IRS doing poor job of policing non-cash donations.(ENFORCEMENT)(Brief Article)

Kiplinger Tax Letter, The, April, 2004

IRS is doing a poor job of policing non-cash donations to charity. According to the General Accounting Office, the Service had leads on thousands of taxpayers suspected of inflating the value of vehicles and other assets given to charity. But none of the returns were audited. The IRS determined that other audit targets had higher revenue potential, even though all the leads on donations involved gifts of more than $5,000.

Congress will make enforcement easier by limiting tax deductions for donations of cars, boats and planes to the amount charities receive on the sale of the assets. This way, IRS can easily identify cheaters through document matching, avoiding costly, labor-intensive audits.