Teacher raised $41,000 to help local families hurt by COVID-19. He now owes $16,000 in taxes.

CBS News – Louis Goffinet, a 27-year-old teacher in Connecticut, said he started a fundraiser a year ago to aid local families affected by the coronavirus pandemic. The campaign was a smashing success, collecting more than $41,000 to help them pay for groceries, meals and rental assistance.

But Goffinet said he recently learned of a downside to his efforts: He now owes $16,031 in personal income tax on the funds he raised via Facebook Fundraisers.

“After consulting with several tax professionals, the unanimous consensus seems to be that I am responsible for paying income tax on the funds I was able to raise through Facebook,” Goffinet wrote in a Facebook post.

In his April 10 post, Goffinet is again turning to charity — this time to cover his own tax bill. “This is more than I can reasonably afford to pay alone, and am asking for the community’s help,” he wrote.

In an interview with CBS MoneyWatch, Goffinet said he was in “genuine shock” after getting the tax form.

“I had spent the better part of my 2020 devoting my weekends and free time to volunteering and helping the community,” he said. “It was a powerful thing to be part of it. But then to be told not just by the 1099-K, but to be told by tax professionals that I do owe taxes on funds I raised for my community, it didn’t feel right.”

Goffinet said he raised funds through two Facebook fundraisers, one to assist local families with groceries and the other aimed at providing financial help over the holidays. He didn’t create an IRS-approved charity, but instead deposited the funds in his bank account and then spent the money on whatever local families needed, he told the Hartford Courant, which earlier reported on his predicament.

Goffinet told CBS MoneyWatch that he’s concerned his experience may send the wrong message to other would-be volunteers and samaritans.

“Part of the message people are seeing now is it’s not worth it to help others because you will only set yourself up for a really tough situation,” he said. But, he added, he plans to continue his efforts in some way.

“This is probably the most rewarding thing I’ve done,” Goffinet said.

Facebook said that it’s unable to provide tax advice to people who use the platform to raise funds because individual situations can vary and the tax code can change from year to year.

Pitfalls of donating via Facebook

The 8th-grade math and science teacher said he organized two fundraisers: One at the start of the pandemic, which helped pay for groceries for community members in need, and another in November to help with holiday meals and gifts. He said he paid for 31 Thanksgiving dinners, and provided 20 gift cards for families to buy holiday gifts, on top of about 140 grocery store visits.

In early 2021, he received a 1099 form from Stripe, the payment processing company used by Facebook, stating that he would owe more than $16,000 on the fundraisers, he said.

Goffinet’s tax bill is due May 17, the date of the extended filing deadline set by the IRS. The situation highlights the pitfalls of raising funds through online services such as Facebook, rather than donating money through an IRS-qualified charity.

Facebook cautions in its terms of service for personal fundraisers that it is “solely your responsibility to assess, collect, report or remit the correct tax, if any, to the appropriate tax authority.” Donations made through personal fundraisers “generally are not tax-deductible under applicable law,” the company notes.

Goffinet said Facebook should more explicitly state that raising money for a cause on the site could cause a tax liability.

“Especially in a circumstance like this, where a fundraiser is set up for a broader community and not one individual person’s gain,” he said. “I don’t think it’s clear enough to warn people like me that even if you are going to turn around and pass on all the money you raised, that there is still an income tax burden on that.”

In the meantime, he said he has received some donations from people who want to help him pay his tax bill — including two offers from people who said they would cover the entire IRS bill once the final amount is certain.

“I would really encourage people who are considering something like this to go out and do it — and make sure you are well versed on the tax code,” Goffinet added.

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9 Comments

  • Fajada_Sunrise

    The service the teacher did to his community was truly a noble one, and very reminiscent of what the “COVID Relief” style bills sending people reimbursement funds for the economic downtrodden that has happened in the past few months. And sure the article is emphasizing the almost “unfairness” of the current tax system in which a local good Samaritan now owes a heft sum of money as the title suggests. The point of the article is not that the tax system is unfair but rather that anyone can make a difference and an emphasis to know what the regulations are. I think the use of the “click-bait” style to the opening is a good way to draw people into such a positive message of selflessness (and maybe to help this poor teacher out just a bit).

    • 5:22 pm - April 20, 2021

  • lamekoala

    It seems ridiculous that his altruistic acts are being repaid with a ridiculous amount of taxes. It is understandable that these are simply Facebook’s rules, so they are not trying to punish him, but they need to be more clear about their policies.

    • 8:46 pm - April 20, 2021

  • irides

    I think that this incident really shows the economic inequality present in America. A teacher, who already makes likely very little, raises money for his communtiy and gets taxed but extremely wealthy people and companies get away with tax evasion and paying less taxes than this teacher. Our system is flawed and allows for rich people to get away with almost anything because aparently money is more important that making ethical choices.

    • 10:32 pm - April 20, 2021

  • Bunny03

    I cannot believe that if you don’t have an IRS approved charity you are liable for income taxes. This school teacher did a charitable deed to help struggling families at the beginning of the pandemic, and now he has to create a charity to help pay for his taxes. The Facebook service should have had a disclaimer that if you run a charity through them you will be taxed.

    • 8:25 am - April 21, 2021

  • Funky Boots

    I think overall this is just a very unfortunate situation; it sounds to me like Facebook does say that funds raised through them will be liable for taxation, but I can understand how someone wouldn’t readily be able to find that information. I think it would be good for Facebook to make the information about their tax policies for fundraising clearer for those who choose to do that, but personally I don’t think either party is fully liable in this case.

    • 7:22 pm - April 21, 2021

  • zebrafan1010101

    This is a terrible situation for Louis Goffinet. Nobody should have to pay taxes for the money they spend on donating. While I get why Goffinet still has to pay taxes for this, there should be something made for these types of cases. Since now more people are aware of this situation, I think there is a better chance that something could be done to prevent this from happening to someone else in the future. If there isn’t a change to prevent taxes on situations like this, then the policy should be more clearer to people like Goffinet.

    • 8:34 am - April 22, 2021

  • Mr. Steez

    This is a very poor situation but I do understand both sides of it. On one hand you have someone who is just trying to better the community and help everyone out and is getting a hard time for it. On the other hand he used a personal fundraiser. I agree that if you are going to do something like this, and people should, they must be well education. Goffinet states that he thought Facebook should be the one educating people on this issue but I would have to disagree with that.

    • 2:06 pm - April 22, 2021

  • RMS

    I understand both sides of the situation, however, in my opinion, there should be some instances where taxes are overlooked or decreased. Since Louis took his time to help others than himself, donating 41k to the people in need, I believe that he should not pay for that tax. Of course, he would need to pay for his other stuff, however, 16k for tax is too much. Maybe there could be a compromise of lowering the amount of tax for the teacher.

    • 10:50 pm - April 22, 2021

  • ChiliChimichanga

    Goffinet said it best in that last statement. Ideally, he wouldn’t be taxed for these expenditures, but the lack of prior research and tax understanding rendered his albeit charitable donations unfit in the eyes of the law, for good reason. This begs the question: How will social media outlets, as they become increasingly globalized, handle the transfer of funds between individuals?

    • 10:33 am - April 23, 2021