An estimated 4,000 charities nationwide accept donated vehicles— cars, trucks, boats, and other vehicles. In most cases, these vehicles are sold to provide cash for charities.
In 2004, Congress has become concerned that donors were claiming inflated tax deductions for their donations, while charities were not receiving enough financial benefits from vehicle sales. In October 2004, President Bush signed into law a bill aimed at curbing abuses related to vehicle donations.
Here is what donors should know about vehicle donations:
Verify that the recipient is tax-exempt as a 501(c)(3) charitable organization.
Check out the charity, and any third parties, with the BBB serving your area.
Find out if the charity is properly registered with your state’s Attorney General.
Ask if the charity plans to resell the vehicle or to repair it for its own purposes.*
Make sure the title of the vehicle is transferred to the charity, and keep a copy of this record.
For tax records, the charity is now required to provide the donor with a receipt stating the amount for which the car was sold. This is the amount donors are now able to deduct from their taxes.*
*Vehicles worth less than $500 and vehicles that charities repair to use for their own purposes are not covered under the new regulations.