June 19, 2011: International News From the Field

19 June: The Wall Street Journal article, "Stray Cat Strut: Woman Beats IRS," captured the importance of the story in its first two sentences:

When Jan Van Dusen appeared before a U.S. Tax Court judge and a team of Internal Revenue Service lawyers more than a year ago, there was more at stake than her tax deduction for taking care of 70 stray cats.

Hanging in the balance were millions of dollars in annual tax deductions by animal-rescue volunteers across the nation—and some needed clarity on the treatment of volunteers' unreimbursed expenses for 1.55 million other IRS-recognized charities.

This volunteer incurred $12,068 in expenses while taking care of stray cats in her home on behalf of the IRS-approved charity, Fix Our Ferals. This covered such things as cat "food, veterinarian bills, litter, a portion of utility bills, and other items such as paper towels and garbage bags." When she attempted to deduct these costs on her 2004 income tax return, the IRS disallowed them and she appealed. Now, years later, she has won and set important precedents.

This ruling helps all animal-rescue volunteers and has far-reaching implications for every sort of American volunteer. It clarifies how someone can legitimately claim a deduction for unreimbursed charitable expenses of $250 or more, especially if they involve use of a private home. What is required is that the taxpayer keep accurate records and that the benefitting agency provide written acknowledgement as to the value of such out-of-pocket expense contributions. While not assigning any monetary value to the time given by volunteers, this now shines a light on the enormous, formerly-invisible cost of being a volunteer.

The Humane Society says it has "tens of thousands" of members out of 11 million nationwide who do volunteer work with local shelters and rescue groups. It estimates that many of these volunteers spend up to $2,000 of their own money a year to help animals in need, with some spending up to $15,000 a year when all expenses are counted.

The ruling not only gives volunteers a critical tax benefit that they deserve, but it also forces agencies – and their accountants – to recognize the financial gifts that accompanying volunteering.