Frequently Asked Questions
Jobs Creation Act of 2004 — Impact on Charity Car Donation Programs
Jobs Creation Act of 2004 — Impact on Charity Car Donation Programs
What does the new federal law mean for charities?
As of January 1, 2005 , charities that accept donations of vehicles, trucks, and boats—and later sell these donated items—will be subject to additional reporting requirements. Charities will be required to disclose in writing, to each donor and to the IRS, the gross proceeds raised from the sale of their donated vehicle.
What does the new federal law mean for donors?
The law will not affect donors who do not itemize on their taxes. Donors who do itemize their taxes will no longer carry the burden of determining the deductible value of their donation. Instead, they will receive a verifiable written receipt from the charity, which will document the gross proceeds raised from the sale of each donated item. Donors will have the option of claiming the sales price or choosing a minimum alternative amount not to exceed $500.00. Donors are encouraged to speak to their tax advisors.
Won't that increase the amount of time it takes before donors receive receipts?
The law requires charities to issue receipts within 30 days of either the donation or sale of each vehicle.
How does this impact car donation as a whole?
When people outgrow a vehicle, they still have the same three options:
- Trade it in to a car dealership;
- Endure the hassle and expense of selling it on their own; or
- Donate it to a worthy cause and possible qualify for a tax deduction.
Those who prefer to donate their vehicle and receive a tax deduction, still have that option. Won't this make car donations undesirable?
No. The same attractive reasons for donating a car still exit, such as: helping serve the mission of a non-profit, efficiently transferring a vehicle to another party, and taking a tax deduction when taxes are itemized. The largest impact of the law is being imposed on the charities themselves, and we are ready to handle these additional reporting requirements.
Could this law enhance charitable deductions?
Perhaps. This bill could make car donations more desirable because the IRS is unlikely to challenge a deduction that is verified by a documented sales price. Of course, if a person donates a vehicle with the intention of over-inflating its value, then this law will serve its purpose.
Now that donors have a vested interest in getting the best prices for their vehicle, how will they know which charity to choose?
While we cannot speak for other charities, we expect to continue our proven record of maximizing the highest per-vehicle proceeds possible.
Together, with our agent Cars With Heart, we will continue to be good stewards of all donated items. We will continue to improve and refine the protocol used to sell vehicles to achieve the highest yield in the shortest amount of time.
General Questions
What can I donate?
Cars, trucks, boats, fleet vehicles, motor homes, motorcycles, snowmobiles, personal water crafts, and RVs.
Is my donation tax deductible?
Donations to non-profit organizations that are classified under 501 (c) [3] are tax deductible. All individual tax situations are different, so please check with your tax professional to determine how you benefit.
What do I need to donate my vehicle?
You will need the keys and title. If you cannot find the title, please call us and arrangements can be made to get you the correct documents.
What kind of shape does my vehicle have to be in to donate it?
The vehicle needs to be in running order for us to accept it. However, exceptions can be made on a case by case basis. Remember, the condition of the vehicle will affect the fair market value of the donation.
Can I deliver my vehicle?
Yes, you can drop off your donation. A receipt will be issued at that time.
Will you pick-up my vehicle?
Yes, we can arrange to have your donation picked up. Our goal is to pick-up donations within 24 hours.
How is the value of my vehicle determined?
Donors will have the option of claiming the sales price of their vehicle donation or choosing a minimum alternative amount not to exceed $500.00. The donor will receive a verifiable written receipt from the charity, which will document the gross proceeds raised from the sale of each donated item.
OR
Cars With Heart will decide to complete material improvements to the vehicle. If, material improvements are determined to be done before the resale of the vehicle, then the donor is required to make a good faith determination of the value of the vehicle at the time of donation taking into account its age and condition, to document the basis for the donor's determination, and to follow the guidance of a Blue Book of the vehicle
* Donors are encouraged to speak to their tax advisors with further questions. *
Pear Marketing, LLC
