Charity Car Donation

There have been many events occurred that encourage the IRS to act and chief among them is people taking advantage of charity deductions. In the case of durable goods or non-cash donations to charity, reports issued in late 2003 found that over half a billion dollars was slipping through the IRS’s proverbial fingertips. So as to be able to stem this revenue hemorrhaging, new rules took effect in 2005, largely due to just a single scathing report from the US General Accounting Office (GAO) in late 2003.

This report,however, was the first of its kind to actually focus exclusively on automobile and vehicle donations to charity. And what it found shocked the IRS and the Senate Finance Committee that it was delivered to. Indeed, an immediate response was garnered from the IRS to publicly concur with the recommendations of the report that called for rule changes and greater oversight of vehicle donations to charity.

It is worth noting the the timing of this report was just a year after an influential and scathing article on this very topic appeared in the Washington Post. Though the increased number of ads cajoling people to donate their car to charity certainly merited inspection by someone. Whether an employee of the GAO saw this, or a constituent of one of the Senators on the Finance Committee is unknown.

Regardless, the report, entitled, “Vehicle Donations: Benefits to Charities and Donors, but Limited Program Oversight,” found some glaring problems with the system of automotive donations to charity, even when taxpayers followed the letter of the law when determining their allowable deduction.

To name one example, the average deductible represented only between 1-5% of the actual monies accepted by the charity in most cases. The remainder was lost by selling the vehicle as quickly as possible on the wholesale market, often taking in less than 10% of the automobile’s value according to even conservative estimates by valuation services such as the Kelly Blue Book.

It is certain that part of the confusion arises from the generally unsatisfactory condition of many donations - a condition that was found to be exasperated by offers of free towing of any vehicle with a free and clear title. Thus, most donation organizations (whether operating as a profitable business or non-profit charity) will tow cars as a matter of course, whether they run or not. Whilst, the Kelly Blue Book rating of “poor” still requires the car to move under its own power.

More info on charity car donation.

Welcome to Goldenboar.com. This is your first post. Edit or delete it, then start blogging!