Page 176 - Washington Nonprofit Handbook 2018 Edition

sale, and state that the donor’s deduction may not exceed the gross sale proceeds.
See Code section 170(f)(12)(B)(iii). If the donee intends to use or improve the
vehicle, the acknowledgment must include a certification and detailed description
of the intended use or improvement, the intended duration of such a use, and a
certification that the vehicle will not be sold before the use or improvement is
completed. See Code section 170(f)(12)(B)(iv). If the donee intends to sell or give
the vehicle to a needy person at a price significantly below fair market value in
direct furtherance of a charitable purpose, the acknowledgment must also certify
that the donee will make such a sale or gift and that the sale or gift will directly
further the organization’s charitable purpose of relieving poor and distressed or
underprivileged persons in need of means of transportation. See Notice 2005-44,

2005-25 I.R.B. 1287, section 3.03(4).

An acknowledgment must be “contemporaneous.” A donee organization
satisfies this requirement by providing an acknowledgment within 30 days after its
sells a vehicle at fair market value or, if the acknowledgment certifies an intended
use, improvement, or sale or gift to a needy person, within 30 days after the
contribution is made. See Code section 170(f)(12)(C). A donee organization must
provide the information contained in an acknowledgment to the IRS. See Code
section 170(f)(12)(D). An organization may provide an acknowledgment in any
reasonable manner. See Notice 2005-44, 2005-25 I.R.B. 1287, section 8.03. A donee
must report contributions of qualified vehicles to the IRS on Form 1098-C and may
use copies of this form as contemporaneous written acknowledgments to donors.

(vii) Penalties for False or Fraudulent Acknowledgments

The IRS may impose a penalty on a donee organization required to furnish a
contemporaneous written acknowledgment to a donor of a qualified vehicle if the

organization knowingly furnishes a false or fraudulent acknowledgment or
knowingly fails to furnish such acknowledgment in the manner, at the time, and
showing the information required by the foregoing rules. See Code section 6720.
For each vehicle that the donee organization sells without significant intervening
use or material improvement, the penalty for a false or fraudulent
acknowledgment, no acknowledgment, or a noncompliant acknowledgment is the
greater of the gross sale proceeds or 35% of the sales price stated in the
acknowledgment. See Code section 6720(1). If a donee organization does not so
sell a vehicle, the penalty for a false or fraudulent acknowledgment is the greater of
35% of the claimed value of the vehicle or $5,000. See Code section 6720(2).

WASHINGTON NONPROFIT HANDBOOK -165- 2018