DOJ Cracking Down on DPAs

The Department of Justice is seeking an injunction against Partners in Charity Inc. as part of a crackdown on downpayment assistance organizations.The DOJ and the Internal Revenue Service filed the civil lawsuit to stop the West Dundee, Ill., tax-exempt organization from allegedly "misleading" house sellers and real estate professionals into believing that payments made to PIC are tax-deductible charitable contributions. Under the PIC program, the seller pays the amount of the downpayment assistance to PIC plus a 0.75% administrative fee. Seller payments are not tax-deductible because they are "compulsory" under PIC's program and "they facilitate the sale of the seller's house," according to the government complaint filed with the U.S. District Court in Chicago. Partners of Charity could not be reached for comment. The IRS is conducting a "compliance program" that focuses on tax-exempt organizations that operate downpayment assistance programs, an IRS spokesman said.