Feral Cat Rescuer Has Her Day in Tax Court

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Should expenses incurred from taking care of feral cats be tax-deductible?  One woman found herself in Tax Court fighting for just that…and won.

Oakland, California resident, Jan Van Dusen, is a family lawyer with a passion for feral cats. In fact, she is known to care for 70 to 80 at a time in her 1,400 square foot home. On her 2004 income tax return, she claimed $12,068 in cat care expenses as a charitable deduction. After the IRS denied her deduction, stating that her expenses were personal and not rendered on behalf of a qualifying charity, the Tax Court overturned the decision and found that she indeed worked as a volunteer for 501(c)(3) charities, primarily Fix Our Ferals, but also Island Cat Resources and Adoption, Berkeley East Bay Humane Society, East Bay Society for The Prevention of Cruelty to Animals, and Second Chance Cat Rescue.

Van Dusen trapped feral cats and took care of them until she could return them to the wild or adopt them out. Every day she fed, cleaned and provided a loving home for the cats. She laundered the cats’ bedding and meticulously kept all areas sanitized. Additionally, she paid third parties for veterinary services, pet supplies, and cleaning supplies.

The Court concluded that 90 percent of the veterinary and pet supply expenses and that 50 percent of the cleaning supply and utility expenses were eligible deductions for her foster cat care and therefore potentially deductible.

The Court accepted carbon copies from Van Dusen’s check book, credit card statements, an account history from a pet hospital, and utility invoices for the charges less than $250. For the expenses of $250 or more, the Court denied the deductions because Van Dusen did not have a substantiation letter from a charity acknowledging that she expended the funds on its behalf. Van Dusen said she wasn’t aware of the extra requirements for the expenses of $250 or more until she was audited.

“Had Ms. VanDusen kept better records, almost all of her unreimbursed volunteer expenses would have been deductible,” says William Markley, a tax lawyer in Walnut Creek, California who is helping Van Dusen negotiate with the IRS over unpaid taxes for several years. She and Malarkey are hoping this recent decision will help her in these negotiations.

The Tax Court cited some of Van Dusen’s expenses like pet cremation, bar association dues, and Department of Motor Vehicle fees as “categorically not related to taking care of foster cats and therefore not deductible.”  Additionally, the Court found expenses like a wet/dry vacuum and a Costco membership were not deductible as they were not “solely attributable” to foster cat care.

“It’s a huge win for all the rescue people out there,” says Van Dusen. “The judge was really nice. He understands what we do. We all go broke doing this.” She says she now has “about 60 cats” and is interested in starting her own 501(c)(3) charity to help feral cats.

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