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Anyone donating a car to a charity has only days left to sign over the title before tax-law changes could reduce the value of the deduction for write-off purposes. Congress changed the law in October so that starting January 1, 2005, donors must deduct what the car actually sells for, which is usually much less than the Blue Book value donors have used in the past. Because of the change, some ministries are preparing for up to a 30 percent drop in donations.

Willow Creek Community Church's CARS ministry provides cars to people who don't have transportation. (The acronym stands for Christian Auto Repairmen Serving.) One of the ministry's selling points in its brochure is that a vehicle's "Blue Book value defines a fair tax write-off." The program's director, Joel Krooswyk, says many donations have come from people who don't want to spend the time and money selling their car and instead have claimed a tax write-off worth far more than what the car would sell for in the classifieds.

The new law requires nonprofits to provide car donors with a receipt showing how much their car actually sold for, if the value is more than $500. If the car required any repairs, the cost of repairs must be deducted from the sales value. Donors must use that figure, not the Blue Book estimate, on their tax return.

Krooswyk, along with other nonprofits, lobbied Congress to stop passage of the bill. "It's not the end of the world," he said, but he expects a 30 percent decline in income. The surpluses the CARS ministry formerly had will disappear, Krooswyk says. "We'll be a baseline organization again."

But it's hard to know what exactly to expect. Barry Kurland, general manager of Habitat for Humanity's Cars for Homes program says they have no estimates ...

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IRS Changes May Dent Ministries' Car-Donation Programs
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December 2004

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