Kokua Line
Kokua Line
Review rules before
giving used vehicles
to charities
The Internal Revenue Service and national charity officials have issued a consumer alert about what to watch out for when donating used cars to charities -- a growing fund-raising solicitation."We want people to take a few simple steps to avoid possible problems and to make sure they get the proper tax deduction for their donation. Don't get taken for a ride,'' said IRS Commissioner Charles Rossotti.
Karin Kunstler Goldman, president of the National Association of State Charity Officials (NASCO), also urged people to find out how their contributions will be used. "Any reputable charity should be happy to provide potential donors with financial reports and other information about its activities," she said.
IRS and NASCO officials recommend taking the following steps:
>> Check that an organization is qualified: Unless the car is donated to an eligible organization, the donation will not be tax-deductible. You can check to see if an organization is qualified by searching Publication 78 at www.irs.gov/bus_info/eo/eosearch.html. Publication 78 also can be found in many public libraries, or you can call IRS at 1-877-829-5500. Have the organization's correct name and its headquarters, if possible. Churches, synagogues, temples, mosques and governments are not required to apply for this exemption to be qualified and often are not listed in Publication 78. Donations to these institutions are tax-deductible.
>> Get more information: Although the advice is to review an organization's state registration and financial filings, charities no longer have to be registered with the state of Hawaii, according to Stephen Levins, acting director of the state Office of Consumer Protection. Your best bet is to check with the Better Business Bureau of Hawaii (536-6956 or www.hawaii.bbb.org), which has a lot of information on charities. Check how long a charity has been in existence, and compare the percentage of revenue the charity spends on its programs versus what it spends on administrative costs.
>> Ask questions: Are those soliciting the car donation officials of the charity or a private fund-raiser acting on the charity's behalf? If it is a private fundraiser, what will it do with the vehicle? Will the car be fixed up and given to the poor and needy, or will it be resold? If it is resold, what share of the proceeds go to the charity?
>> Itemize: You need to itemize deductions in order to take a deduction. For the most part, the decision to itemize is determined by whether your total itemized deductions are greater than the standard deduction (for 2001, the standard deduction will be $4,550 for single; $7,600 for married filing jointly).
>> Deduct only the fair market value: Some car donation program operators have mistakenly claimed that donors can take the full "Blue Book'' value of their car for a deduction. However, the IRS will only allow a deduction for the fair market value of the car.
>> Calculate the fair market value: Many used-car buying guides contain step-by-step instructions on how owners can determine this value. IRS Publication 526, "Charitable Deductions," and IRS Publication 561, "Determining the Value of Donated Property," also provide detailed instructions. Both publications can be found at www.irs.gov.
>> Document the charitable contribution donation: Taxpayers must document the car donation and its fair market value. Recordkeeping requirements are comprehensive, complicated and vary depending on the amount of the contribution and the total amount of the charitable deduction. IRS Publication 526 details requirements for the types of receipts taxpayers must obtain and the forms they must file.
>> Follow the state law regarding car title and license plates: Generally, state officials ask the donor to transfer the car title to the charity's name and make a copy of the title transfer, when possible. In Honolulu, you just need to send a regular notice of transfer (that perforated attachment at the top of the title), to the city Motor Vehicle and Licensing Division, said assistant licensing administrator David Mau.
Some charities will provide a notice of transfer to his office, he said, "but I wouldn't rely totally upon it because the responsibility still is with the registered owner (of the vehicle) to notify us."
>> Contact charity and IRS officials when in doubt: Donors with questions should call the IRS at 1-800-829-1040 (for TTY/TDD help, call 1-800-829-4059). Applicable IRS forms and publications are available online at the IRS Web site at http://www.irs.gov/bus_info/eo/index.html.
Does any group want ...
>> I have three boys who played soccer years ago. They accumulated many trophies (about 20) which are still in good condition. Is there any soccer team or organization that may want them? I will remove the nameplates, and all they must do is put on new nameplates. -- Bert>> Do you know of any organization that would like lightly-used (like new) stuffed animals (all sizes). They've just been sitting on a shelf. -- Lori
If any groups are interested, call Kokua Line at 529-7443 and leave a name and contact number.
Got a question or complaint?
Call 529-4773, fax 529-4750, or write to Kokua Line,
Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210,
Honolulu 96813. As many as possible will be answered.
Email to kokualine@starbulletin.com