The IRS may soon give more scrutiny to how we value our noncash donations to
charities after the release of a General Accounting Office (GAO) report on the
subject.  The GAO reviewed the noncash donation programs (for example,
vehicle donation programs) of 4,300 charities. It also examined the terms of 54
specific vehicle donations, and found that in two-thirds of those cases,
charities received 5 percent or less of the value that donors had claimed on
their tax returns.
The GAO hastened to add that the discrepancy between the
amounts claimed by the donors and the proceeds actually received by the
charities could be partially explained by the fact that the vehicles were
usually sold at auction at wholesale prices, and the proceeds were reduced by
vehicle processing fees and other costs. Even so, the GAO recommended that
the IRS reassess its own methods for determining if taxpayers have overstated
the value of their noncash charitable deductions.
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