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Charities Fight Vehicle-Donation Change

Well-thumbed copies of the Kelley Blue Book can be found on the desk or bookshelf of nearly every car salesman and mechanic in America, not to mention in the back pockets of countless car buyers. But this week, the familiar automobile guide can be found somewhere unexpected: Capitol Hill.

Since April, when the company that publishes the car-pricing manual hired the lobbying firm Fleishman-Hillard Government Relations, company representatives have been traveling to Washington to discuss a few paragraphs in the FSC-ETI international business-tax bill, which is expected to head to conference sometime after the August recess.

Both the House and Senate versions of the bill contain a provision that would alter the way charities and tax payers report income from the charitable donation of used automobiles. Some lawmakers pushed for the measure because they argue that taxpayers have been claiming too much value for donated vehicles when claiming deductions on their income-tax forms.

Currently, donors of used cars can deduct amounts based on fair market value, without referring to the price the car ultimately sells for. For cars whose value exceeds $5,000, taxpayers have to receive a qualified appraisal.

By contrast, the House bill requires that donors receive a “qualified appraisal” when claiming vehicle deductions over $250. The Senate version limits tax write-offs to the actual sale price of the car, which charities would be required to report to donors.

The bill’s sponsor, Sen. Chuck Grassley (R-Iowa), and other proponents maintain that their proposals will help reduce excessive deduction claims. Opponents, including Kelley and a coalition of national charities, contend that the additional requirements are so cumbersome that many potential donors will simply decide to trade in their car rather than donate it to charity.

In what the company calls its first-ever lobbying effort, Kelley Blue Book is seeking to persuade Congress to replace the provisions with a requirement that donors fill out the company’s vehicle condition report and cite the guidebook’s fair market value. Kelley says it doesn’t have any potential windfall at stake: It provides both functions online for free.

“I just woke up one day and said, ‘I have a solution,’” said Blue Book spokeswoman Robyn Eckard, who noted that the company has contacted the Internal Revenue Service to offer its vehicle condition report at no cost. “We don’t have to hurt the charities, and we don’t have to hurt the donors. We have a solution, and we just want to give it to you for free and make this happen for everybody.”

A Senate Finance Committee aide disagreed. “If the idea is to make it less difficult for donors, then I’m not sure [the Kelley Blue Book proposal] would do it,” the aide said. The aide added that there is little chance the provision will be altered once the tax bill goes to conference. “This is the most painless, clean tax reform.”

In the fight to strip the new tax proposal, Kelley Blue Book is joined by a range of other groups. In February, before the bill passed, nearly 30 national charities formed an ad-hoc coalition dubbed — fittingly — CARS: Charities Advocating Responsible Solutions. Coalition member Tom Roberts, director of development at Melwood, a social-service charity for individuals with developmental disabilities based in Marlboro, Md., conceded that the donation process needs to be reformed, but he argued that the tax bill’s solution could threaten vehicle donation programs.

“If there are concerns over taxpayer compliance, we share those concerns,” Roberts said. “But the solutions that have come forth in the Senate and the House bills could have such a devastating effect that you’re not going to fix a problem — you’re going to kill a program,” Roberts said.

Roberts said the CARS coalition has conducted ongoing meetings with the Treasury Department’s Office of Tax Policy and with Members of Congress, but he acknowledged that their task is complicated by the scope of the tax legislation it is part of.

“This is something that has so many twists and turns to it,” he said. “We’ve contacted plenty of people on the Hill who didn’t even know the provision was in there.” The group has designed and run print ads, though Roberts acknowledged that the group’s finances are limited.

Chuck Gould, president of Volunteers of America, a CARS coalition member that assists homeless shelters, nursing homes and day-care centers for at-risk children, said the vehicle-donation program is critical to his organization. He said car sales provided $10 million of the group’s $700 million budget last year.

“There are services we are providing that we won’t be able to provide if we lose that scale of support,” Gould said. “You have a challenge every time you have in-kind contributions, there’s no question. But if the goal is to make this thing easier on the IRS — we just think that’s the wrong question to ask.”

The Senate aide suggested that the charities have other motives for opposing the bill. “What’s really driving this is they don’t want the truth to be known about what they’re getting for these cars.”

Joe Hearn, vice president of Adesa Impact, helps run vehicle-donation programs for a number of well-known charities, including the American Lung Association, the American Red Cross and the March of Dimes. Recently, he has been active in lobbying against the proposal.

“Some charities were advocating a change long before the government decided to get into this,” Hearn said. “In my mind, they’ve been largely ignored. At the end of the day, it’s going to be a missed opportunity.”

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