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Fuel Allowance
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We are a municipality and have fuel allowances for our management team. An issue has been brought up about this. Most of our managers use their city owned and provided vehicles for leisure and recreat
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Forums » Topic Forums » Benefits & Compensation » Fuel Allowance
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Fuel Allowance
posted at 6/28/2007 3:03 PM EDT
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Posts: 36
First: 6/1/2006 Last: 8/22/2011 |
We are a municipality and have fuel allowances for our management team. An issue has been brought up about this. Most of our managers use their city owned and provided vehicles for leisure and recreational use, not just business. I.e. pulling boats and such.
The question has been brought up: is there any tax owed on fuel used for recreational use. I know this is an odd question. Purchases made by the city are tax exempt. But it is curious that if much of this fuel is used for recreation does that open the door for any questions such as that of tax on the fuel? HR of course has been consulted but discussing any problem with his use of city vehicle for recreation simply does not make him happy. We just do not need our employees finding errors like this before we do. |
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Fuel Allowance
posted at 6/30/2007 12:34 AM EDT
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Posts: 36
First: 6/1/2006 Last: 8/22/2011 |
Wow! If someone could tell me where that is found it would help alot. That could prevent many future problems for us but I need to substantiate my facts or they will be dismissed. I too will search for it. Thanks. |
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Fuel Allowance
posted at 6/30/2007 4:42 AM EDT
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Posts: 3870
First: 2/12/2002 Last: 11/2/2009 |
Here you go. Straight from the IRS website. I'd guess that your employees have some tax return amendments to file.
01 If an employer provides an employee with a vehicle that is available to the employee for personal use, the value of the personal use must generally be included in the employees income and wages. Internal Revenue Code § 61; Treas. Reg. § 1.61-21. .02 For employer-provided passenger automobiles (including trucks and vans) made available to employees for personal use that meet the requirements of section 1.61-21(e)(1) of the regulations, generally the value of the personal use may be determined under the vehicle cents-per-mile valuation rule of section 1.61-21(e). However, regulations section 1.61-21(e)(1)(iii)(A) provides that for a passenger automobile first made available after 1988 to any employee of the employer for personal use, the value of the personal use may not be determined under the vehicle cents-per-mile valuation rule for a calendar year if the fair market value of the passenger automobile (determined pursuant to regulations section 1.61-21(d)(5)(i) through (iv)) on the first date the passenger automobile is made available to the employee exceeds a specified dollar limit. .03 For employer-provided vehicles available to employees for personal use for an entire year, generally the value of the personal use may be determined under the automobile lease valuation rule of section 1.61-21(d) of the regulations. Under this valuation rule, the value of the personal use is the Annual Lease Value. Provided the requirements of regulations section 1.61-21(d)(5)(v) are met, an employer with a fleet of 20 or more automobiles may use a fleet-average value for purposes of calculating the Annual Lease Values of the automobiles in the employers fleet. The fleet-average value is the average of the fair market values of all the automobiles in the fleet. However, section 1.61-21(d)(5)(v)(D) of the regulations provides that for an automobile first made available after 1988 to an employee of the employer for personal use, the value of the personal use may not be determined under the fleet-average valuation rule for a calendar year if the fair market value of the automobile (determined pursuant to regulations section 1.61-21(d)(5)(i) through (v)) on the first date the passenger automobile is made available to the employee exceeds a specified dollar limit. .04 The maximum passenger automobile values for applying the vehicle cents-per-mile and the fleet-average value rules reflect the automobile price inflation adjustment of Code section 280F(d)(7). The method of calculating this price inflation amount for automobiles other than trucks and vans uses the new car component of the Consumer Price Index (CPI) automobile component. When calculating this price inflation adjustment for trucks and vans, the new trucks component of the CPI is used. This results in somewhat higher maximum values for trucks and vans. This change reflects the higher rate of price inflation that trucks and vans have been subject to since 1988, and is consistent with the change announced in Rev. Proc. 2003-75, 2003-2 C.B. 1018, for purposes of calculating depreciation deductions. See also Rev. Proc. 2004-20, 2004-1 C.B. 642, and Rev. Proc. 2005-13, 2005-12 I.R.B. 759. For purposes of this revenue procedure, the term trucks and vans refers to passenger automobiles that are built on a truck chassis, including minivans and sport utility vehicles (SUVs) that are built on a truck chassis. |
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Fuel Allowance
posted at 7/1/2007 2:34 AM EDT
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Posts: 36
First: 6/1/2006 Last: 8/22/2011 |
Thanks,
You are correct I think on return amendments. Now I just need to determine how the tax exempt status of the municipality relates to the tax status of the employee or if it does at all. Then I can get to work on damage control. Thanks again. Any tips of the tax exempt thing would be appreciated too. Thanks all. |
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Fuel Allowance
posted at 7/2/2007 4:40 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Publication 15B by the IRS spells out the fringe benefit calculations for company-provided vehicles that are used for personal use. I don't know of any exemption of those rules for government employees, but I would consult with a tax accountant/attorney to make sure.
rr |
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Fuel Allowance
posted at 6/12/2009 5:31 AM EDT
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Posts: 1
First: 6/12/2009 Last: 6/12/2009 |
i think they made some exemption for fuel taxes..
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