The new IRS vehicle donation policies are intended to protect charitable organizations and donors seeking to support those organizations.
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In a 2003 study, the United States General Accounting Office (GAO) estimated that about 4,300 charities had vehicle donation programs. For tax year 2000, the GAO estimated that about 733,000 taxpayers claimed deductions for donated vehicles they valued at $500 or more. However, in some cases, the charity actually received less than 10% of the value claimed on the donor's return or actually lost money on some vehicles. Inflated deductions are dishonest, and they hurt the charities. Therefore, the IRS has created materials to educate donors and charities on what constitutes a well-run donation program, focusing on helping donors to correctly value their donations, and teaching them to ask the right questions to ensure that the services through which they are giving actually benefit the destination charity. In addition, charitable organizations are required to provide documentation of the gift and its value to the donor and to the IRS.
