December 12,2003

Senators Release GAO Report on Car Donations to Charities

WASHINGTON – Sen. Chuck Grassley, chairman of the Committee on Finance, and Sen. Max Baucus, ranking member, today released a General Accounting Office report showing taxpayers might take much more generous tax breaks for donating cars to charities than deserved, and the Internal Revenue Service is giving the issue little scrutiny.

Baucus said, “Charitable donations provide invaluable assistance to many needyorganizations, especially during the holiday season when needs are greater. But it’s vital thatindividuals do their homework on where their donations are going and who really receives theassistance, especially when donating used cars. As the GAO report on car donations highlights,charities are receiving only pennies on the dollar from the donations of used cars. And even moreconcerning, the tax breaks individuals receive for these donations are costing the governmentmillions of dollars a year. I don’t want to discourage donations, but it’s clear that changes are needed, including increased oversight. As the saying goes, ‘Buyer Beware.’ But in this case, ‘Donor Beware.’ ”

Grassley said, “This report further exposes what’s proving to be a rat’s nest of problems inthe area of aggressive valuation of in-kind gifts. Cars aren’t the only charitable gift over whichtaxpayers are being taken for a ride. Donations of land, art and intellectual property are all raisingconcerns. The Finance Committee will look at significant reforms in this area as we consider thecharitable giving bill early next year. Also, we have to make sure the IRS isn’t turning a blind eyeto charitable gifts that have been red-flagged as possible problems.”

The report follows.