Question: How do I deal with a vehicle donation?
Question: Does anyone have experience with accepting used vehicles as a donation? A donor would like to give us a car, but I am not sure if we need to register it and get insurance if we are just going to sell it.
Answer:
The IRS publication 4302 A Charity’s Guide to Vehicle Donation provides the guidelines your organization needs to follow if your intent is to immediately sell the vehicle and use the proceeds exclusively to fund your charitable programs. The simplest way to handle this type of donation is to establish an agency relationship with a for-profit entity that will handle the vehicle sale on your behalf. The for-profit entity will handle any issues with registration and insurance if required.
The written acknowledgement of the vehicle donation to the donor requirements vary by the value of the vehicle. If the value is more than $500, you are required to provide the IRS Form 1098-C to the donor. You must provide the written acknowledgment to the donor within 30 days from the date of the vehicle’s sale.
All acknowledgements must contain the following information, plus information on what you did with the vehicle (in your case, sell it):
the donor’s name and taxpayer identification number,
the vehicle identification number,
the date of the contribution, and one of the following:
a statement that no goods or services were provided by the charity in return for the donation, if that was the case,
a description and good faith estimate of the value of goods or services, if any, that the charity provided in return for the donation, or,
a statement that goods or services provided by the charity consisted entirely of intangible religious benefits, if that was the case.
If you through your for-profit entity sell the vehicle for more than $500, in addition to the above information required for all acknowledgments, the contemporaneous written acknowledgment must include:
a statement certifying that the vehicle was sold in an arm’s length transaction between unrelated parties,
the date the vehicle was sold,
the gross proceeds received from the sale, and,
a statement that the donor’s deduction may not exceed the gross proceeds from the sale.
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