The AAA Scholarship Foundation Inc. which runs programs in Nevada and five other states, says it doesn’t give tax advice but has, when asked, shared an IRS memo on the matter.
The Institute on Taxation and Economic Policy say loopholes in the tax code would allow contributors to both eliminate their state tax bill and also get a charitable deduction off their federal taxes, and in some cases, also their state taxes. Carl Davis, the Washington-based think tank’s research director, likened the system to a money-laundering tax scheme because the contributions are officially considered donations – even if the scholarship money goes to for-profit schools.
“That’s not charity. That’s just helping facilitate the movement of funds. These so-called donors are really like middlemen,” Davis said. “They’re not making a financial sacrifice.” Read more