- Community
- Research
- Forms, Rates & Tables
- Government
- Executive
- Judicial
- Legislative
- Treasury
- Comments
- Continuing Professional Education
- Determination Letter
- Email Chief Counsel Advice
- Field Service Advice
- Forms and Instructions
- General Counsel Memoranda
- IRS Announcements
- IRS Fact Sheet
- IRS Forms
- IRS Legal Memoranda
- IRS Notices
- Information Release
- Internal Revenue Code
- Letter Rulings
- Publications
- Regulations
- Revenue Procedures
- Revenue Rulings
- Technical Advice Memoranda
- Treasury Decisions
- Management
- Marketing
- Planning
- News
- Articles
- Case Studies
- Technical Reports
Bill Would Modify Vehicle Donation Rules
Summary
Sen. John Ensign (R-NV) has introduced S. 110 that if enacted would modify current rules affecting charitable donations of qualified vehicles. The bill requires contemporaneus written substantiation of use, value, and, if sold, certification of an arm's-length transaction.
Full Text:
112TH CONGRESS
1ST SESSION
S. 110
To amend the Internal Revenue Code of 1986 to promote charitable donations of qualified vehicles.
IN THE SENATE OF THE UNITED STATES
JANUARY 25 (legislative day, JANUARY 5), 2011
Mr. ENSIGN introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to promote charitable donations of qualified vehicles.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. TREATMENT OF QUALIFIED VEHICLE DONATIONS.
(a) IN GENERAL. -- Subparagraph (A) of section 170(f)(12) of the Internal Revenue Code of 1986 (relating to general rule for contributions of used motor vehicles, boats, and airplanes) is amended to read as follows:
"(A) IN GENERAL. -- In the case of a contribution of a qualified vehicle, paragraph (8) shall not apply and no deduction shall be allowed under subsection (a) for such contribution unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgment of the contribution by the donee organization that meets the requirements of subparagraph (B) and includes the acknowledgment with the taxpayer's return of tax which includes the deduction.".
(b) CONTENT OF ACKNOWLEDGMENT. -- Subparagraph (B) of section 170(f)(12) of such Code is amended by striking clauses (iii), (iv), (v), and (vi) and inserting the following:
"(iii) In the case of a qualified vehicle that is not sold by the organization --
"(I) a certification of the intended use or material improvement of the vehicle and the intended duration of such use, and
"(II) a certification that the vehicle would not be transferred in exchange for money, other property, or services before completion of such use or improvement.
"(iv) In the case of any qualified vehicle the claimed value of which does not exceed $2,500 --
"(I) the fair market value of the vehicle as determined in accordance with regulations prescribed by the Secretary,
"(II) a statement that the deductible amount may not exceed the fair market value of the vehicle, and
"(III) if the organization sells the vehicle without any significant intervening use or material improvement a certification that the vehicle was sold in an arm's length transaction between unrelated parties.
"(v) In the case of any qualified vehicle the claimed value of which exceeds $2,500 --
"(I) a qualified appraisal as defined in subparagraph (E) of paragraph (11) of this section,
"(II) a statement that the deductible amount may not exceed the appraised value of the vehicle, and
"(III) if the organization sells the vehicle without any significant intervening use or material improvement a certification that the vehicle was sold in an arm's length transaction between unrelated parties.".
(c) CONTEMPORANEOUS. -- Subparagraph (C) of section 170(f)(12) of such Code (relating to contemporaneous) is amended by striking "days of -- " and all that follows and inserting "days of the contribution of the qualified vehicle.".
(d) REGULATIONS. -- Subparagraph (F) of section 170(f)(12) of such Code (relating to regulations) is amended by striking the last sentence.
(e) CLERICAL AMENDMENT. -- Section 170(f)(12) of such Code, as amended by this section, is amended by striking "acknowledgement" each place it occurs and inserting "acknowledgment".
(f) PENALTY FOR FRAUDULENT ACKNOWLEDGMENTS. -- Section 6720 of such Code (relating to fraudulent acknowledgment with respect to donations of motor vehicles, boats, and airplanes) is amended by striking "equal to -- " and all that follows and inserting the following:
"equal to the greater of --
"(1) the product of the highest rate of tax specified in section 1 and the claimed value of the vehicle, or
"(2) $5,000.".
(g) EFFECTIVE DATE. -- The amendments made by this section shall apply to contributions made after the date of the enactment of this Act.
Re: Bill Would Modify Vehicle Donation Rules
I think this bill is aimed to create a more equitable donation environment. Good regulations would only help the auto donations actions so that more people can actually benefit from that.
Re: Bill Would Modify Vehicle Donation Rules
Choosing a right vehicle donation program is very important. You only not give your vehicle to charity and sleep, you should take care that your car goes where you intended. The charity use it for welfare of underprivileged or not.
What is the purpose of this?
I know legislators are looking for any way they can to shore up the deficit, but discouraging vehicle donations by placing added costs and burdens on the donor & nonprofit are the not the way to go about this. Has there been abuse and fraud of the vehicle donation program of which I am not aware? Otherwise, this seems like a pointless bill that distracts from the real issues and will harm nonprofits. Perhaps that is part of the rationale, since vehicle donation programs provide significant funding to public broadcasting, which is currently under heavy scrutiny.Vehicle donation proposed regulation changes
I am curious to know why a vehicle would have to be apprised if the value is thought to be $2,500 or under when qualified appraisals are required for other gifts of tangible personal property when they are valued at over $5k. Requiring an appraisal at such a low value could deter donations of vehicles that are in good to very good condition. Raising the amount to at least $5k would be in keeping with existing regulations and would provide the donor with peace of mind that they donated what would more likely be a well-running and maintained vehicle. It would also ensure that the nonprofit is not fending off clunkers, considering taking a vehicle that might need a lot of maintenance, or taking a vehichle that has very little resale value. As the old saying goes "be careful about accepting a gift that eats!"Donation of Automobiles
Key is requirement of contemporaneous written acknowledgment by charity. If you look at terms of acknowledgment from charity when charity does not improve vehicle in the proposed regulation, section two states: a statement that the deductible amount may not exceed the fair market value of the vehicle. Lots of abuse in the process that IRS has become aware of and IRS is trying to close another loophole.