Tax Law Change for 2006

Due to a provision contained in the Pension Protection Act of 2006, which the President is expected to sign on August 17, 2006, noncash donations of used clothing or household items made after the date the bill is signed must be in "good" condition to qualify for a deduction. Congress did not define "good" condition, and the IRS will be issuing guidance in the future.

Meanwhile, we advise that you deduct donations of used clothing or household items made after August 17, 2006 only if the organization intends to sell or use the donated items for its charitable purposes. In particular, if an item is heavily worn, don't assume that the organization will sell or use it. To be sure, ask the organization if it will be sold or used.