Unlike other businesses closing for the New Year's Eve holiday, the Melwood Horticultural Training Center, a charity in Upper Marlboro, is bringing in extra staff members to handle hundreds of old cars it expects donors to leave in the parking lot before midnight tonight.
By this time last December, 4,000 owners had given their cars to Melwood, which finds housing and jobs for people with developmental disabilities. In return, donors enjoyed generous tax write-offs. But tomorrow, a new federal law will cut the allowable deduction for a donated car, and Melwood expected to take in at least 400 cars yesterday and today as donors rushed to beat the change.
Cars that have been donated to the Salvation Army are loaded by a contractor for Capital Auto Auction. Charities fear they will be hurt by a federal law, taking effect tomorrow, that cuts tax deductions for vehicle donations.
(Photos Katherine Frey -- The Washington Post)
|
|
"We just anticipate there may be people trying to donate up until the very end," said Don Pollock, the charity's vice president in charge of vehicle donations.
For years, people who donated cars, boats, campers, artwork and other items to charity could deduct the fair market value when calculating their taxes. Congress cracked down on the practice, perceiving abuse because charities auctioned vehicles for far less than the donors claimed. Starting tomorrow, the Internal Revenue Service will limit deductions to the auction price, though a full fair market deduction can be claimed for cars valued at less than $500.
The Salvation Army in Annandale, which serves Northern Virginia, yesterday reported a 20 percent jump in donations compared with the last week of 2003. Other charities in the area are adding staff and hours to accommodate a similar surge.
What is not known is whether the less generous deduction will drive donors away next year, as many charities fear.
Isaac Christian of Woodbridge said he won't change his custom. "I'll be doing the same thing next year I've always been doing," he said as he filled out paperwork Wednesday to donate his gold 1994 Mazda to the Salvation Army. Every December, Christian donates one of his extended family's four cars to charity and replaces it with another. He knew about the tax change. "But donating is for a good cause, so I would do it even without any tax deduction."
Dan Wurmser of Burke drove his mauve 1993 Geo Prism and its 223,462 miles into the parking lot with the same sentiment. "I don't know that I would have been as strongly motivated to donate it" under the new law, he said. "But the dealer was only going to give me $100. So why not donate?"
Yet charities, which strongly opposed the new legislation, say they fear that donations will plummet next year. "I've hated to see this law go into existence," said Terry Pacheco, membership and affiliate service coordinator for the American Council of the Blind, a Washington-based advocacy group. "The cars have been an incredibly important funding source. I'm afraid this will extinguish it."
Pacheco and others said they expect that owners of higher-end cars will try to sell them on their own.
"Some people who may have donated the better cars may decide, if I can't get the fair market value [in tax write-offs], I'll mess around with trying to sell it," said Pete Palmer Jr., co-founder of Vehicle Donation Processing Center Inc., a California group that handles cars and other gifts for 300 charities, including several local ones.
The average sales price of a donated car at auction was $438, Palmer said.
But the charities stressed that they are by no means giving up.
"It's still a very viable program," said Melwood's Pollock.
