Car Donation Tax Deduction Bill

See update at bottom

The charitable institutions throughout the US raise many millions of dollars by having donated cars or vehicles auctioned. In 2000, 733,000 taxpayers reduced their liability by about $654 million. Congress is dismayed at the disparity between the valuation placed on a car by a donor (say, $5,000 -- the threshold above which an independent appraisal already is required) and the amount a charity could gain from auctioning it (say, $500).

A Senate bill would limit a donor's tax deduction to the amount the car is sold for at auction. This would mean a long period when donors would not know the value of their gift . This would limit the incentive to donate. A House bill would require an independent appraisal of any car valued at more than $250, which means all cars. This appraisal would be paid for by the donor and it could cost more than the value of the tax deduction to the donor.

Why not just simply require the donors to reduce their tax liability by the Blue Book's assessment of the vehicles' fair market values? Most will bring close to that when they are retailed at auction anyway. And considering the bang for the buck from charities and the savings their good works mean for governments, the Senate and House bills are mising the boat.

If Congress was to divert because of the government's convenience a portion of one stream of income -- one that is crucial to charities, but none-the-less trivial in relation to federal revenue -- this would emphasize the principle that government should empower, not hinder.

Update: 2007 -- You can claim a minimum $500 deduction on your itemized federal tax return when you donate your car or other vehicle, boat, motorcycle or truck. If your car sells for more than $500, the sale price will be the amount you can claim as a deduction.  Most cars in the United States are accepted for donation, old or new, running or not. To be eligible for donation, your car must have a clear title, not be stripped of any parts, have 4 inflated tires and be in a place where a tow truck can easily get to it. Some of the national charities your donation can help include: American Foundation for the Blind, Cancer Research & Prevention, Asthma and Allergy Foundation, United Spinal Association, and Teach for America. See National List: List of Car Donation Charities