Restricting tax deduction would dry up donated cars - East Valley Tribune: Opinion

Restricting tax deduction would dry up donated cars

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Posted: Monday, May 10, 2004 11:44 am | Updated: 6:13 pm, Thu Oct 6, 2011.

Charity car donations have become a popular way to boost funding for dozens of worthy causes that help countless needy people. They provide a multimillion-dollar windfall for private, non-profit assistance organizations while allowing citizens a break on their taxes.

So, naturally, the Tax Man doesn’t like them one bit.

As the Tribune’s Le Templar reported last week, charities in the East Valley and across the country have partnered with charity car auctions to help fill their coffers. Make-A-Wish of Central and Southern Arizona, for example, received $200,000 from charity car donations last year, about 10 percent of its budget. That was enough money to fulfill the wishes of 40 terminally ill children.

Meanwhile, people like Greg Roberds of Mesa, owner of FasTrak Charity Auctions, makes a good living by doing most of the work. If someone wants to donate a used car to benefit a charity, Roberds picks it up and auctions it in the wholesale vehicle market. He gets a fee and the rest goes to the charity.

Meanwhile, the donor gets a tax deduction up to the full cash value of the vehicle as listed in the Kelley Blue Book.

But the U.S. General Accounting Office, sensing scandal of Enron proportions, tracked a few dozen of these donations and discovered that the amount these vehicles fetched at the wholesale auctions often was — GASP! — below the Blue Book value. Extrapolating from its few dozen cases, the GAO calculated that the U.S. Treasury was losing an estimated $622 million in tax revenues.

So U.S. Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, introduced legislation that would allow car donors to deduct only the amount their vehicle fetched at auction.

Roberds warns the restriction would probably end the charity car donation windfall for charities. And he’s probably right. It would curtail or kill a very good thing for needy people, for the charities that help them, and for public officials who’ve been preaching less dependence on the government.

Grassley’s legislation would create a needless hassle for the good-hearted citizens who almost always could get far more for their vehicles through private-party sales than they get in tax deductions. Instead of a $622 million bonanza for the federal government, Grassley’s legislation most likely would increase demands on government for human services now handled by charities that benefit from the charity car donations.

Grassley not only has introduced a bill in search of the problem, it would create an expensive one of its own by discouraging a productive, enterprising partnership between citizens, auction businesses and charities that is doing a lot of good. His colleagues should kill it.

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