Iowans who donate their cars to charity would have to wait a bit longer for what would likely be a much smaller tax deduction under federal legislation proposed by Senator Chuck Grassley. The Iowa Republican says the current system cheats charities and taxpayers. While the leader of one Iowa non-profit group says he’s “very concerned” about the legislation scaring away potential car donors, Grassley proposes making the process work the following way. You’d donate your car and the charity would sell the car and then would notify the taxpayer how much money the car brought and that’s what the person could write off. Under the current method, a “blue book” is used to assign a value to the vehicle, even though the car may be worth much less than that amount — or it may bring much less at auction. Grassley says the average car is written off for about 44-hundred dollars though the actual car only brings in about 17-hundred dollars, while the charity only gets about 900-dollars. That’s what Grassley says has to change about the process.Grassley says there’s an “in-between person that rips off the charity and the taxpayers are getting ripped off because they’re able to deduct more than the true value of the car.” He says market forces should determine what that car is worth, not a subjective opinion. Some critics of the legislation say it would hurt charities because people will quit donating their cars because they wouldn’t be able to get nearly as much of a tax benefit as before — or because they’d have to wait perhaps many months until the cars are eventually sold before seeing the tax benefit. Harold Wimmer is executive director of the American Lung Association’s Iowa and Illinois chapters. Wimmer says he has concerns about how the legislation would impact car donations. Wimmer says “It’s a very significant part of our revenue stream, so, very significant dollars and a very substantial part of our budget.” He estimates up to three-thousand cars a year are donated to the agency in Iowa every year — each bringing an average of 900 to a-thousand dollars. Wimmer fears Grassley’s amendment would scare potential car donors away.Wimmer says the legislation “could certainly effect the donor’s ability to write off a fair market value for the vehicle.” He says the vehicles are sold off “as quickly as possible” and often only bring a liquidation sale price, not a wholesale price. Grassley says his amendment will likely be up for debate next week.
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