Turn in your old gas-guzzler, and the government will help you buy a more efficient car. That's the idea behind the "cash for clunkers" bill that President Obama signed yesterday. The government cuts pollution by taking emissions-belching cars off the road, we cut our nationwide intake of foreign oil, help revive the struggling auto industry - and you get a new car in the process. Sounds like a win for everyone, right?
Not everyone.
Kicking Tires reports, "Car-donation groups are keeping a wary eye on the Cash for Clunkers bill, fearful that it will dry up a key supply of used cars. The bill is adding insult to injury for these groups, as it comes on top of a painfully bad economy that has already slowed donations."
Under an IRS provision, individuals can receive a tax deduction in exchange for donating their car to many charitable organizations. Washington, D.C.'s Examiner explains, "Most of these programs will then sell your old car at auction." Some will restore the car and give it to a family in need of transportation. "The nonprofit organization will provide the donor with verification of the sale price to use toward a tax deduction."
The IRS, in a guidance letter explaining the rules for vehicle donations, notes that "Donors may claim a deduction of the vehicle's fair market value."
Marty Schloss, cofounder of CarsHelpingAmerica.org, tells Kicking Tires "I think [the bill] will have an impact. I think it will hurt." Tim Finnigan, who co-ordinates car donation programs for several charities, told KT "the economy is already playing a role in terms of donations, noting that business for him is off 15%-20% from previous years. With the Cash for Clunkers legislation, ‘if donations fall off to charities, it's just another kind of nail in the coffin for them,' he said."
Car shoppers might want to note, however, that if your old car doesn't qualify for the cash for clunkers program, you might still be able to get some value out of it through a donation. For details on whether your old car qualifies, see our Cash for Clunkers FAQ.
To keep up to date on the latest developments, check out our Cash for Clunkers news page, where we've gathered the latest cash for clunkers news and what it means for you all in one place. If you already know which car you want, you can contact local dealers here.
