The Republican and Democratic leaders of the Senate Finance Committee, chairman Chuck Grassley, R-Iowa, and ranking member Ron Wyden, D-Ore., are asking the Internal Revenue Service to crack down on the people involved in the recent college admissions scandal.
They noted that the parents of the prospective college students purported to make tax-deductible donations to a sham charity set up by the scheme’s organizer, William Singer, who set up a tax-exempt organization known as the Key Worldwide Foundation, to funnel illicit payments to him and to college officials as bribes. Singer eventually agreed to help government investigators implicate the parents and university officials who were charged in the case. Officials at prestigious schools such as Yale University, Georgetown University, the University of Southern California, UCLA, the University of San Diego, the University of Texas, Austin, Wake Forest University and Stanford University have been implicated. Among the parents are actresses Felicity Huffman and Lori Loughlin, who appeared in court Wednesday.
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“As you are surely aware, this scandal involves the parents of college-bound children allegedly paying for fraudulent SAT and ACT test scores, allegedly bribing college administrators, and committing other fraud to help their children attain preferential admissions,” they wrote. “As alleged in various Department of Justice charging documents, those payments often took the form of fraudulent tax-deductible donations to a charity known as the Key Worldwide Foundation.”
Some payments were made from private foundations and from businesses, along with donations of stock holdings arranged to appear as if they were charitable donations, possible as a way to avoid capital gains taxes.
“If these allegations are true, such payments to KWF obviously should not be treated as legitimate charitable deductions, and we expect the IRS will enforce the law accordingly in this regard, both as to KWF as well as to the parents who may have claimed such payments as deductions on their personal income tax returns,” Grassley and Wyden wrote.
They urged the IRS to crack down on those involved in the scheme. “This scandal, however, appears to implicate further violations of the tax code, and we expect the IRS to be vigorous in enforcing the applicable tax laws,” the senators wrote.
