A simple one that comes up a lot is back dating when a donation "occurred" to be within a certain tax year. Donations don't "occur" until they are processed completely. The end of the tax year has lots of donations come in. If the foundation isn't on their toes, they might not process all of them in time for the tax deadline. It's illegal (though completely possible, and happens all the time) to back-date the donation date to before the end of the tax year, after the tax year has ended.
Others come up as errors of classification. A certain donor might donate a certain good or service instead of straight money. That donation has to be recorded at fair market value and has to be treated as if it were a proper vendor relationship. Determining that value can be quite complex, especially considering such donations are usually done out of excess stock or time that the donor doesn't have a good valuation on out of their own books.
And often, those sorts of donations come with an expectation of quid pro quo: I give two dozen bails of hay that I have just lying around and expect to get a ticket to the next fundraising ball (which might have a few-thousand dollar list price). If the foundation gives that ticket, the bails of hay are no longer a donation and listing it as such is tax fraud.
>A simple one that comes up a lot is back dating when a donation "occurred" to be within a certain tax year. Donations don't "occur" until they are processed completely. The end of the tax year has lots of donations come in. If the foundation isn't on their toes, they might not process all of them in time for the tax deadline
To fix this, many nonprofits have a fiscal year that is different than the calendar year (calendar year being Jan - Dec) while a fiscal year can be any 12 month period (for example, July beginning to June end). The organization reports based on its fiscal year, so it has plenty of time to process December donations. See here for detail: https://www.irs.gov/charities-non-profits/exempt-organizatio... (this details for nonprofit orgs but the same can be done for businesses and sole-proprietor orgs should this interest someone).
(I have experience in working AML and Compliance for a large multinational bank)
You're aware of specific instances of people actually going to jail for this sort of thing? I'm not saying it doesn't happen, but honestly I'd be surprised if it did, and surprised if Ito was criminally charged in relation to this conduct.
Others come up as errors of classification. A certain donor might donate a certain good or service instead of straight money. That donation has to be recorded at fair market value and has to be treated as if it were a proper vendor relationship. Determining that value can be quite complex, especially considering such donations are usually done out of excess stock or time that the donor doesn't have a good valuation on out of their own books.
And often, those sorts of donations come with an expectation of quid pro quo: I give two dozen bails of hay that I have just lying around and expect to get a ticket to the next fundraising ball (which might have a few-thousand dollar list price). If the foundation gives that ticket, the bails of hay are no longer a donation and listing it as such is tax fraud.