|Action||Amend the NAP tax credit program regulation to make technical and substantive changes.|
|Comment Period||Ends 8/8/2007|
Neighborhood Assistance Program (NAP) and IRS Exceptions
We are writing today to request an extended public comment period to address a regulation that is being implemented by the Department of Social Services (DSS) for the Neighborhood Assistance Tax Credit program, or NAP credits. Its effective date is scheduled for September 1, 2007.
We use NAP credits to fulfill the purpose for which they were created. In fact, our program would not exist without these credits as incentives for our contributors. Over the past year, DSS has revised regulations for the NAP program. We have participated in commenting to DSS on these revised regulations, and we tried to make it clear what negative impacts would occur if certain actions were taken.
Now, however, it seems that we are at a stopping point where decisions to be made will severely impact our fundraising from the private sector for the Achievable Dream and other organizations that accept donations of new automobiles to auction as major fundraisers. Here is the problem: DSS has sent out a notice that includes an “Exception to IRS Standards” dealing with the value of merchandise to be sold, auctioned or raffled. The new regulations would read as follows:
C. The value of merchandise donated to be sold, auctioned or raffled is the lesser of the value determined for federal tax purposes using IRS regulations or the actual proceeds received by the approved organization.
Our annual Tennis Ball in November, which is the biggest source of private funds for our program, relies largely on the donation of new automobiles (not used) from car dealers who then receive tax credits based on the actual book value of the car (i.e. their actual cost). If these regulations are applied without consideration of the difference between new and used cars, and car dealers cannot recover credits for their actual cost of the vehicles donated, there will be no incentive for support of our program at the level we depend on.
All we ask is that we have a choice to follow IRS standards. We understand that DSS may have experienced problems in the past with other types of donations that have not fulfilled the intent of the NAP program, but why can’t those problems be addressed with better documentation from tax credit recipients, or certification of the process used to auction the vehicles?
We recognize the DSS staff as dedicated professionals with whom we work closely to achieve our shared goal to fulfill the intent of the NAP credit program. However, this is an action that must be reconsidered or revised if we are to be able to provide private sector support for state objectives. We would ask that an additional public comment period be provided so these problems can be more clearly defined and support the strong reasons for why this part of the regulation should be withdrawn or revised.
Neighborhood Assistance Program and Valuation of Donated Vehicles
We are writing to express our concerns about a regulation that is being implemented by the Department of Social Services (DSS) for the Neighborhood Assistance Tax Credit Program, or NAP credits.
Our new car dealer members make donations of new vehicles to community organizations that can use this program to provide a tax credit to the dealer in return for their donation. The credits are provided for the actual cost of the vehicle to the dealer. The vehicles are then often raffled off by the community organizations as a fundraiser.
Under the proposed regulation, these organizations would no longer be able to provide a credit for the dealers' actual cost, but rather would be limited to a credit for the proceeds it receives for the vehicle. If dealers cannot recover credits for their actual cost of the donated vehicles, there will be no incentive to support the many community organizations that rely upon these donations from dealers.
The regulation states that it is intended to ensure a fair valuation of donated items. In the case of new vehicles, a dealer's cost is readily verifiable through both the dealer and independent sources that provide this information to vehicle purchasers.
At the very least, this regulation should make a distinction between new vehicles, the cost of which can be easily verified, and used vehicles, the cost of which is more widely varied.
We ask that this part of the regulation be withdrawn or revised to reflect our stated concerns. Thank you.