Across the country, more than 5,000 charities depend on sales of donated cars as a primary fundraising tool.
Under current law, taxpayers who donate motor vehicles to these nonprofit organizations can immediately claim a tax deduction for vehicles whose values fall below $500 or exceed $5,000, but must obtain proof of a completed sale for vehicles priced between the two thresholds.
Because of the delay between the time of donation and when a deduction for the contribution may be claimed, potential donors don’t have enough information at the time of their transactions to make fully informed decisions. Since these donation parameters were enacted in 2005, there has been an 83.1 percent decline in the volume of car donations, according to the IRS.
In 2104, House Ways and Means Committee members Reps. Todd Young (R-IN) and Linda Sanchez (D-CA) introduced the Charitable Automobile Red-Tape Simplification (CARS) Act (H.R. 4960) to address a gap in the tax law.
Independent Sector is monitoring ongoing Congressional efforts to pass legislation addressing this issue. IS supports taxpayers receiving the highest permissible value for their vehicle donations.