At least one local charity said it doesn?t plan to cut back its core programs, even though revenue from a key source of donations has fallen 50 percent.
“We?ll make do,” said Pat Hughes, director of vehicle donations for the Salvation Army in Baltimore City. “No one will suffer.”
His faith is strong in light of getting 200 vehicle donations each month instead of the 400 a month that came prior to Jan. 1, 2005. That?s when a federal law on tax deductions for donated vehicles to charity took effect.
Prior to 2005, charitable groups like the Salvation Army, Purple Heart, Melwood even the American Cancer Society could count on a steady flow of cars being donated by owners hoping to get a decent tax write-off, Hughes said.
Under the previous law, anyone donating a vehicle could write off the vehicle?s fair market value on his income tax by using prices usually found in the Kelly Blue Book Used Car Guide, according to the Internal Revenue Service. Donating the vehicle qualified as a charitable deduction.
It was an easy and virtually effortless deal, with the owner watching as the charity hauled their car away hooked to a tow truck, Hughes said.
But according to the American Jobs Creation Act of 2004, vehicle owners are now limited to a $500 tax write-off regardless of vehicle condition.
To get a bigger write-off, the owner has to wait for the vehicle to be sold by the charity to determine the gross proceeds that the vehicle owner can deduct from their income taxes.
The charity has to send the IRS and the vehicle owner a notice indicating the gross proceeds when the vehicle is sold, under the new law.
In Baltimore, the new law has meant less available money at the Salvation Army?s Adult Rehabilitation Center on W. Patapsco Avenue The center has 100 beds for men in long-term drug and alcohol recovery.
The loss of vehicle donations “has hurt us tremendously,” Hughes said.
“People that are donating are donating wrecked cars or cars without transmissions. We?ll take them because we need the revenue,” Hughes said.
DONATE
» Salvation Army Car Donation Program: 800-95-TRUCK (800-958-7825) or www.thesalvation armycardonationprogram.org
» Purple Heart Car Donation Program: 888-414-4483 or donate online at www.purpleheartcars.org
» Melwood Vehicle Donation Program: 877-MELWOOD (877-635-9663).
