By Jim Sanders
The Sacramento Bee
Copyright 2007 Ventura County Star
All Rights Reserved
SACRAMENTO, Calif. — After five firefighters died in a wind-whipped, Riverside County firestorm, thousands of donors contributed $1.3 million to help the grief-stricken families — but disbursing the money would violate federal tax law.
Nearly three months after the Esperanza Fire was extinguished, controversy continues to simmer, with a Riverside County United Way chapter torn between risking its tax-exempt status or breaking promises made to donors.
The impasse has spawned legislation to make an exception to tax law.
The Internal Revenue Service points out, however, that charity tax law is clear and that the agency can’t make exceptions. The law stipulates that donations for undocumented needs can be distributed to large classes of people but not to one person or a small number of families.
Caught in the middle are relatives of the five U.S. Forest Service firefighters who perished in walls of flame up to 90 feet high — Capt. Mark Loutzenhiser, 43; Jason McKay, 27; Jess McLean, 27, Pablo Cerda, 23; and Daniel Hoover-Najera, 20.
United Way has not distributed a dime to the five families, but it wants to, and the agency appealed to lawmakers to help break the $1.3 million impasse.
Congress and President Bush responded last month by approving a one-time-only exemption.
The final hurdle is the California Legislature, where two nearly identical bills are pending from Assemblyman John Benoit and Sen. Jim Battin, both Palm Desert Republicans.
Without an exemption, donors to the Esperanza Fire fund would not be entitled to a tax writeoff and United Way could be exposed to penalties, such as losing its tax-exempt status or having to pay taxes on the $1.3 million.