Not-for-profit organizations typically engage in a variety of fundraising activities to support their programs and further their tax-exempt purpose. One activity that often resonates with charities and donors alike is the sale of donated vehicles. If your organization currently has or is considering a vehicle donation program, following IRS rules can keep your program running smoothly and preserve your favorable tax status.
- For each motor vehicle donation, your organization generally must file Copy A of Form 1098-C with the IRS by February 28 — March 31, if you file electronically — of the year following the year in which the charity provides acknowledgement of the gift to the donor. The form asks for:
- Your organization’s federal identification number
- The donor’s name and taxpayer identification number
- The vehicle identification number
- The date of the vehicle donation and
- A statement as to whether goods or services were provided in exchange for the donation,
- A description and good faith estimate of the value of any goods or services provided in return for the donation, and
- A statement of whether the goods or services provided consisted solely of intangible religious benefits.
You must also certify whether the vehicle:
- Was sold in an arm’s-length transaction to an unrelated party,
- Will not be transferred for money, other property, or services before completion of material improvements or significant use, or
- Is to be transferred to a needy individual for significantly below fair market value in furtherance of your organization’s charitable purpose.