Released: August 21, 2006

New IRS donation deduction rules

Source: Associated Press

Donating an old toaster or television to a local charity won’t count as a tax deduction if it’s not in good condition. And those used undies and socks?

Any household item with little value likely won’t qualify for a deduction under new tax rules for charitable giving and receiving.

Many charitable organizations support the changes. Dave Barringer, vice president of member relations at Goodwill Industries International, said they will reinforce a common message: “This isn’t a place to dump trash.”

“Most people take that to heart,” Barringer said.

Goodwill receives more than 1 billion pounds of clothing each year, and about 5% must be discarded.

The Internal Revenue Service may deny deductions for donations of clothing or household items — furniture, appliances, linens, electronics and similar items — that aren’t in “good” condition.

“What is the definition of ‘good’ and ‘better’?” asked Maj. Todd Hawks, national public affairs secretary for The Salvation Army.

The new rules, which became law Thursday when President Bush signed a massive pension bill, ask the Treasury Department and IRS to define those terms.

Hawks said donors and charities would also be helped if the IRS issues a standardized evaluation guide, to let people know the acceptable range of value for commonly donated goods.

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