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National Kidney Foundation
Q & A
Impact on Charity Car Donation Programs Jobs
Creation Act of 2004
What does
the new federal law mean for charities?
As of January 1, 2005, charities that accept donations of vehicles, trucks,
boats, and airplanes -- and later sell these donated items -- will be subject to
additional reporting requirements. Charities will be required to disclose in
writing, to each donor and to the IRS, the gross proceeds raised from the sale
of their donated vehicle.
What
does the new federal law mean for donors?
The law will not affect donors who do not itemize on their taxes. Donors who do
itemize their taxes will no longer carry the burden of determining the
deductible value for their donation. Instead, they will receive a verifiable
written receipt from the charity, which will document the gross proceeds raised
from the sale of each donated item. Donors will have the option of claiming the
sales price or choosing a minimum alternative amount. Donors are encouraged to
speak to their tax advisors.
Won’t
that increase the amount of time it takes before donors receive receipts?
The law requires charities to issue receipts within 30 days of either the
donation or sale of each vehicle.
How
does this impact car donation as a whole?
When people outgrow a vehicle, they still have the same three options:
1.
Trade it in to a car dealership;
2.
Endure the hassle and expense of selling
it on their own; or
3.
Donate it to a worthy cause and possible
qualify for a tax deduction.
Those who
prefer to donate their vehicle and receive a tax deduction, still have that
option.
Won’t this make car
donations undesirable?
No. The same attractive reasons for donating a car to the Kidney Cars
Program still exist, such as: helping to fight kidney failure, taking a tax
deduction when taxes are itemized, and efficiently transferring a vehicle to
another party, all remain in tact. The largest impact of the law is being
imposed on the charities themselves, and the National Kidney Foundation of
Upstate New York is ready to handle these additional reporting requirements.
Could
this law enhance charitable car donations?
Perhaps. This bill could make car donations more desirable because the IRS is
unlikely to challenge a deduction that is verified by a documented sales price.
Of course, if a person donates a vehicle with the intention of over-inflating
its value, then this law will serve its purpose. The National Kidney Foundation
of Upstate New York maintains the highest level of ethical standards in its
operations and will uphold the letter and the spirit of the law.
What kind
of reaction is expected to this law?
The National Kidney Foundation of Upstate New York expects two profound
responses to this bill: an influx of donated vehicles in the remaining months
of 2004, and, due to the increased reporting and operational burdens, a falloff
of smaller or less reputable charities that currently accept vehicle donations.
Prior to the
legislation, donors could claim the same tax deduction when donating a vehicle,
regardless of which charity received it. In 2005, this will all change. A
donor’s tax deduction will become contingent upon the charity’s ability to
return the highest proceeds on its sale. The distinction among charities that
can achieve this and charities that cannot will become apparent. In a sense,
the donors themselves will become the charities’ watchdogs to ensure the best
prices are being returned to fund their selected charities.
Now
that donors have a vested interest in getting the best prices for their vehicle,
how will they know which charity to choose?
While the National Kidney Foundation of Upstate New York cannot speak for other
charities, the Foundation expects to continue its proven track record of
fetching some of the highest per-vehicle proceeds possible.
The National
Kidney Foundation of Upstate New York is proud of its personal investment in
learning the automotive sales industry, and has embraced this program from the
get-go. Over the years, Foundation representatives have continually improved
and refined the protocol used to sell vehicles to achieve the highest yield in
the shortest amount of time. The National Kidney Foundation of Upstate New York
has depth and insight in this area.
Questions? Contact the Kidney Car Manager
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