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Some
get more mileage out of an old car that goes to charity.
But not all donations go smoothly, government warn
By
DEBERA CARLTON HARRELL, SEATTLE POST-INTELLIGENCER REPORTER
December
27, 2003
Donated
junkers head for the scrap heap, reliable cars go to
working folks and hot donations -- like that '91 Lexus
and Mazda Miata -- are posted on eBay.
Ka-ching.
When
all goes well with charitable vehicle donations, nothing
is wasted and everybody wins, according to Jim Brown,
program director for the auto donation program of Volunteers
of America/Western Washington in Everett, one of the
oldest and largest such programs in the state. People
who desperately need cars get them for low cost, charities
get a boost and donors avoid hassles, feel good about
helping others -- and get a tax deduction.
But
acknowledging that not all such donations go smoothly,
federal and state agencies are increasing both scrutiny
and consumer advice, particularly as end-of-year donations
rise.
In
recent weeks:
The
Internal Revenue Service has issued consumer alerts,
urging taxpayers to ask questions when they donate their
vehicles to charity.
The
General Accounting Office released a study saying that
while donating vehicles to charity saved Americans an
estimated $654 million in taxes in 2000, the most recent
data available, charities nationwide collected only
a fraction of that amount. The report also found that
many donors overvalue their contributions.
The
Secretary of State's Office, to better track charitable
car donations, has for the first time created a separate
category for such donations in its new database.
"Definitely,
charitable car donations are growing," said Austin
DePaolo, executive director of the Martin Luther King
Jr. Family Outreach Center in Spokane. The agency is
one of 11 non-profits that benefit from Cars for Charity,
a tax-exempt organization that takes in and sells donated
cars, disbursing the proceeds.
Vehicle
donations are attractive for both donor and charity
because they "give the most return for the least
amount of effort" compared with other fund-raising
methods, DePaolo said.
"Donating
a car is a very simple, straightforward thing. It shouldn't
involve a whole lot of hassle," said Dennis Poor,
supervisor for the Seattle-based consumer protection
area, a division of the State Attorney General's Office
that includes King, Snohomish, Clallam and Jefferson
counties.
Poor
said his office has received only a few minor complaints
this year involving charitable car donations, and neither
required action by the Attorney General's Office. Both,
however, involved what Poor and others call the most
critical issue facing donors: ownership, as established
by vehicle titles.
Those
who fail to clear their car titles, or do not file the
required seller's report, can -- and have -- wound up
being liable for towing, license tab and other fees.
Such outstanding fees can, for example, block a driver's
license renewal.
"Everyone
should file a seller's report, whether they're selling
or donating," Poor said.
Rebecca
Sherrell, charities project manager in the Secretary
of State's Office, said the amount a charity receives
from car donations varies according to agreements made
between parties. Some organizations, such as Volunteers
of America, have their own donation lots. While many
charities rely on volunteers, such as mechanics, others
may sign pacts with a range of organizations, including
towing and salvage companies, charitable fund-raisers
or for-profit vehicle processing centers. The greater
the number of parties and fees involved, the higher
the overhead and the less money to charities, Sherrell
and others said.
Overhead
is a fact, Brown said. More than 50 percent of the cars
donated to Volunteers of America go to salvage, necessitating
such fees as towing -- at $80 or more per car. In the
last few years, the organization also has spent $200,000
a year in newspaper, TV and other advertising.
But
the generosity of many -- including repeat donors --
has helped the program grow from the annual $40,000
raised 10 years ago to about $1 million raised last
year. The money is distributed to 30 local charities
and the organization's own food distribution programs,
crisis care line, children's camps and dispute resolution
center, Brown said.
Over
the years, Brown has marveled at the generosity of donors,
including some who donate many times. Sometimes, transactions
can help ease grief. One woman who donated the helicopter
of her deceased son, Brown said, received "a sense
of closure" when it was ultimately sold for $500
to a chopper enthusiast.
Sam
Granato, executive director of the Silverdale Chamber
of Commerce, said his family has donated three cars
over the years. A local towing company agreed to tow
their Peugeot free of cost to Bremerton Vocational Technical
School, where the donation became a teaching project.
A second car, an old Mercedes, went to Seattle-area
homeless, and a third to a charity helping the blind.
Granato
said the family had a good experience each time.
"We
tended to keep cars way after they were paid for, and
ran them for years," Granato said.
"Instead
of trading them in, we preferred to donate. It felt
like a win-win for us because we got a tax deduction,
but we were also helping people."
DONATION
GUIDELINES
Always
fill out a seller's report, whether you are a donor
or a seller, to establish clear title and avoid liability
for title-related problems. The seller's report is available
from the state Department of Licensing and/or local
branches; 360-902-3600 or www.dol.wa.gov.
Do
not assume that because a charitable organization or
fund-raiser is registered with the Secretary of State's
Office, as required by law, that it has a seal of approval.
Registration only means the group has provided required
information. No group should ever use registration as
an endorsement while soliciting consumers. The Secretary
of State's Office cannot tell callers where to donate
their cars. Information on charitable organizations
involved in car donations is available online at www.secstate.wa.gov/charities.
Ask
questions. The IRS urges donors to ask whether those
soliciting the donation are officials of the charity
itself or a private fund-raiser acting on the charity's
behalf. If it is a private fund-raiser, 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? And if
it is resold, what share of the proceeds will go to
the charity?
Itemize.
Many taxpayers can't take a deduction for donations
because they don't itemize deductions on their personal
tax return. The decision to itemize is determined by
whether the total itemized deductions are greater than
the standard deduction. For 2003, the standard deduction
will be $4,750 for single; $9,500 for married filing
jointly.
Calculate
the fair market value and deduct only that. Many used-car
buying guides contain step-by-step instructions so that
readers can make adjustments to the value of a car for
accessories, mileage and other indicators of its general
condition.
Keep
records. For vehicle donations, taxpayers must document
the car donation and its fair market value. Recordkeeping
requirements are comprehensive and vary depending on
the amount of the contribution and the total amount
of the charitable deduction.
When
in doubt about whether a contribution is deductible,
call the IRS at 800-829-1040 or for TTY/TDD help, call
800-829-4059 or check the Web site at www.irs.gov/bus_info/eo/index.html
Donors concerned that contributions are being solicited
for fraudulent purposes should contact the appropriate
state charity. A list of state charity offices can be
found online at www.nasconet.org.
P-I
reporter Debera Carlton Harrell can be reached at 206-448-8326
or deberaharrell@seattlepi.com
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