Car Donation Program Update

Car donation programs continue to get careful scrutiny from the IRS.

NOTE: Some of this information has been revised please see our new IRS Publications 526, 561 and 4303 pages for latest revision.

01/17/03 Car Donation Program Update

Source of this information: http://www.wiley.com/legacy/jklasser/news/tax_news_011703.html

Car donation programs continue to get careful scrutiny from the IRS. Following up the letter rulings reported in the October 2002 issue of the Monthly Tax Letter , the IRS in a revenue ruling has put its official stamp of approval on the use of authorized agents to handle car donations on behalf of a charity. It also clarifies the use of pricing guides to value used cars.

The IRS allows donations to be made to a charity through an authorized agent that solicits donations of used cars, sells them, transfers the proceeds minus its fee to the charity, and provides the donors with the written acknowledgment required by law. Assuming the agency relationship meets state law requirements, the transfer of a car to the agent is considered a transfer to the charity.

Donors may use an established used-car pricing guide to determine the fair market value of a donated car, but only if the guide lists a sales price for a car in the same area that is the same make, model, and year and in the same condition as the donated car. For example, if a guide provides sales prices for similar cars in the donor's area that are in excellent or average condition (no or few defects), but the donor's car is in poor condition, the donor may not rely on the guide to value the donation. In that case, relevant sales data or some other reasonable method of valuing the car must be used.

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We have provided the various guides and information needed to make a Safe Car Donation.

Just fill out our Online Car Donation Form.