Taxable Personal Use of University Vehicles

Summary

The value of the personal use by an employee of a university vehicle is taxable.  These guidelines establish the basic procedure for reporting and calculating the taxable benefit of personal use of university-provided vehicles.  Failure to properly substantiate the business use of the vehicle may result in the full value being reported as taxable income.

Procedure

A.   Definitions

1.    Business Use

Business use of a university vehicle includes (but is not limited to): traveling between the employee’s regular place of work and another regular place of work; traveling between the employee’s regular place of work and a temporary work location; and traveling between the employee’s home and a temporary work location.

2.    Personal Use

Personal use of a university vehicle includes (but is not limited to): commuting (i.e., traveling between the employee’s home and his/her regular place(s) of work, but see, paragraph A(3),below); running a personal errand from his/her work location; and using the vehicle on weekends, vacations, or other days off for other than official university business.

3.    Commuting

a.    Generally

Commuting is generally defined as an employee’s traveling between home and his/her regular place of work—even if the employee works during the commute (e.g. making business phone calls).

b.    Multiple “Regular” Work Locations

If an employee regularly works at two or more locations, traveling between the two locations is a business use of the vehicle. However, traveling between the employee's home and any of his/her regular work locations is commuting.

c.    Temporary Work Location

Traveling between home and a temporary work location is a business use (it is not commuting); provided that the temporary work location is realistically expected to last for one year or less (and actually lasts for one year or less).

d.    Public Safety Vehicles

For public safety officials who are provided University vehicles (including unmarked vehicles) in support of law-enforcement functions (e.g. being able to report directly from home to an emergency situation), traveling between home and a regular place of work is a business use.[1] 

B.    Substantiating Business Use

1.    Generally

When an employee is permitted both business and personal use of an employer-provided vehicle, the Internal Revenue Service (IRS) requires the employer to maintain records to substantiate the employee’s business use of the vehicle.  The balance is deemed to be personal use.

2.    Reporting Period

The reporting period for personal use of university vehicles begins on November 1 and ends on October 31.

3.    Recordkeeping

Employees who use university-provided vehicles should maintain records of the business use of the vehicle, including (for each trip):

•       Date

•       From

•       To

•       Total miles

•       Business Purpose

•       Driver Initials

See, Form HR-4A, Mileage Log for University-Provided Vehicles.

The records kept on business use can be used to offset the total miles to determine the personal use.

4.    Fuel

Employees who are issued University-provided vehicles should use university-provided fuel (e.g. filling up at campus fuel pumps, purchasing fuel with a University credit card, or seeking reimbursement as a business expense).   The taxable benefit of University-provided fuel will be calculated at 5.5 cents/personal mile.

C.    Reporting Personal Use

In November of each year, each employee who is permitted personal use of a University-provided vehicle must complete parts I-III and sign Form HR-4, Personal Use of University-Provided Vehicle.  The Form is due in the University Human Resources Department no later than November 30.

The Human Resources Department will complete part IV by calculating the taxable benefit according to the Lease Value Rule[2], including the taxable employer-provided fuel, if any, and notify the employee and the appropriate chief human resources officer.

The chief human resources officer will coordinate with appropriate procurement or other personnel to ensure that each university-provided vehicle is accounted for.

D.   Withholding

The chief human resources officer will ensure that the calculated taxable benefit is added to the employee’s taxable gross wages for the reporting year.

[1] See, www.irs.gov/govt/fslg/article/0,,id=112717,00.html#2

[2] See, www.irs.gov/publications/p15b/ar02.html#en_US_publink1000193786.