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IRS Updates: New Car Donation Regulations; Form 1023 Revisions

If you're thinking of donating a car to charity or applying for 501(c)(3) status for your nonprofit organization, you'll want to take heed of recent IRS actions.

New Car Donation Regulations

As of January 1, 2005, donors who give cars (or trucks or boats or airplanes) to charity will no longer be able to claim the "fair market value" of those items on their federal income taxes. Instead, if the claimed value of the donated vehicle exceeds $500 and the organization sells it, the deduction will be limited to the amount the nonprofit receives for it. For more information, see the consumer alert the IRS issued November 30.

New, Improved Form 1023

In October, the IRS released revisions of Form 1023, "Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code," and its instructions. The new 1023 is intended to reflect tax law changes, expedite processing of requests for 501(c)(3) status, make the application and instructions easier to understand, and capture information about potentially abusive transactions. For more information, see the IRS FAQs about the revised application.
Topics: Law and Regulations