It is a great resource to have hundreds of agencies to check with on how you address issues. As I expected, no agency responding charges a fee in addition to the Taxable Compensation Reporting. As included in one suggestion I also rely on the GFOA book on taxable fringe benefits. When I read it AGAIN, I think Zane's definition comes closest to the letter of the law. In order to use the $3 per day commute charge it looks like you must also be able to say: "For bona fide noncompensatory business reasons, the employee is required to use the vehicle to commute to and from work." Otherwise as noted by Zane there may be a requirement to use the lease method. Good Luck All and Thanks to those who responded. Paul Rankin Chief Financial Officer East Bay Regional Parks District Responses Follow: ***************************************************************** CITY OF WHITTIER RESPONSE We do report the same way on the W-2s. At year end, we ask employees with a city vehicle to let us know of the no. of miles or the no. of days they use the vehicle for commute purpose. we do not check if the information is accurate , other that a reasonableness cursory review. Recently I found out that we have some employees who left the city during the year, and traditionally we ask them to report to us at year end. That works out fine for long-term employees, but for those hires after 4/96, the city ended up paying Medicare. So I now make the employee report at termination. Clara K. Wong City Controller City of Whittier ********************************************************************************** Response From Town of Truckee The Town of Truckee provides a vehicle for commuting only to those employees on standby. They are eligible to be on standby if they can respond to the scene within 20 minutes (not public safety - animal control and public works only). We limit the personal use of the vehicle to commuting only and use the guidelines listed in the GFOA's publication Taxation of Employee Fringe Benefits: A Guide for State and Local Employers. They have several options listed. The dollar amount is added as Other Pay and also deducted. That way the benefit is taxable without dollars being added to the net pay. Let me know if you need further clarification. Jill Olsen Administrative Services Director Town of Truckee ************************************************************************ Response From City of Tracy Paul, I know a number of cities/districts use the $3 rule but I think they are taking liberty with its applicability. The $3 rate can only be used if the employer provided vehicle is provided because "the employee must commute to or from work in that vehicle for bona fide noncompensatory business reasons (e.g. unsafe conditions at the time the employee commutes)". Can you substantiate this is why they have a vehicle? We charge the full lease rate valuation method to compute taxable benefit for those having a vehicle. This includes our City Manager, Public Works Director, Dev. & Engineering Director, and Parks and Community Services Director, and City Engineer. They all have cars that they can commute to work in. The City Manager lives in town but his contract permits his total personal use of the vehicle. Some of the directors live as far away as Davis, Hayward and Turlock and commute to Tracy. They also use City paid gasoline. Under the lease valuation method, the more expensive the car and the more personal miles (including commute), the more you are going to be taxed. Believe me this much greater than $3 per day. Two other department heads (i.e. me) receive a car allowance of $350 per month. This is taxable so why should someone having full use of a city vehicle and city paid gasoline only be valued at $3 per day (about $60 per month). Police and Fire Chiefs have unmarked cars to commute in but the IRS does permit this to be tax exempt if the cars have been provided to them to facilitate their quick response to an emergency situation. We have letters on file from the City Manager stating this reason for providing the vehicle. All public safety marked vehicles are exempt from taxation. Hope this helps. Zane Johnston, Finance Director City of Tracy *************************************************************************** Response From Dublin San Ramon Services District It sounds contradictory that the employee must pay for using a District vehicle AND have the $3.00 per day added to taxable income at the end of the year. That must be unique?? I will be interested in the results of what others are doing. Barry Whitley Dublin San Ramon Services District ****************************************************************** Response From City of Danville Am I missing something? If you charge "rent" for the vehicle, the employee has paid for the vehicle. If you then tax them the $3/day IRS amount aren't they being taxed on an imputed benefit they actually paid for? Danville lets maintenance supervisors, who must respond to an emergency call, commute in Town cars and taxes them at the $3 per day rate. There is no limit on commute distance but I think it would be a good policy to add. Elizabeth H. Hudson Finance Director/Treasurer ****************************************************************
