Tax Legislation

Letter to Treasury Secretary Snow Regarding Vehicle Donations

March 4, 2004


The Honorable John W. Snow
Secretary
Department of the Treasury
1500 Pennsylvania Ave., NW
Washington, DC 20220

Dear Secretary Snow:

The undersigned charitable organizations are interested in the Administration’s recent proposal to reform the tax rules governing the charitable donation of vehicles.

Donations of vehicles have become an increasingly important source of revenues that support many charitable programs and services. While most charities—and most donors—exercise reasonable and ethical judgment in handling vehicle donations, we agree that more could be done to ensure that taxpayers do not overestimate the value of the donated vehicles for purposes of claiming tax deductions. We believe this can and should be done without imposing procedures that inadvertently dissuade potential donors. We are particularly interested in speaking with you and your staff regarding alternative standards for what would constitute a qualified appraisal.

We do, however, share The Joint Tax Committee’s concerns as expressed in its recently issued report on FY05 Revenue Provisions about the alternate charitable vehicle donation proposal that would limit the taxpayer’s deduction to the amount received by the charity through the eventual sale of the vehicle. Under such a proposal, a taxpayer’s actual deduction amount would be uncertain at the time of a contribution, and potential donors would not be able to compare the relative benefits obtained by donating their vehicles, trading them in to a car dealer, or selling the vehicles themselves. We agree with the Joint Tax Committee that “a selling price deduction would impose some administrative burdens on the charitable donees, and the donor would not have the certainty of knowing how much the contribution deduction is worth at the time he or she makes the contribution.” It would be extremely difficult to track and assess the effect on the sale price if the charity used or damaged the vehicle in any way after it was donated. As the Joint Tax Committee points out “the price at which the charity sells the donated vehicle is beyond the control of the donor and may not approximate fair market value.”

We believe this approach would greatly discourage and reduce future vehicle donations to charities and increase the cost of administering such programs, and we would respectfully ask that the Treasury join us in opposing any such proposal. We stand ready to work with you on these issues and would welcome your views on our recommendations concerning this policy.

Respectfully,
 

Catholic Charities of America Gifts In Kind International INDEPENDENT SECTOR Lutheran Services in America March of Dimes National Council of Nonprofit Associations

National Multiple Sclerosis Society Polly Klaas Foundation Texans Can!    United Jewish Appeal Federation of NY Volunteers of America

Other organizations that signed this letter after it was sent to Secretary Snow:
 

Activated Ministries American Cancer Society Association of Fundraising Professionals Cancer Fund of America Casa Esperanza, Inc. Knights of Columbus Van Nuys Council 3148 Muscular Dystrophy Family Foundation

Society for the Blind Stanford Home for Children Stanford Settlement Neighborhood Center Starlight Children's Foundation of CA, AZ, NV United Children's Fund United Methodist Church of Westlake Village

Charitable Vehicle Donations Working Group Contact:
Patricia Read
Vice President, Public Affairs
INDEPENDENT SECTOR

cc: Greg F. Jenner, Acting Assistant Secretary for Tax Policy