Car donation programs are a great, mutually beneficial way to support your favorite charitable organization. All you need to do is sign over the documentation and provide a representative with a set of car keys. In return, you will be provided with a receipt that can be used as a tax deduction -- and you'll also get hassle-free car removal out of the deal. The organization can then liquidate the vehicle and add these funds to their budget.
An organization can quickly begin operating a car donation program by spreading the word that they are requesting donations of used vehicles as part of a new fundraising campaign. Once the donated cars start coming in, most charities partner with auto auction companies who can efficiently sell off the vehicles and return the majority of the profit back to the charity. There are also some businesses that specialize in processing donated vehicles and forwarding the proceeds to the charity of your choice.
In recent years, it's been said that the IRS has been cracked down on enforcing its regulations pertaining to car donation programs. However, the truth is that the agency is only targeting citizens who exaggerate the value of their donated vehicle in order to claim a higher tax deduction.
When car donation programs were first becoming popular in the late 1990s, many people made the mistake of reporting a much higher value for their donated vehicle to the IRS. Although it took the IRS some time to react to this new form of tax fraud, the agency is now very intolerant of people who try to take advantage of these programs with dishonest claims. Don't take the chance -- report the actual value of the donated vehicle to the IRS if you're going to claim it as a tax deduction.