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New Law Drives Car Donors Away

Donors of vehicles to charity can now only deduct actual selling price, not Kelley Blue Book retail value. Donations have dropped 30-50 percent this year.

by Staff
November 9, 2005
1 min to read


A new federal law that requires charities to notify a person who donates their vehicle to them in writing of the actual selling price that they received within 30 days of the sale is significantly driving away possible donors, according to the Washington Post. The law, which applies to vehicles that are valued at more than $500, also requires the donor of the vehicle to attach a copy of the charity’s statement to their tax return or the deduction will be denied. As a result of the stiffer rules, vehicle donations to charitable organizations, such as Goodwill International Inc., have dropped between 30-50 percent this year. Many of those charities say that the new law makes donating cars unappealing because a donor could typically make more money if they just sold the car themselves. In the past, many who donated their cars – some 1.2 million taxpayers -- claimed full Blue Book value whether their vehicle was worth that amount or not. The excessive car valuations cost the U.S. Treasury about $654 million in tax revenue in 2000, according to a 2004 study by the Government Accountability Office (GAO).

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