Car Donations : Fewer taxpayers for a ride

by David Jackle Jr.

Car Donations to charities seem like a win-win project . A donor receives a hassle-free way to get rid of an old car and a tax deduction of fat gets a charity money they otherwise would not receive cash and an intermediary who made ​​a tidy profit for the collection , transportation and selling the car. Unfortunately, the loser of the rest of us . As taxpayers , we subsidize tax deductions for car donations that do not get anywhere near commensurate with the benefits of love.

A U.S. General Accounting Office study ( GAO) , was interviewed in November 2003 and conducted for the AIP as a resource , found that in two thirds of the 54 cases reviewed, the organization will receive 5 % or less of the value of a donated car declared on an individual tax return. Why so little? The car is often auctioned roughly the cost of advertising in newspapers and on radio and the Internet is subtracted . After the cost of towing the car and packing and processing the paperwork is drawn, can be left a little to charity. Furthermore, some charities can a lump sum for each car donated obtained regardless of the value , sometimes as little as $ 25 per vehicle. GAO could not determine whether donors were inflating the value of the used car. But it would be easier for donors to do so because of lack of information on the state of the car.

Car donations are a popular way for tax deductions . 733,000 of the 129 million forms filed for the tax study (2000) stated year of $ 654 million in deductions for cars worth more than $ 500 . More than 4,300 nonprofit organizations with revenues over $ 100,000 use of car donations . The GAO study found extensive comments and percentages of charitable was estimated on the income tax return of an individual to $ 2.915 in 1990 Mercury Station Wagon , sold for $ 30 gross and net of fees , the organization lost $ 130 , a 1991 Ford Crown Victoria was rated on an individual tax return to $ 3.100 to $ 300 gross and net fee income , the organization received $ 165 sold , and a 1995 Toyota ½ ton truck was and the individual income tax to $ 4.999 , $ 1.800 gross net cost of charity received $ 1.290 sold .

At 1 June 2004 Finance Committee of the Senate a witness who works in the automotive industry confidentially described ways in which middle men benefit from donated cars can cost to charity. In a practice of the faith as " fixing cars " , some intermediaries intentionally disable cars by simple techniques such as pulling a fuse or turning the distributor cap , so they can be bought at auction or used by car and then sold very little of what the car was originally worth . A donor is rarely contacted about the status of the vehicle, according to the testimony . the witness gave two examples in which a charity . Less $ 300 for a car that was worth about $ 4,000

Some law firms general have filed lawsuits against the makers of car donation programs , according to the GAO report . A for-profit company paraded as a charity called for cars to agents of the State of Massachusetts close . In 2003, the Connecticut Attorney General lawsuit against the Fund for Animal Health , a false charity animal welfare by the owner of a used car dealer, maintained and serviced product donations that creates almost all of the car a current account for both entities . The Attorney General of California filed a lawsuit against a person with a lot of used cars, which estimates a charitable non- charitable programs and has raised more than $ 1 million .

In response to specific programs car out of control , Congress in 2004 passed a law to limit taxpayers receive deductions for donations of cars, trucks , boats, airplanes or gross revenues of love . People donate vehicles worth $ 500 or more to charities that sell or auction the vehicles must have a written charity to receive the proceeds of the sale stating that he has sold " in a version without operation arm's length between unrelated parties. " If the organization uses the donated car of its programs, the donor must be confirmed in writing by the love of the use or the expected improvement in the vehicle and the expected amount of time will be used as intended. The agency must also certify that they do not sell or market the vehicle before the scheduled time for its use or planned improvement . See " Tips for a car donation to charity. "

AIP encourages donors regularly give cars to charities that can use the car in their programs, such as the provision of meals on the return trip, with the elderly or blind people to the doctor or shopping , training future auto mechanics, etc. in this way to be sure that the full value of their vehicle received donor charity contribution. We recommend that people use their local United Way Goodwill, Army Hi , school programs contact community or professional colleges require specific vehicles you are looking for .

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