STATE OF CONNECTICUT
THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775
MEMORANDUM NO. 2003-03
January 29, 2003
TO THE HEADS OF ALL STATE AGENCIES
||Chief Administrative and Fiscal Officers, Business Managers, and
Payroll and Personnel Officers
||Calculation of the Taxable Benefit of the Non-Business Use of
State-Provided Vehicles, Calendar Year 2003
When a state employee commutes in or uses a state vehicle for personal
business, certain tax consequences result. The Internal Revenue Service
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.
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;
- advise agencies of a change in the rate used in the vehicle
cents-per-mile method and,
- advise agencies and employees of a change in the definition of control
employee (yearly compensation).
Effective January 1, 1986, Federal Public Law 99-44 mandates that an
employee's personal use of an employer-owned or leased vehicle must be
reported to the Internal Revenue Service as taxable income. "Personal
use" is defined as any non-business use, including commuting from an
employee's home to his or her worksite. The term "vehicle" means "any motorized wheeled vehicle
manufactured primarily for use on public streets, roads and highways"
and generally includes automobiles. Except for certain exceptions as set
forth later in this memorandum, all State of Connecticut employees will be
subject to taxation on any state vehicle use which is not documented as
business use. State agencies will be responsible for implementing the
applicable reporting requirements.
The following IRS requirements and other guidelines are set forth to
assist agencies in determining those employees whose use of state vehicles
is deemed taxable and in reporting the dollar value, by employee, of such
III. STATE'S VEHICLE USE POLICY
As stated by the three branches of government, the policy of the State of
Connecticut basically prohibits personal use of state-owned/leased vehicles
except for home-to-worksite travel as required by the employer. Under the
State of Connecticut's written policy, no employee may use the vehicle for
personal purposes other than de minimis use (e.g., a stop for lunch between
two business appointments or deliveries). Refer to the Department of
Administrative Services General Letter No. 115 dated November 1997.
IV. VALUATION METHODS
The following methods are to be used in valuing the taxable benefit:
- A. Commuting Value Method - for use by a non-control employee only
(defined in Section V).
- Personal commutation to work is valued at a daily commuting rate of
$1.50 for each one-way trip (or $3.00 round trip).
- B. Lease Value Method - A monthly rate of $214.00 per 30-day month plus 5.5
cents per mile for gasoline is assessed; or a per diem rate of $28.49.
- NOTE: If the vehicle is used more than seven days in a month,
it is advantageous to use the monthly rate rather than the per
- C. Vehicle Cents-Per-Mile - Personal miles are valued at 36 cents
per mile effective January 1, 2003. If the employer does not supply
gasoline, the rate is reduced by 5.5 cents to 30.5 cents per mile.
- 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
V. CALCULATION OF THE TAXABLE BENEFIT
To calculate the value of his or her commuting or personal miles an employee
A. Select the Appropriate Method
- Control employees can choose only the lease value or the
cents-per-mile methods for calculation of the taxable benefit.
- A control employee is defined as:
a. an elected official; or
b. an employee whose annual compensation will equal or exceed $125,400 in
All other employees must use the commuting value method.
B. Perform the Calculation
Example 1: Commuting Value Method (used by all non-control employees)
The employee commuted round trips to work for 60 days during the reporting
quarter. The rate of $3.00/day is multiplied by 60 days = $180.00.
Example 2: Control Employee Using Leave Value or Cents-Per-Mile
- The employee has been assigned a state vehicle for the first time.
She commutes 20 miles to work 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 follows:
$214/month for 3 months
|20 miles/day at 5.5 cents/mile multiplied by 60 days
TOTAL QUARTERLY AMOUNT
20 miles/day at 36 cents/mile by 60 day
TOTAL QUARTERLY AMOUNT = $432.00
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 despite any changes in his or her circumstances.
VI. EXCEPTIONS (Applicable to Eligible Control and Non-Control Employees)
The following categories of vehicle use are not presently subject to
1. Qualified Non-Personal Use Vehicles
- The term "qualified non-personal use vehicle" is applied to
any vehicle that, because of its nature, is not likely to be used more
than a very limited (i.e., de minimis) amount for personal purposes.
Refer to Attachment "A" for a listing of "qualified
non-personal use vehicles" that fall within this exception with
explanatory information concerning the exception requirements for vans
and trucks and the narrowly-defined requirements for "law
- 2. Overnight Parking ("Garaging") of Vehicle at Approved
State-Owned or Leased Facility
Taxation will not apply if an employee uses an approved state-owned
or leased facility for the overnight "garaging" of an assigned
state vehicle even though such facility was some distance from the
employee's worksite and possibly close to his or her home. However,
this exception is qualified by three stipulations: (a) a vehicle usage
and parking location must make "good business sense" to the
employer; (b) overnight parking location must be approved by the
employer; and (c) if the driver transports one or more passengers from
their home(s) to the worksite, such passengers are subject to taxation
on the derived benefits.
- 3. De Minimis Use of Vehicle
- According to Section 1.132-6 of the IRS Regulations, the term
"de minimis fringe" means any property or service, the value
of which is (after taking into account the frequency with which similar
fringes are provided by the employer to the employer's employees) so
small as to make accounting for it unreasonable or administratively
- The regulations give as an example of fringe benefit that is not
excludable from gross income: the commuting use of an employer-provided
automobile more than one day a month. The regulations also say that
"the fact that the commuting use of an employer-provided vehicle
more than one day a month is an example of a benefit not excludable as a
de minimis fringe does not mean that the commuting use of a vehicle up
to 12 times per year is excludable from gross income as de minimis
VII. REPORTING REQUIREMENTS
Vehicle Usage Fringe Benefit Computation Records
1. The Vehicle Usage Fringe Benefit Computation Records are:
Computation Record for Lease Value Method (Form CO-961);
Computation Record for Cents-Per-Mile Method (Form CO-960); and
Computation Record for Special Commuting Rate (Form CO-959).
- These forms are now available through Vanguard Direct at
860-563-1054. Agency needs will vary depending upon the agency's
election of methods for control employees.
- 2. From the information on the Monthly Usage Report (Form CCP-40),
the agency will then post data as needed to the Employee's Computation
- 3. Follow instructions on the Computation Record to calculate the
monthly value of the fringe benefit.
- 4. Submit the required paperwork to his or her business office for
inclusion in a payroll transaction.
- 5. Retain the Computation Record and the documenting CCP-40 for the
- (a) three years or (b) until examination by the Auditors of Public Accounts.
- The Department of Administrative Services has implemented a program with
select officials where they report their state vehicle usage on-line.
Questions regarding this procedure should be directed to DAS.
VIII. AGENCY RESPONSIBILITY
- Agencies are to notify concerned employees of the preceding requirements
and the definition of control employee and the cents-per-mile valuation
- 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, 2002 through October 31, 2003.
Questions may be directed as follows:
Computation and Benefits: Policy Services Division, (860) 702-3440;
Payroll Procedures: Payroll Services Division, (860) 702-3463;
On-line Home to Office Usage: DAS, Financial Services Center, (860) 713-5003.
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