COMPTROLLER'S SEAL STATE OF CONNECTICUT
STATE OF CONNECTICUT
NANCY WYMAN
COMPTROLLER
OFFICE OF THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775
MARK OJAKIAN
DEPUTY COMPTROLLER

MEMORANDUM NO. 96-07

February 5, 1996

TO THE HEADS OF ALL STATE AGENCIES

Attention: Chief Administrative and Fiscal Officers,
Business Managers, and Payroll and Personnel .
Officers
Subject: Calculation of the Taxable Benefit of the
Non-Business Use of State-Provided Vehicles, Calendar
Year 1996
 

I. PURPOSE AND APPROACH

When a state employee commutes in or uses a state vehicle for personal business certain tax consequences result. The IRS views the personal use as a taxable benefit to the employee and has established guidelines on how to determine how much the dollar value of that benefit would be. In certain circumstances the State of Connecticut also charges for the personal use of state vehicles.

This memorandum is being issued to:

- notify agency heads and employees on methods to use in valuing the taxable benefit derived from non-business use of state- provided vehicles; and

- notify employees of changes in the rate used in the vehicle cents-per-mile method.

II. AUTHORITY

Federal Public Law 99-44, Internal Revenue Code (IRC), Section 61:

An employee may use a special valuation rule only if the employer uses that same rule. For the 1996 calendar year, the state will continue the use of the special valuation rules previously established.

III. VALUATION METHODS

The following methods are to be used in valuing the taxable benefit:

  1. Commuting Value Method - for use by a non-control employee only (defined in Section IV);

    Personal commutation to work is valued at a daily commuting rate of $1.50 for each one-way trip or ( $3.00 round trip).

  2. Lease Value Method - Monthly value of $131.00 per 30-day month plus 5.5 cents per mile for gasoline is assessed; or
  3. Vehicle Cents-per-Mile - personal miles are valued at 31 cents per mile. If the employer does not supply gasoline, the rate is reduced by 5.5 cents, to 25.5 cents per mile.

To calculate the value of his/her commuting or personal miles an employee would:

- select the appropriate method

- perform the calculation

- net out any amount that has been paid to the state as reimbursement for personal use (if the amount paid the state exceeds the taxable benefit for the tax year, the benefit equals zero. Credit amounts can not be carried forward).

- submit the required paperwork to his/her business office for inclusion in a payroll transaction.

Special forms are available to facilitate this process. Please refer to Comptroller's Memoranda Nos. 86-13 and 89-55 or the Comptroller's Payroll Manual, Section VIII, Taxation of Vehicles, for details.

EXAMPLE:

  1. Non-control employee - the employee commuted round trip to work for 60 days during the reporting quarter. The rate of $ 3.00/day is multiplied by the 60 days = $ 180.00. The employee does not reimburse the state for the commuting use of the vehicle, therefore a value of $ 180.00 will be added to the employee's reported wages.
  2. Control employee - the employee has been assigned a state vehicle for the first time. She commutes to work 20 miles round trip for 60 days in the quarterly reporting period. She may choose one method of valuing the use of the vehicle. A comparison of the methods follow:
- lease value:
$ 131/month for 3 months
20 miles/day at 5.5 cents/mile
multiplied by 60 days
= $ 393.00

= 66.00

TOTAL QUARTERLY AMOUNT

$ 459.00
- cents per mile - 20 miles/day at
31 cents/mile by 60 days
TOTAL QUARTERLY AMOUNT = $ 372.00

In this example the cents per mile method is the least costly. However, once a method is selected, the employee must continue with that method regardless of his/her changes in circumstances.

And in our example, if the employee reimbursed the state for Home to Office travel, at a rate of 2.50 per day for 60 days which equals $150.00, the net reportable benefit is $ 210.00 ($ 360.00 - 150.00).

Please note:

Special rules may apply when using each of these methods.

Once one of the valuation methods is elected, the employee must use it for all subsequent years unless the qualification rules are not met.

The Commissioner of The Department of Administrative Services (DAS) issues a memorandum concerning the rates for the reimbursement of Home to Office travel. Not all employees are required to reimburse the state. Questions concerning State reimbursement should be addressed to DAS.

IV. CONTROL EMPLOYEE

Control employees can choose only the lease value or the cents- per-mile methods for calculation of the taxable benefit. All other employees must use the commuting value method.

A control employee is defined as:

  1. an elected official; or
  2. an employee whose annual compensation will equal or exceed $108,200 in 1996; or
  3. an employee who is allowed to use a State-owned vehicle for non-business use in addition to home-to-office travel (Special State of Connecticut definition).

V. AGENCY RESPONSIBILITY

Agencies are to notify concerned employees of the preceding requirements and of the change to the cents-per-mile valuation rate (a one cent increase to 31 cents per mile from the 1995 rate of 30 cents per mile).

Agencies must continue to maintain the records necessary to properly determine and report on the dollar value of the vehicle use benefit for the period November 1, 1995 through October 31, 1996.

VI. QUESTIONS

Questions may be directed to the Office of the State Comptroller as follows:

Computation and

Benefits: Policy Evaluation & Review Division, 566-4265;

Payroll Procedures: Payroll Services Division, 566-5428.

Reimbursement

Requirements: Department of Administrative Services,

Director of State Fleet Operations,
566-5940

NANCY WYMAN
STATE COMPTROLLER

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