For donated cars, trucks, vans, boats and airplanes
Vehicle donation acknowledgment letters: the $500 line, the 30-day clock and Form 1098-C
A donated car is the one non-cash gift with its own acknowledgment statute. Up to a claimed value of $500 it is an ordinary in-kind gift: describe it, say no goods or services, state no value. Above $500, Section 170(f)(12) takes over: the donor needs a letter (or Form 1098-C) with their taxpayer identification number, the VIN, and either the gross proceeds of your sale or your certification that you will use, improve or give away the vehicle — delivered within 30 days. Four templates below cover the four situations, each with the Publication 1771 elements and the 1098-C content.
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Which letter, what the donor deducts, and when it is due
| What happens to the vehicle | Donor's deduction | Your acknowledgment | Due |
|---|---|---|---|
| Donor will claim $500 or less (any outcome) | Lesser of fair market value or $500 | Ordinary in-kind letter: describe, no value, no-goods statement (template 4) | Before the donor files |
| You sell it, no intervening use — proceeds over $500 | Gross proceeds of your sale | Template 1: donor TIN, VIN, date of sale, arm's-length certification, gross proceeds, deduction-limited statement; file 1098-C Copy A | 30 days after the sale |
| You sell it for $500 or less | Lesser of FMV or $500 | Template 1 with the under-$500 paragraph; no 1098-C required | 30 days after the sale |
| You keep it for significant program use or a material improvement | Fair market value (private-party value); appraisal + 8283 Section B above $5,000 | Template 2: certification of intended use/improvement and duration, no transfer before completion | 30 days after the contribution |
| You give it, or sell it well below value, to a needy individual | Fair market value | Template 3: certification of the transfer and the charitable purpose | 30 days after the contribution |
| Sold at auction, buyer happens to be needy | Gross proceeds | Template 1 — auction sales never qualify as needy-individual transfers | 30 days after the sale |
| Donor received something back (gift card, tickets) | Reduced by the value of what they got | Add the goods-or-services sentence with the value (Form 1098-C boxes 6a–6c) | Same as above |
| Dealer donates a car from inventory | Inventory rules, not §170(f)(12) | Ordinary in-kind letter describing the vehicle | Before the donor files |
| Boat or airplane | Same rules as a car | Same templates; use the hull ID / FAA N-number in place of the VIN | Same |
The practical pattern: hand the donor the drop-off receipt (template 4) the day you take the keys, then send template 1, 2 or 3 within 30 days of the sale or of the gift. Never state a value, and never certify intervening use for a vehicle you intend to sell.
Vehicle sold — Form 1098-C style acknowledgment
The letter most charities send: donor name and TIN, VIN and odometer, date of contribution, date of sale, the arm's-length certification, gross proceeds and the statement that the deduction may not exceed them. Includes the alternative paragraph for a sale at $500 or less.
[Organization name] [Mailing address] EIN [00-0000000] [Date — no later than 30 days after the sale] Dear [Donor name], Thank you for donating your [2014 Honda Odyssey], vehicle identification number [VIN], odometer reading [miles], to [Organization name] on [date of contribution]. This letter is your contemporaneous written acknowledgment under Internal Revenue Code Section 170(f)(12). Please attach it (or the enclosed Form 1098-C, Copy B) to your federal income tax return if you claim a deduction of more than $500. Donor name: [Donor name] Donor taxpayer identification number: [XXX-XX-####] [Organization name] sold the vehicle on [date of sale] in an arm's-length transaction between unrelated parties. The gross proceeds from the sale were $[2,150.00]. Under Section 170(f)(12), the amount of your charitable contribution deduction may not exceed the gross proceeds from the sale. No goods or services were provided in exchange for this contribution. [If any were: In exchange for the vehicle you received (description) with an estimated fair market value of $(value); the amount of your contribution that is deductible is limited to the excess of the vehicle's value over that amount.] [If gross proceeds were $500 or less, replace the proceeds paragraph with:] The vehicle was sold for $[300.00]. Because the sale price was $500 or less, you may deduct the lesser of the vehicle's fair market value on the date of contribution or $500. No Form 1098-C is required at that level; this letter serves as your written acknowledgment. [Organization name] is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code. We will file Copy A of Form 1098-C with the IRS. Please keep this letter with your tax records. With gratitude, [Signer name] [Title]
Vehicle kept for program use or materially improved
When you will actually use the vehicle in your program for a substantial period, or make major repairs before any transfer, the donor may deduct fair market value. The letter certifies the intended use and its duration and promises no transfer before completion.
[Organization name] [Mailing address] EIN [00-0000000] [Date — no later than 30 days after the contribution] Dear [Donor name], Thank you for donating your [2016 Ford Transit van], vehicle identification number [VIN], odometer reading [miles], received by [Organization name] on [date of contribution]. This letter is your contemporaneous written acknowledgment under Internal Revenue Code Section 170(f)(12) and contains the information shown on Form 1098-C. Donor name: [Donor name] Donor taxpayer identification number: [XXX-XX-####] [Organization name] certifies that it intends to make significant intervening use of the vehicle: [the van will be used to deliver meals to homebound seniors five days a week for at least the next twelve months, an estimated 12,000 miles]. [OR, for a material improvement: (Organization name) intends to make a material improvement to the vehicle before any transfer: (rebuild the transmission and replace the brake system), work that is more than cleaning, minor repairs or routine maintenance.] [Organization name] further certifies that the vehicle will not be transferred in exchange for money, other property or services before completion of that use [or improvement]. Because of this certification, your deduction is generally the vehicle's fair market value on the date of contribution, determined by you — for example the private-party value for a vehicle of the same make, model, year, mileage and condition in a used-vehicle pricing guide (IRS Publications 526 and 4303). If you claim more than $5,000, you will also need a qualified appraisal and Form 8283, Section B, which we will sign as donee. No goods or services were provided in exchange for this contribution. [Organization name] is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code. We will file Copy A of Form 1098-C with the IRS. Please keep this letter with your tax records. With gratitude, [Signer name] [Title]
Vehicle given or sold below value to a needy individual
For transportation-assistance programs: certifies that the vehicle goes to a needy individual in direct furtherance of your charitable purpose, so the donor may deduct fair market value. Not available for auction or public sales.
[Organization name] [Mailing address] EIN [00-0000000] [Date — no later than 30 days after the contribution] Dear [Donor name], Thank you for donating your [2011 Toyota Corolla], vehicle identification number [VIN], odometer reading [miles], received by [Organization name] on [date of contribution]. This letter is your contemporaneous written acknowledgment under Internal Revenue Code Section 170(f)(12) and contains the information shown on Form 1098-C. Donor name: [Donor name] Donor taxpayer identification number: [XXX-XX-####] [Organization name] certifies that it intends to [give the vehicle / sell the vehicle for $(price), a price significantly below fair market value,] to a needy individual, and that the transfer is in direct furtherance of our charitable purpose of [helping low-income families obtain reliable transportation to work]. The vehicle will not be sold at auction or to the general public. Because of this certification, your deduction is generally the vehicle's fair market value on the date of contribution, determined by you (IRS Publications 526 and 4303). A deduction above $5,000 also requires a qualified appraisal and Form 8283, Section B. No goods or services were provided in exchange for this contribution. [Organization name] is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code. We will file Copy A of Form 1098-C with the IRS. Please keep this letter with your tax records. With gratitude, [Signer name] [Title]
Drop-off receipt (day of hand-over)
The receipt you hand the donor with the keys: describes the vehicle and title, states no goods or services and no value, explains that a 1098-C follows within 30 days of sale if proceeds exceed $500, and reminds the donor about plates and release of liability. Doubles as the full acknowledgment for claims of $500 or less.
[Organization name] [Mailing address] EIN [00-0000000] [Date] Dear [Donor name], This confirms that [Organization name] received your [2009 Chevrolet Silverado] pickup truck, vehicle identification number [VIN], odometer reading [miles], on [date], together with the signed title. Thank you. No goods or services were provided in exchange for this contribution. [Organization name] does not assign a value to donated property; the value of the vehicle is determined by you. What happens next: if we sell the vehicle and you intend to claim a deduction of more than $500, we will send you a second acknowledgment (Form 1098-C) within 30 days of the sale stating the gross proceeds; your deduction is generally limited to that amount. If the vehicle sells for $500 or less, this receipt is your acknowledgment and you may deduct the lesser of fair market value or $500. If we keep the vehicle for our program, we will tell you within 30 days of today's date. Please remember to [remove your license plates / file a release of liability with the (State) DMV] so you are not responsible for the vehicle after today. [Organization name] is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code. Please keep this receipt with your tax records. With gratitude, [Signer name] [Title]
Vehicle rows in the generator
Paste vehicle gifts as in-kind rows: Name, Date and a Description such as "2014 Honda Odyssey, VIN …, 142,000 miles", with no Amount. The generator writes the describe-don't-value letter that serves as the drop-off receipt and the full acknowledgment for claims of $500 or less, and it adds a WARNING on every car, truck, boat or airplane row: if the donor will claim more than $500, the separate Section 170(f)(12) acknowledgment — donor TIN, VIN, gross proceeds or intended-use certification — is due within 30 days of the sale or gift, and Form 1098-C Copy A must be filed with the IRS. Use the templates above for that second letter.
Vehicle donation questions
What counts as a "qualified vehicle" for these rules?
A motor vehicle manufactured primarily for use on public streets, roads and highways; a boat; or an airplane (IRC §170(f)(12)(E)). Cars, trucks, vans, SUVs, motorcycles and motorhomes qualify, as do sailboats, powerboats and aircraft. Property the donor holds for sale to customers — a dealer's inventory — is not a qualified vehicle. Trailers, tractors and golf carts are ordinary non-cash gifts under the in-kind rules.
When is an ordinary in-kind letter enough, and when do we need Form 1098-C?
It turns on the value the donor will claim. At $500 or less, the normal written acknowledgment applies: describe the vehicle, state no goods or services, give no value. If the donor will claim more than $500, Section 170(f)(12) requires a special acknowledgment with the donor's name and taxpayer identification number, the VIN, and either the sale information (date, arm's-length certification, gross proceeds, deduction-may-not-exceed-proceeds statement) or a certification of your intended use. Form 1098-C Copies B and C, or a letter with the same content, satisfies it. Because you rarely know what the donor will claim, most charities send the drop-off receipt at hand-over and the 1098-C letter after the sale whenever proceeds exceed $500.
What is the deadline?
The acknowledgment is contemporaneous only if the donor has it within 30 days of the sale (when you sell without intervening use) or within 30 days of the contribution (when you certify intervening use, material improvement or a transfer to a needy individual). Miss it and the donor is limited to $500; knowingly failing to furnish it exposes you to the §6720 penalty.
Do we have to file anything with the IRS ourselves?
Yes. For every vehicle acknowledgment you issue under §170(f)(12), file Form 1098-C Copy A with the IRS by February 28 of the following year (March 31 if filed electronically), with Form 1096 if on paper. If you file ten or more information returns of all types in a year, you must file electronically. Do not file 1098-C for vehicles whose claimed value is $500 or less.
Why does the letter need the donor's Social Security number?
Because Form 1098-C is an information return matched to the donor's return, and a §170(f)(12) acknowledgment must include the donor's TIN. Collect it on a paper or secure form at hand-over, never by plain email, store it like payroll data, and shred the intake form after filing. The letter itself goes by mail or a secure portal, not in an email body.
The car sold at auction for $350. What does the donor get?
A sale for $500 or less means the donor may deduct the lesser of the vehicle's fair market value on the date of the gift or $500 — without a 1098-C. Send a letter that describes the vehicle, states the sale price and the $500 rule (the optional paragraph in template 1), and includes the no-goods statement. Many charities send a 1098-C anyway with box 7 checked; that is allowed but not required.
What are "significant intervening use" and "material improvement"?
Intervening use means you actually use the vehicle to substantially further your regularly conducted activities, and the use is significant — Notice 2005-44 gives the example of driving a vehicle 10,000 miles over a year delivering meals, or daily use for a year. Material improvement means major repairs or improvements that increase value — rebuilding an engine, replacing a transmission — not cleaning, minor repairs, painting, rust removal, routine maintenance or installing a radio. Using the vehicle for a few weeks before selling it does not qualify, and the IRS reads the exception narrowly.
We give cars to families in our job-training program. Is that the needy-individual exception?
Yes, if the gift or below-market sale to the individual is in direct furtherance of your charitable purpose of relieving the poor or distressed or underprivileged who need transportation. Your acknowledgment certifies that intent, and the donor may then deduct fair market value. A sale at auction or to the public at a bargain price never qualifies, even if a needy person happens to be the buyer, and the IRS says so expressly in the 1098-C instructions.
We use a vehicle donation processor. Who sends the acknowledgment?
You are still the donee, and the acknowledgment must come from you or your agent on your behalf — the processor usually issues the 1098-C in your name, under a written agency agreement. Read that agreement: Publication 4302 warns that if the for-profit company is not acting as your agent and merely sends you a flat fee or a percentage, the donor's gift may not be a gift to your organization at all, and the acknowledgment the company issues may be worthless to the donor. Keep copies of every 1098-C issued in your name.
Can we tell the donor what the car is worth?
No. You describe the vehicle and, after a sale, state the gross proceeds. The donor determines fair market value when they are entitled to it (intervening use, improvement, needy-individual transfer, or a sale under $500): generally the private-party price in a used-vehicle pricing guide for a vehicle of the same make, model, year, mileage, options and condition — not dealer retail (Publication 4303). Above $5,000 the donor also needs a qualified appraisal and your signature on Form 8283, Section B; if you then sell or dispose of the vehicle within three years, you file Form 8282.
What is the penalty for getting the acknowledgment wrong?
Section 6720 applies when a charity knowingly furnishes a false or fraudulent vehicle acknowledgment or knowingly fails to furnish one properly. For a vehicle you sold, the penalty is the greater of the gross proceeds or 37% (the top §1 rate) of the sales price stated on the acknowledgment; for a vehicle you certified you would keep or transfer to a needy person, the greater of $5,000 or 37% of the claimed value. The word is knowingly — honest errors are corrected with an amended 1098-C — but a program that routinely certifies "intervening use" and then sells is exactly what the statute targets.
What should we do about the title and plates?
Have the donor sign the title over to your organization (not leave the buyer line blank — an open title leaves the donor liable for tickets and accidents), record the odometer reading, give the donor a dated receipt, and tell them to remove the plates and file the state's release of liability. Retitle the vehicle in your name before you sell it unless your state allows a charity to assign a title directly. Boats need the hull identification number and any trailer title; aircraft need the FAA registration transfer.
How do we lay out vehicle gifts for the generator?
Use the in-kind layout: Name, Date, Description ("2014 Honda Odyssey, VIN 5FNRL5H…, 142,000 miles"), no Amount. The generator writes the describe-don't-value letter — the drop-off receipt — and adds a WARNING that a vehicle, boat or airplane gift over $500 needs the separate §170(f)(12) acknowledgment within 30 days of sale, with the donor's TIN and gross proceeds, which this page's templates provide. Record the sale date and proceeds in Notes so your records match the 1098-C you file.
General information based on Internal Revenue Code §§170(f)(8), 170(f)(11), 170(f)(12) and 6720; Treas. Reg. §1.170A-13; Notice 2005-44; Form 1098-C and its instructions; Forms 8283 and 8282; and IRS Publications 526, 561, 1771, 4302 and 4303. Not legal, tax or accounting advice.