When the US General Accounting Office (GAO) issued its landmark report on charitable vehicle donation to the Senate Committee on Finance in November of 2003, over 4,000 distinct charity and non-profit organizations (NPOs) were accepting vehicular donations. When one has a car that is a good candidate for automotive donation, there are very often time constraints that don't allow for a great deal of shopping around for the most needy individuals in the community, much less, repairing and making that vehicle a useful donation. An authorized vehicle donation center, recognized by charitable organizations and the IRS, will be able to take care of your vehicle, find it's best and most charitable use and give you a verifiable receipt for your tax forms.
But, how do you know your vehicle is being used for the charitable purposes the supposedly authorized vehicle donation center claims to support? There are several signs, especially when you're looking online for such a service or responding to solicitation, that you're dealing with a non-authorized vehicle donation center.
Since the tax laws regarding car donations were changed in 2005 to stem the tide of fraudulent deductions that were uncovered by several independent reporters and the US General Accounting Office in 2002-3, choosing to make car donations to charities that will fix up the car and put it to good use will help you get the full fair market value for your car in the form of a legal deduction. A quick check with even one or two of the charitable organizations (preferably ones you've heard of before) should yield an acknowledgement of the authorized vehicle donation center's association as an agent of that charity. Any legitimately authorized vehicle donation center will be able to provide you with a list of charities it brokers deals for.
Though very few authorized vehicle donation centers are registered with the IRS as a 501 (c)(3) non-profit organization, the charity you donate to must be. Without this badge of approval from the tax authorities, you'll not be allowed to legally take the deduction. Even worse, this can set you up for an audit and no one wants to mess with that kind of attention. A truly authorized vehicle donation center will be able to provide you with their tax ID number so you may check it on the IRS website.
Several states additionally certify authorized vehicle donation centers on their own. If your state is one of these, you can easily check with the state attorney general's office to see if the donation center you're considering is listed on the state non-profit rolls. If not, you may not be dealing with an authorized vehicle donation center at all.
The authorized vehicle donation center is most often, in fact, over 95% of the time, a for-profit venture. The donation center must follow certain rules of conduct with regards to how you may be enticed into vehicle donation. There is also a register of organizations that are not allowed to do business in the state.
Programs that focus on road-worthy cars are often the very same ones that will find a practical use for your donated vehicle that will allow you to take the fair market value of the car for a deduction rather than a somewhat lower (often much lower) sale price that is paid for cars auctioned at wholesale. One very important function of an authorized vehicle donation centers is helping you determine a fair donation value for your donated car, truck, boat or RV to be reported to the IRS. This is not the so-called “blue book” value but, instead, its value on the market. Bear in mind, this market may be wholesale rather than retail.
Most often, the value you'll be given a receipt for is the value the charity ultimately receives for the car. If you don't receive a receipt suitable for tax purposes right away, that's o.k., but if you've not heard anything in a few months, you should start making phone calls to the authorized vehicle donation center's offices. If the car is being repaired before sale, it could take awhile, though even authorized vehicle donation centers very rarely do that, preferring the wholesale and scrap methods.
This is especially true in the case of vehicles that are not currently running. However, there is still money to be made, and most legitimate and authorized vehicle donation centers will be happy to come and haul your old car, truck or boat away for free. You should be suspicious of any supposedly authorized vehicle donation center that would require you to pay for towing services and ask.
Car donation can be part of a total charitable package that can help greatly with end of year tax evaluation, especially if the business is teetering on the edge of a higher tax bracket. If the fair value of your car is less than $250, there is no reason to bother with a form of donation from your chosen charity or a third-party organization such as an authorized vehicle donation center. However, over that amount, you'll need a receipt in writing. If more than $5,000 is received for your vehicle, you will require an additional form (Form 8283, section B) to be signed by a representative of the authorized vehicle donation center in question and an independent appraisal.
If donating directly to a charity, you may elect to also donate the fees they need to pay to get the car in the hands of a needy individual, though they usually take care of it, too. Though there are certainly charlatans out there who would take advantage of charitable giving to line their own pockets, the IRS and state governments take this very seriously. The state Attorney General's office will have a list of known scammers to avoid. Once you know the authorized vehicle donation center you've chosen is on the up and up, you can donate with peace of mind.
