[Missouri-l] Tax deduction for selling used cars - from the September 2009 Braille Forum

[peter altschul]

H.R.  571: A BILL THAT WOULD BENEFIT ACB AND ITS AFFILIATES
  by Melanie Brunson
  For both ACB and its affiliates, much of the revenue that keeps
us running comes from individual donors.  In recent years, one of 
the
easiest ways in which individuals could help a non-profit 
organization such
as ACB, or one of its affiliates, has been by donating an 
automobile to that
organization.  The car can then be sold and the proceeds of the 
sale used to
keep the organization--so work going.  The donor can claim a tax 
deduction for
the donation to charity.
  In 2004, Congress became concerned about stories circulating in
both the media and within government agencies that seemed to 
indicate that
some people were claiming more in tax deductions than the cars 
they donated
to charity were actually worth.  In an effort to address these 
concerns,
Congress passed legislation that limited tax deductions for car 
donations
over $500 to the amount the car was actually sold for by the 
charity.
  While this measure may appear reasonable on its face, its
practical effect is that vehicle donation is now a huge gamble 
for everyone
concerned.  The donor has no idea at the time a donation is made 
of the
amount he or she is actually donating, or the amount of the 
deduction that
will be allowable.  Charities have no means of determining how 
much revenue
a vehicle will produce.  Neither party will be able to find out 
anything
about the value of the vehicle until it is actually sold, which 
often takes
several months and sometimes a year or more.  In short, vehicle 
donation is
now an unattractive proposition for donors, and a very uncertain 
revenue
source for charities.
  Recent reports issued by the IRS and the Government
Accountability Office, as well as the experiences of ACB and its 
affiliates,
have shown this to be true.  Since the new rules took effect in 
2005, ACB
and many of its affiliates who receive donated vehicles have seen 
major
drops in both the number of vehicles donated and the revenues 
derived from
the sale of those vehicles.  Non-profits all across the country 
are
reporting similar decreases.
  This is not what Congress intended.  The intent of the tax law
amendments was to curb abuse, but not to destroy a valid revenue 
source for
non-profits.  In order to bring some balance to the situation and 
encourage
the public to donate cars and other vehicles to charities once 
again, Rep.
William Delahunt (D-Mass.) has introduced H.R.  571.  This bill 
would amend
the Internal Revenue Code to allow donors to deduct the --fair 
market value--
of vehicles donated to charity up to $2,500.  Those who donate 
vehicles
appraised prior to donation at more than $2,500 would be allowed 
a deduction
at the time of donation equal to the appraised value of the 
vehicle.  The
bill keeps in place requirements that both taxpayers and 
charities report
the details of their transactions to the IRS, and imposes 
penalties for
false reporting.
  We believe H.R.  571 takes a much more reasonable approach to 
the
problems Congress needed to address than its predecessor did.  
Its enactment
would provide a deterrent to those who might otherwise try to 
defraud the
IRS, but without discouraging the vast majority of potential 
vehicle donors
from making honest contributions to organizations whose work they 
want to
support.
  H.R.  571 now has 35 co-sponsors, but that is a long way from 
the
number who would be needed to move this legislation forward.  
Many of the
state and special-interest affiliates to which readers of "The 
Braille
Forum" belong would benefit, along with ACB, if this legislation 
is passed
by Congress and the IRS changes its rules.  Therefore, I urge all 
Forum
readers to contact their members of Congress and ask them to 
support H.R.
571.
  If you have questions about this bill, feel free to contact me,
or Eric Bridges, in the ACB national office.  We will keep you 
posted on the
progress of this bill both here and on the Washington Connection.