Dear Commissioner Everson:
In November 2003, GAO issued a report finding that proceeds received by charities withvehicles donation programs were significantly less than deductions taxpayers were reporting on theirtax returns. It is estimated that, annually, vehicle donation deductions lower taxpayers' income taxliability by $654 million. A charity is required to file a Donee Information Return (Form 8282) withthe IRS if the charity receives donated property with a value in excess of $5,000 and the charitydisposes of such property within two years from the date the property was received. According tothe GAO report, the IRS estimates that on average about 20,000 Form 8282s are received annuallyfor all sorts of in-kind donations, and that 4,000 to 5,000 tax returns are reviewed to determinewhether they have audit potential. Thirty to forty percent of these surveyed returns are referred tothe field for audit. According to GAO's analysis of the IRS audit data, none of these referred returnswere actually audited during the years 2001 and 2002.
We are concerned that charitable contributions of various types of property may produce farmore in the way of tax deductions for taxpayers than cash proceeds for charities. We request thatyou provide the Finance Committee with a report on what action IRS is taking with regard to thebacklog of Forms 8282 to ensure that the appropriate fair market value is being used by taxpayersin computing their charitable deductions. We are also requesting that the IRS provide the Committeewith the first two hundred Form 8282s and (corresponding Form 8283s) received by the IRS thatwere referred to the field for audit during the year 2002. In addition, we are requesting all Forms8282s and 8283s for the most recent year with respect to the top ten corporate contributors of in-kindproperty as determined by amounts claimed as deductions. Please submit the report and Forms nolater than 30 days from the date of this letter.
We recognize that some of the material requested is protected by section 6103. Please submita set of Forms pursuant to section 6103 and another set of Forms redacting the section 6103information. Pursuant to the authority of IRC section 6103(f)(4), the Chairman designates that (named staff) may have access to section 6103 information under this letter.
This is a Congressional record and is entrusted to the IRS for the sole purpose of obtainingconfidential information pursuant to section 6103(f) of the IRC.
Sincerely yours,
Max Baucus
Ranking Member
Charles E. Grassley Member Chairman
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Source: Ranking Member’s News
