. Guarnieri has an extensive criminal record, including
felony convictions for burglary and larceny. As part of
investigation conducted by this office, documents produced by
Connecticut Auto Auction reveal that it may have valued donated
vehicles in a three-month period in 2002 as high as $125,280, but
only gave $500 of that money to one animal hospital.”
In March 2004 the Nevada SPCA suspended an employee who
accepted the donation of a newly restored 1969 Karman Ghia sports
car, valued at $9,000, and tried to sell it to the appraiser for
$4,000, allegedly trying to pocket the money.
At about the same time, the Council of Better Business
Bureaus Wise Giving Alliance warned that a Delaware charity calling
itself the National Humane Society had not provided enough
information for the Alliance to determine if it meets the BBB-WGA
standards.
Unrelated to two other organizations that also use the name
“National Humane Society,” the society in question appears to be
engaged chiefly in raffling off luxury cars. It spends only from
8% to 26% of budget on identifiable animal welfare work, according
to five recent filings of IRS Form 990. The filings do not indicate
whether the cars are actually purchased by the charity, or are
bought by others and then donated for a deduction.
The charity was incorporated in 1998 by four people including
brothers Glenn and Randy Kassal. The Kassal brothers were involved
in a Florida-based entity called American Animal Protection Charities
Inc., which was sued in March 1998 by the Florida Attorney General’s
Office for allegedly falsely advertising a raffle and not making the
advertised use of the proceeds.
A spokesperson for the Delaware-based National Humane Society
did not respond to the question from ANIMAL PEOPLE, “What became of
American Animal Protection Charities Inc.?”
