Notice to the charitably inclined who made a car donation to their favorite nonprofit during 2009 – a 2 month’s to go nudge is the perfect cue to find that donation receipt before filing a form 1040 for last year. The April 15 tax filing deadline is right around the corner and many taxpayers are meeting with their accountants right now. Harvard E. "Pete" Palmer, Jr., an industry spokesman and a founder of the Vehicle Donation Processing Center says there is plenty of anecdotal evidence that shows that a significant percentage of itemizing taxpayers who donate cars -- especially low value, non-running cars -- misplace their charitable donation receipt and fail to get the taxation reducing benefits of their generosity. True, if such a hypothetical taxpayers’ donated car was a 15-year-old non-runner, perhaps the subsequent loss to her or him does not constitute a tragedy of Haitian proportions....
However, the Vehicle Donation Center (while, in point of fact, utilizing car donations to help fund charitable work in Haiti) is sticking to their guns that they will do whatever it takes to ensure that every one of their 800,000+ car donation participators should get every dime of tax deduction benefit coming to them. In the above mentioned example, that "donate a car" deduction may be only $500 but Palmer and the team at the Vehicle Donation Processing Center count that as real money nonetheless. Taxpayers at the sixty days out mark note that IRS 1040s are about to be due. Use this nudge to find any missing car donation receipts right away. Individuals who had their car donations processed by the Vehicle Donation Center would have received the proper receipt when the transportation company picked up their car donation.
The proper car donation receipt is very simple. It states the name of the person who made the vehicle donation and that they received no financial benefit in return. It also specifies the official name of the charity and the charity’s 501(c)(3) registration number (assigned to the nonprofit at the time of official nonprofit status recognition by the IRS). Also shown are the date when the donating individual handed over the keys and the title and the vehicle -- smiled at the tow truck driver and said "donate car".
There is another important point to consider regarding the ”no financial advantage in return for donation" aspect of the proper auto donation receipt. If that “no financial advantage” situation is not the case, then the proper auto donation receipt and taxpayer filing must indicate the value of such “consideration” that went into the auto donation transaction between the charity and the individual who said "donate car" and handed over the keys. Sadly, this is an area where mistakes have been made. For example, some charities who participate in vehicle donation programs, under certain circumstances will offer the individual who is donating a car, a coupon or certificate for some type of vacation benefit. The Vehicle Donation Processing Center, itself, on occasion has an offer for a free or discounted vacation hotel stay or coupons for gasoline and/or grocery benefits. The Vehicle Donation Processing Center is very careful to indicate the proper retail value of such a certificate to car donors such that the car donation taxpayer (and her or his accountant) can properly take the tax deduction for the charitable donation, consistent with the requirement to show that "consideration" was received by the taxpayer who did the automobile donation.
Unfortunately, there have been other companies who do car donations in support of charitable good works who have abused such arrangements, according to the Attorney Generals of Oregon and Pennsylvania -- each of which recently levied high, five figure fines against a car donation company. The error that was made in this instance (and appears to be not all that unusual) was to assert to the individual who made the automobile donation through that particular company, that because that company obtained a significant quantity of the alleged "free hotel stay" certificates at such a very low cost; that the individual who made the car donation could claim to the IRS that they had received no "consideration". They contended that the certificates were officially “valueless”.
When a thing appears to fly in the face of common sense one should give pause prior to making an illogical representation to the IRS (in the opinion of Pete Palmer and the Vehicle Donation Processing Center) That was certainly the case in Oregon and Pennsylvania situations. In one breath that company said in their advertising or on their website "free vacation value worth XYZ-many dollars" and then in the next breath they suggest that an individual who made a car donation and received the vacation value should tell the IRS they received no "consideration" in exchange for their automobile donation. It did not fly in Oregon or Pennsylvania, it does not fly for the charities represented by the Vehicle Donation Processing Center, and hopefully that methodology is now becoming a thing of the past.
A car donation that helps the charity do good work is a wonderful thing and so is a tax deduction that helps taxpayers hold on to their hard earned cash. Those who made a vehicle donation to any of the 400+ charities represented by the Vehicle Donation Processing Center, who have misplaced their auto donation receipt may simply call or e-mail the company to receive another copy by return mail. Those who donated a car in other arrangements should be able to do the same. Charity missions, in part funded with car donation proceeds, are vital to people around the world while taxpayers pay plenty and should conserve all they can. Paraphrasing the Supreme Court here; it is not against the law for taxpayers to attempt to legally minimize the amount of tax they pay…. Save deductible expense receipts and file 1040 tax return as soon as you can for a speedier IRS refund!