County vehicle fringe benefit to be taxed
Published 12:47 pm Wednesday, December 18, 2013
If you are lucky enough to be able to use a county vehicle for traveling to and from work, your payroll taxes will now increase to accommodate this benefit.
“In the spirit of Christmas, don’t kill the messenger,” said county attorney Wes Daughdrill who explained to the Board of Supervisors at Monday’s regular meeting that companies and county governments such as Jeff Davis County are being audited by the Internal Revenue Service.
“An IRS agent is making the rounds auditing every county going back three years,” said Daughdrill.
The issue of taxation of personal use of county vehicles was a topic of discussion at the recently-attended state supervisors convention where Jeff Davis County supervisors learned of the new tax. Elected officials are taxed differently and more harshly than non-elected. Some vehicles are exempt such as marked police and fire vehicles. The most common and simplest method of determining taxation for non-elected employees is to implement is the “Commuting Rule.”
Under this rule, the value of a vehicle provided to an employee is determined by multiplying each one-way commute (from home to work and from work to home) by $1.50 equaling $3.00 per day. County employees work 50 weeks per year, five days per week or 250 days per year. At $3.00 per day, that adds up to $750 annually.
Daughdrill gave an example. “If an employee makes $30,000 annually then you would add the $750 of income. He will not get the $750 in pay, but he will be taxed on that additional amount.”
Delta Computer Systems who handles payroll for the county will deduct the taxable fringe benefit.
For elected officials, the formula is more detailed involving the fair market value and lease value of the vehicle and how long a commute is to the supervisor’s work site. Questions arose as to what constitutes a worksite.
In an example, Daughdrill described an estimated taxable income increase of potentially $2,226. “This is not additional income in anyone’s pocket. This amount is for tax purposes only.
Daughdrill explained there is more research needed on the tax “There a lot of way to skin a cat,” said Daughdrill. The taxation will be implemented in January 2014.