As you may already know, the Internal Revenue Service has long imposed strict rules and detailed paperwork requirements concerning car-donation programs. This has resulted in our long-held stance that such programs are to be approached with caution. In the last year, the IRS has revised these rules to make them even more difficult to navigate, with the result that these programs are not encouraged.
For those programs that do exist or if any are contemplated, however, following is a synopsis of the new government rules (NB: This memo is for your own use/information only; we must never purport to offer tax or legal advise to our donors). Please keep this memo on file and share it with those involved in your parish/school/agency’s development and fundraising efforts.
The IRS is chiefly concerned with three areas with respect to gifts to charities: 1) the deductibility of the gift from the donor’s taxes; 2) the reporting requirements to the government by the recipient (i.e., the charity); and 3) verifying that the donation was truly “charitable” in nature. The first includes rules of “acknowledging” certain gifts. Without a proper acknowledgment from the charity, the donor may not claim the deduction and so will have less incentive to make the gift. The second and third involve