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There Are No Tax Benefits To Donating To Professor Amy Wax’s Legal Defense Fund Especially When The Website Looks Like A Phishing Scam


Amy Wax

Amy Wax

Last week, Joe Patrice asked me whether contributions to Professor Amy Wax’s legal defense fund were tax deductible. He pointed to a website titled the Amy Wax Legal Defense Fund (AWLDF). It stated that the funds are to be used to fight the University of Pennsylvania Law School’s administration, which is seeking “major sanctions” against her. And it says that contributions are tax deductible under Section 501(c)(3) of the Internal Revenue Code.

While I tweeted my initial thought, I want to take this opportunity to dig deeper. Let’s look at what the current tax law says about whether contributions to legal defense funds are eligible for a tax deduction. Next, let’s see whether there are any workarounds in case contributions are not tax deductible. Lastly, I want to share some irregularities I found with this website that make me wonder whether this could be a scam.

Before I continue, I want to state that I have no animosity toward Wax. She has been accused of making racist statements towards minorities, including Asians. That kind of mentality and rhetoric has no place in modern society, especially from someone who has both a medical and law degree from top universities. However, I also get that some people tend to sensationalize stories and take quotes out of context, either to get moar clicks, to drive a certain narrative, to expose a bigger societal issue (supposedly), because they have severe Republican Derangement Syndrome, or simply to get a blue check mark next to their name hoping for corporate sponsorships on their next DEI retreat in the Bahamas. So their columns should be ignored or read with a great degree of incredulity and skepticism.

A 501(c)(3) organization is not only exempt from tax on its net income, but donors can also claim a deduction on their tax returns and reduce their income tax bill. Until recently, a donation was an itemized deduction which means that your itemized deductions have to exceed the standard deduction ($12,550 in 2021) before they are deductible. But today, anyone can take a charity deduction of up to $300 whether they take an itemized deduction or a standard deduction.

To be a 501(c)(3) organization, it must abide by certain rules. First, it must be set up for exempt purposes. Second, none of its earnings can be used to benefit a private individual, even if the private individuals may need charitable assistance, such as an expensive surgery, funding a documentary, or getting food and toys for the holidays. Lastly, the organization cannot get involved in political activities generally.

So the first question is whether the AWLDF has an exempt purpose. The IRS states that exempt purposes include advancement of education, eliminating prejudice and discrimination, and defending human and civil rights secured by law, among others. The IRS uses two tests to determine exempt status and both must be passed. The “organizational test” requires that the AWLDF’s articles of incorporation state that it was organized exclusively for exempt purposes. The “operational test” requires that the organization’s primary activities accomplish exempt purposes. We don’t have AWLDF’s articles of incorporation (assuming they exist) so we will look at the operational test.

Proponents of exempt status would argue that the defense fund would further the above stated exempt purposes by stopping or deterring university administrators from taking actions against faculty with conservative viewpoints, especially when they are in the minority and subject to discrimination and bullying by students, faculty, and administrators. Opponents would argue that granting 501(c)(3) status to people who openly make derogatory remarks about minorities would promote discrimination and prejudice which would go against the exempt purposes as defined by the IRS.

While I believe this is a toss up, the IRS would likely grant exemption considering that their tax exempt department was criticized a few years ago for arbitrarily denying exempt status to conservative groups.

Assuming that the AWLDF has an exempt purpose, the next question is whether it benefits a private individual. This seems to be fairly obvious considering that the organization’s name itself suggests that the money will benefit Professor Wax. The website also states that she intends to fight for her job. On the other hand, since the money is being used to pay for legal expenses, and without legal representation, Wax could lose her tenure status and even her job, it could be arguable that she is not receiving a financial benefit. Ultimately, based on the words on the website, it would fail the private benefit test because it appears that the primary purpose of AWLDF is to pay for Wax’s legal fees. The website does not state that the AWLDF will help faculty with similar issues. In addition, even thought Wax may not get any money from the fund, she does financially benefit by not having to pay legal expenses.

So assuming the AWLDF is not eligible for 501(c)(3) status, are there any workarounds? Perhaps. The easiest way would be for an attorney to take her case pro bono. Another is to have an organization like the ACLU take her case.

Lastly, certain things makes be believe that this website could be a phishing scam perpetrated by someone other than Wax. First, I could not locate the name AWLDF (or any derivatives) on the IRS’s tax exempt verification website. Professor Sam Brunson noted that website was owned by an entity that does not provide information about the true owner of the site. Also, Wax already has a GoFundMe page which has raised $178,215 so far and has no mention of donations being tax deductible. So why the need for a second funding website when the first one appears to be doing very well? There could be various motives. The simple one is that someone is taking advantage of this publicity to take money from people who don’t know better. Or someone might be doing this to get on top of the search engine results and prevent donors from donating to the real website. In any case, people should be wary about donating money to the AWLDF website.

So, donating to Wax’s defense fund is not likely to be tax deductible but, given the mostly small donations, I guess that most people do not care about the tax deduction. And it doesn’t seem like Wax meant it to be a 501(c)(3) anyway. But the website in question looks very sketchy, so those who want to donate to her cause should do so at the GoFundMe page instead.


Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at stevenchungatl@gmail.com. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.





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