Alexander Discusses New Used Car Donation Rules

Alexander Discusses New Used Car Donation Rules

News story posted in Tangible Personal Property on 14 December 2004| comments
audience: National Publication | last updated: 18 May 2011


In a December 7 letter to Gregory F. Jenner, Treasury acting assistant secretary for tax policy, Donald C. Alexander, former IRS commissioner, discussed the new used car donation rules under section 884, specifically whether new procedures under subsection (f)(12) apply to used car donations in which the claimed value of the car exceeds $500. Alexander believes that the new rules apply if the claimed value on a used car donation exceeds $500, but he recognizes that Treasury will still have some concerns about tax avoidance. Therefore, he suggested that charities receiving a donated vehicle obtain a certificate from the donor saying that the donor would not claim a deduction for the car exceeding its fair market value.

Full Text:


Hon. Gregory F Jenner
Assistant Secretary (Tax Policy)
Department of the Treasury
Room 3120
1500 Pennsylvania Avenue, NW
Washington, DC 20220

Re: Section 884, H.R.4520; Donations of Motor Vehicles

Dear Mr. Jenner:

Thank you and your staff for meeting with representatives of Goodwill Industries International and of other organizations on November 15, 2004, to discuss the new requirements prescribed by section 884 with respect to contributions of used motor vehicles.

An important issue that we briefly discussed is whether the procedures required under new subsection (f)(12) apply only to donations of used motor vehicles as to which the donor claims a value exceeding $500.

We believe that the new requirements of subsection (f)(12) are explicitly limited to donations of used motor vehicles only "in the case of a contribution of a qualified vehicle the claimed value of which exceeds $500 --". Furthermore, in describing the Senate Amendment that was adopted in the Conference Agreement, the Conference Report twice repeats the limitation to contributions of used motor vehicles "for which the claimed value exceeds $500". We believe that this express limitation cannot be disregarded and that the new restrictions and obligations cannot be applied to all donations of used motor vehicles.

At the same time, we recognize the possibility of some continued tax avoidance of concern to the Treasury. Therefore, we suggest that as a condition to the acceptance of a donated used motor vehicle, the recipient charity obtain a certificate from the donor that the donor would not claim a deduction for the used motor vehicle exceeding the fair market value of such used motor vehicle in its current condition.

The certificate's flat statement that in no event would the donor claim more than the fair market value of the used vehicle in its current condition should protect the revenues adequately. The amounts involved are small and the applicable tax rates are low. Most individual taxpayers don't itemize. Congress surely had these factors in mind when, balancing the need for revenue protection against the imposition of undue burdens upon donors and charities, it expressly limited the new requirements of subsection (f)(12) to cases where the "claimed value" of the contribution exceeds $500.

We will be glad to discuss this issue further.


Donald C. Alexander


Helen M. Hubbard, Esq.
Susan Brown, Esq.
Eric San Juan, Esq.

Add comment

Login or register to post comments


Group details



This group offers an RSS feed.
7520 Rates:  December 3.6%  November 3.6%  October 3.4%

Already a member?

Learn, Share, Gain Insight, Connect, Advance

Join Today For Free!

Join the PGDC community and…

  • Learn through thousands of pages of content, newsletters and forums
  • Share by commenting on and rating content, answering questions in the forums, and writing
  • Gain insight into other disciplines in the field
  • Connect – Interact – Grow
  • Opt-in to Include your profile in our searchable national directory. By default, your identity is protected

…Market yourself to a growing industry