The rules for substantiating donations of cars changed drastically a few years ago. I explain them fully in chapter 8 of my 2009 Church & Clergy Tax Guide. There is a special IRS form that you must issue to the donor (Form 1098-C). You also are required to send a copy to the IRS.
These new substantiation requirements only apply to transfers of vehicles that qualify as a charitable contribution. In your case, it sounds like the donor is giving the car to the church with the stipulation that the church turn around and give the car to the needy person designated by the donor. This is not a charitable contribution since the donor is depriving the church of any meaningful control over the car. You should decline to receive the car under these circumstances, since the church’s temporary “ownership” will be illusory. Instead, encourage the donor (1) to give the car to the church with no strings attached, and subject to the church’s complete control regarding its use or disposition, or (2) give the car outright to the needy person.
