0115 Publ 4302 (PDF)

Official source: IRS Forms, Instructions & Publications (https://www.irs.gov/pub/irs-pdf/p4302.pdf), retrieved 2026-10-03. U.S. Government work (17 U.S.C. § 105).

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Tax Exempt and Government Entities

EXEMPT ORGANIZATIONS

T Y P E S O F V E H I C L E D O N A T I O N

P R O G R A M S A N D T H E I R I M P A C T

O N TA X - E X E M P T S TA T U S,

TA X A B L E I N C O M E, A N D

D E D U C T I B L E C O N T R I B U T I O N S

harities described in section 501(c)(3) of the Internal Revenue

Code need funds to operate their charitable, educational,

or other tax-exempt programs. These charities may choose

from a number of fundraising activities for financial support. A popular

fundraising program is the sale of donated vehicles.

Through this Publication 4302, the Internal Revenue Service (IRS) and

state charity officials provide general guidelines for charities operating

vehicle donation programs.

The information in this publication applies to the most common types

of section 501(c)(3) organizations, commonly referred to as “charities.”

A companion brochure, Publication 4303, A Donor’s Guide to Vehicle Donations,

provides guidelines for individuals who donate vehicles.

1

A charity must be organized and operated exclusively for one or more exempt purposes

described in section 501(c)(3). If a charity operates a vehicle donation program in a manner that

confers improper benefits on private parties, the charity’s exemption may be adversely affected.

If the charity loses its exemption, its income is subject to tax, and it must file the appropriate

federal income tax return (generally, Form 1120 for corporations or Form 1041 for trusts).

Vehicle donation programs generally fit one of the

following descriptions:

Charity Operates Vehicle Donation Program*

Generally, there should not be an adverse impact on a

charity’s tax-exempt status if it does any of the following

with donated vehicles:

• sells the donated vehicles and uses the proceeds

exclusively to fund its charitable programs,

• regularly uses the vehicles for a significant period of

time to conduct activities that substantially further its

charitable programs,

• sells the vehicles after it makes a material improvement

to the vehicles and then uses the proceeds to exclusively

further its charitable programs, or,

• distributes the vehicles at a price significantly below fair

market value to needy individuals in direct furtherance

of its charitable purpose of relieving the poor and

distressed or the underprivileged who are in need of

a means of transportation.

*A charity must operate exclusively to

further the charity’s exempt purposes.

A charity must not operate a vehicle

donation program in a manner that

improperly benefits private parties.

For example, a charity should not sell

vehicles on favorable terms to individ

uals who are not part of a charitable

class, such as board members. Fees

the charity pays an agent to operate the

program must not exceed a reasonable

amount. Activities such as these may

have adverse tax consequences for

both the charity and related parties.

Charity Hires Agent to Operate Vehicle Donation Program ^*****,

If the charity hires a private, for-profit entity as an agent to operate its vehicle donation program,

the charity and the for-profit entity must establish an agency relationship that is valid under the

applicable state law. Generally, an agency relationship will be established where the parties agree

that the for-profit entity will act on the charity’s behalf and that the for-profit entity’s activities

covered by the agreement are subject to the charity’s oversight. Accordingly, the charity should

actively monitor program operations and have the right to review all contracts, establish rules of

conduct, choose or change program operators, approve of or change all advertising, and examine

the program’s books and records. If the charity follows these guidelines, the program should not

jeopardize the charity’s tax-exempt status.

2

For-Profit Entity Receives and Sells Vehicles Using Charity’s Name,

In this program, the charity grants a for-profit entity the right to use the charity’s name for the

purpose of soliciting donations of used vehicles. The charity receives either a flat fee or a

percentage of the proceeds from the sale of the vehicles to support its charitable programs.

The charity has no control over the for-profit entity’s activities.

Unlike the preceding program, the charity has not established an agency relationship with the

for-profit entity that is valid under applicable state law; therefore, this program is not the charity’s

program. Because the for-profit entity is not an agent of the charity, the donors’ contributions

(transfers) are made to the for-profit entity, not the charity. A charity cannot license its right

to receive tax-deductible contributions. The for-profit entity and the charity must not mislead

the public by stating that contributions may be deductible (for example, by providing a written

acknowledgment that the “contribution” is deductible). Misleading the public in this regard may

expose the for-profit entity and the charity to adverse tax consequences.

,

Donors contribute vehicles in order to support charity and benefit from the federal income tax

deduction. A donor cannot deduct any single charitable contribution valued at $250 or more

unless the charity provides the donor with a contemporaneous written acknowledgment of the

contribution. The information the charity must provide in the written acknowledgment depends

upon what it does with the vehicle and on the claimed value of the vehicle.

Written Acknowledgment for Vehicle Contribution Deduction of More Than $500,

If a donor contributes a vehicle and claims the value of the vehicle is more than $500, the charity

is required to provide a contemporaneous written acknowledgment to the donor, such as Form

1098-C, Contributions of Motor Vehicles, Boats, and Airplanes . All acknowledgments must include

the following information, plus information on what the charity did or intends to do with the vehicle:

n the donor’s name and taxpayer identification number,

n the vehicle identification number,

n the date of the contribution, and one of the following:

• a statement that no goods or services were provided by the charity in return for the

donation, if that was the case,

• a description and good faith estimate of the value of goods or services, if any, that the

charity provided in return for the donation, or,

• a statement that goods or services provided by the charity consisted entirely of

intangible religious benefits, if that was the case.

3

Charity Sells the Vehicle — If the charity sells the

vehicle for more than $500, in addition to the information

required for all acknowledgments, the contemporaneous

written acknowledgment must include:

• a statement certifying that the vehicle was sold in an

arm’s length transaction between unrelated parties,

• the date the vehicle was sold,

• the gross proceeds received from the sale, and,

• a statement that the donor’s deduction may not exceed

the gross proceeds from the sale.

However, if the gross proceeds from the sale are $500

or less, the charity should not provide a written acknowl edgment based on these rules. Instead see Written

Acknowledgment for Vehicle Contribution Deduction

of $500 or Less on page 7.

CAUTION,

A donor cannot claim a deduction for

more than $500 if the acknowledgment

provided by the charity does not con

tain the donor’s taxpayer identification

number. If a donor fails to provide his

or her taxpayer identification number

to the charity, follow the rules under

Written Acknowledgment for Vehicle

Contribution Deduction of $500 or

Less, page 7.

Charity Intends a Significant Intervening Use of the Vehicle — If the charity intends to make a

significant intervening use (defined below) of the vehicle, in addition to the information required

for all acknowledgments, the contemporaneous written acknowledgment must include:

• a statement certifying that the charity intends to make a significant intervening use of the

donated vehicle,

• a detailed statement of the intended use,

• a detailed statement of the duration of that use, and,

• a certification that the vehicle will not be sold before completion of the use.

Significant Intervening Use – To qualify as significant intervening use, the charity must actually

use the vehicle to substantially further its regularly conducted activities, and the use must be con siderable. There is no significant intervening use if the charity’s use is incidental or not intended

at the time of the contribution. In addition, significant intervening use does not include use of the

vehicle to provide training in general business skills, such as marketing and sales. Whether a use

qualifies as significant intervening use depends on its nature, extent, frequency, and duration.

EXAMPLE 1: An individual donates a used van to a charity that delivers meals to needy

individuals. The charity only uses the vehicle a few times to deliver meals and then sells

the vehicle. Because the charity’s use was infrequent and incidental, it does not qualify as

significant intervening use.

EXAMPLE 2: The facts are the same as in Example 1, except that the charity uses the van to

deliver meals every day for one year. This use qualifies because it is significant and substantially

furthers the charity’s regularly conducted activity of delivering meals to needy individuals.

4

EXAMPLE 3: The facts are the same as in Example 1, except that the charity drives the van

a total of 10,000 miles over a 1-year period to deliver meals to needy individuals. This use qualifies

because it is significant and substantially furthers the charity’s regularly conducted activity of

delivering meals to needy individuals.

Charity Intends to Make a Material Improvement to the Vehicle — If the charity intends to make a

material improvement (defined below) to the vehicle, in addition to the information required for all

acknowledgments, the contemporaneous written acknowledgment must include:

• a statement that the charity intends to make a material improvement to the donated vehicle,

• a detailed description of the intended material improvement, and,

• a certification that the vehicle will not be sold before completion of the improvement.

Material Improvement – A material improvement includes a major repair or improvement that

results in a significant increase in the vehicle’s value. Cleaning, minor repairs, and routine

maintenance are not material improvements. In addition, a material improvement to the vehicle

will not qualify if the improvement was funded by an additional payment from the donor.

Material improvements do not include:

• application of paint or other types of finishes (such as rustproofing or wax),

• removal of dents and scratches,

• cleaning or repair of upholstery, and,

• installation of theft deterrent devices.

Charity Intends to Give or Sell the Vehicle to a Needy Individual — If a charity, whose purpose

is relieving the poor and distressed or the underprivileged who are in need of a means of

transportation intends to give or sell the vehicle to a needy individual at a price significantly

below fair market value, in addition to the information required for all acknowledgments, the

acknowledgment must certify:

• that the charity intends to give or sell the vehicle to a needy individual at a price significantly

below fair market value, and,

• that the gift or sale is in direct furtherance of the charity’s charitable purpose of relieving the

poor and distressed or the underprivileged who are in need of a means of transportation.

However, if the charity merely applies the proceeds from the sale of the vehicle to a needy indi vidual for any charitable purpose, the sale is not in direct furtherance of the charity’s charitable

purpose. In addition, the sale of a donated vehicle at auction does not qualify as a sale to a needy

individual at a price significantly below fair market value; instead the rules above under Charity

Sells the Vehicle, page 4, apply.

5

Time and Manner of Providing Acknowledgment to the Donor — The charity must provide the

written acknowledgment to the donor within 30 days from the date of the vehicle’s sale. This

does not mean the charity must sell the vehicle in the year it receives it. For example, if a charity

receives a donated vehicle on December 31, Year 1, and sells the vehicle on January 15, Year 2,

the acknowledgment is due by February 14, Year 2. If the charity intends to make a significant

intervening use of or material improvement to the vehicle, or if it intends to sell or give the vehicle

to a needy individual at a price significantly below fair market value, the acknowledgment is due

within 30 days from the date of the contribution. The charity may use Form 1098-C, Contributions

of Motor Vehicles, Boats, and Airplanes, as acknowledgment or provide its own statement

containing the information described above.

Time and Manner of Providing Acknowledgment to the IRS — A charity must report the infor mation contained in the contemporaneous written acknowledgment to the IRS on Form 1098-C.

Form 1098-C is due by February 28 (March 31 if filing electronically) of the year following the year

in which the charity provides the acknowledgment to the donor.

Penalties — For a written acknowledgment of a vehicle contribution deduction of more than $500,

a penalty applies if a charity knowingly furnishes the donor with a false or fraudulent acknowledg ment, or knowingly fails to furnish an acknowledgment with the required information. In the case

of an acknowledgment related to the sale of a vehicle, the penalty is either the gross proceeds

from the sale or the product of the highest tax rate (currently 35 percent) and the sales price stat ed on the acknowledgment, whichever amount is greater. In the case of an acknowledgment that

is not based on gross proceeds, the penalty is either $5,000 or the product of the highest tax rate

(currently 35 percent) and the claimed value of the vehicle, whichever amount is greater.

EXAMPLE 1: A charity that delivers food and other needed goods to the rural poor in remote

locations receives a donation of a subcompact car that has been driven more than 100,000 miles.

The charity needs three large vehicles suitable for delivering heavy loads across rugged terrain.

The subcompact is not suitable for the charity’s use. The charity provides an acknowledgment

to the donor falsely certifying that it intends to make significant intervening use of the car.

Based on this acknowledgment, the donor claims a deduction of $2,300, the fair market value

of the car. The charity is subject to a penalty for knowingly furnishing a false or fraudulent

acknowledgment to the donor. The amount of the penalty is $5,000, because that amount is

greater than $805, the product of the claimed value ($2,300) and 35 percent.

EXAMPLE 2: The charity receives a donation of a qualified vehicle and sells it without any

significant intervening use or material improvement. The gross proceeds from the sale are $300,

but the charity provides the donor with an acknowledgment that states that the gross proceeds

were $1,000. The charity is subject to a penalty for knowingly furnishing a false or fraudulent

acknowledgment to the donor. The amount of the penalty is $350, the product of the sales price

stated in the acknowledgment ($1,000) and 35 percent, because that amount is greater than the

gross proceeds from the sale of the vehicle ($300).

6

Written Acknowledgment for Vehicle Contribution Deduction of $500 or Less

If a donor is claiming a charitable contribution deduction of at least $250 but not more than

$500 for the vehicle, the acknowledgment must include the name of the charity, a description

(but not value) of the vehicle, and one of the following:

• a statement that no goods or services were provided by the charity in return for the donation,

if that was the case,

• a description and good faith estimate of the value of goods or services, if any, that the charity

provided in return for the donation, or,

• a statement that goods or services provided by the charity consisted entirely of intangible

religious benefits, if that was the case.

Time and Manner of Providing Acknowledgment to the Donor — For the written acknowledgment

to be considered contemporaneous, a donor must receive the acknowledgment by the earlier

of: the date on which the donor files his or her individual federal income tax return for the year

of the contribution; or the due date (including extensions) of the return. A charity may use Form

1098-C as the acknowledgment or provide its own statement that includes the information described

above. If the charity uses Form 1098-C, only provide Copy C to the donor and be sure to check

the box that states that the donor may not claim a deduction of more than $500. The charity

should not file Copy A with the IRS. A charity can provide either a paper copy of the acknowledg ment to the donor, or an electronic acknowledgment, such as an email addressed to the donor.

,

Form 990 Series (Annual Information Return)

and the e-Postcard (Annual Electronic Notice),

Most charities must file an annual information return in the Form 990 series (990, 990-EZ, or

990-PF, with required schedules), disclosing information about the charity’s revenue, expenses,

activities, and financial position. Most small charities that are not required to file Form 990 or

990-EZ, must file an annual electronic notice known as the e-Postcard or Form 990N. See IRS

Publication 557, Tax Exempt Status for Your Organization, the instructions to the annual informa tion returns and the Charities and Non-Profits page of IRS.gov for further information.

Form 1098-C,

The charity must file Copy A of Form 1098-C with the IRS to report the information contained in

a contemporaneous written acknowledgment for a vehicle contribution with a claimed value of

more than $500. Form 1098-C is due by February 28 (March 31 if filing electronically) of the year

following the year in which the charity provides the acknowledgment to the donor.

7

Filing Form 1098-C does not relieve the charity of its obligation to report information about the

disposition of a donated vehicle on Form 8282, Donee Information Return . For more information,

see Forms 8282 and 8283 below.

If the charity uses Form 1098-C as the acknowledgment for a vehicle contribution deduction

of $500 or less, only provide Copy C to the donor and be sure to check the box that states that

the donor may not claim a deduction of more than $500. The charity should not file Copy A

with the IRS.

Forms 8282 and 8283,

A donor must file Form 8283, Noncash Charitable Contributions, to report information about

noncash charitable contributions if deductions for all noncash gifts during the year exceed $500.

If the contribution deduction is over $5,000, the donor must complete Section B of Form 8283,

and an authorized official of the charity must complete a portion of the form and sign it. The

donor must give the charity a copy of Section B. A charity required to sign Form 8283 for receipt

of a vehicle must file Form 8282, Donee Information Return, if it sells or otherwise disposes of the

vehicle within three years after the date it received the vehicle. This form must be filed within 125

days after the charity disposes of the vehicle. This form requires the charity to identify the donor,

the charity, and the amount the charity received upon disposition of the vehicle. The charity must

give the donor a copy of the completed Form 8282.

Written Statements Disclosing Quid Pro Quo Contributions,

If a charity provides goods or services in exchange for property valued at over $75, it must

provide the donor a written statement. See Publication 1771, Charitable Contributions –

Substantiation and Disclosure Requirements, for more information about written statements

disclosing quid pro quo contributions.

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Charities and their fundraisers are subject to state law requirements relating to titling of vehicles

and transfers of title. Generally, state charity officials recommend that the donor take responsibil ity for transfer of title to ensure termination of liability for the vehicle. In most states, this involves

filing a form with the state motor vehicle department, which states that the vehicle has been

donated. Before donating the vehicle, the donor should remove the license plates, unless state

law requires otherwise. This will help avoid any liability problems after the vehicle is transferred.

8

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State Charity Official Assistance,

Before starting a vehicle donation program, check out your state requirements. Charities that

solicit contributions are often required to register with state officials, such as the state attorney

general or the secretary of state. Some state charity officials provide information about paid

fundraisers on their Web site. Contact your state charity official if you have a concern or complaint

that a charity is not complying with state laws.

A listing of state charity offices is available through the National Association of State Charity

Officials at www.nasconet.org. A listing of state attorneys general is available through the National

Association of Attorneys General at www.naag.org.

IRS Assistance,

The IRS offers help that is accessible online, via mail, by telephone, and at IRS walk-in offices in

many areas of the country. IRS forms and publications can be downloaded from the Internet and

ordered by telephone.

Specialized Assistance for Tax-Exempt Organizations,

www.irs.gov/Charities-&-Non-Profits,

Subscribe to the EO Update, an electronic newsletter

with information for tax-exempt organizations and tax

practitioners who represent them.

www.stayexempt.irs.gov,

Web based training,

IRS tax forms and publications related to donations include:

Form 1098-C, Contributions of Motor Vehicles, Boats,

and Airplanes, ,

Form 8282 , Donee Information Return,,

Form 8283, Noncash Charitable Contributions,,

Publication 526, Charitable Contributions, ,

Publication 561, Determining the Value of Donated Property,

Publication 1771, Charitable Contributions – Substantiation

and Disclosure Requirements, ,

Publication 4303, A Donor’s Guide to Vehicle Donations,

EO Customer Service,

(877) 829-5500 (toll-free),

Internal Revenue Service,

TE/GE,

P.O. Box 2508,

Cincinnati, OH 45201,

General IRS Assistance on the

latest tax laws, forms and publi cations, and filing information:

www.irs.gov,

Federal tax questions, (800) 829-1040,

Small business federal tax questions, (800) 829-4933,

IRS tax forms and publications, (800) 829-3676,

Publication 4302 (Rev. 1-2015) Catalog Number 38161E Department of the Treasury Internal Revenue Service www.irs.gov