STATE OF CONNECTICUT
THE STATE COMPTROLLER
April 7, 1997
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 1997|
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:
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 1997 calendar year, the state will continue the use of the special valuation rules previously established.
The following methods are to be used in valuing the taxable benefit:
Personal commutation to work is valued at a daily commuting rate of $1.50 for each one-way trip or ( $3.00 round trip).
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.
To calculate the value of his/her commuting or personal miles an employee would:
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:
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 the 60 days = $ 180.00.
Example 2. - Control employee using lease value or cents-per-mile
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||= $ 393.00|
| 20 miles/day at 5.5 cents/mile|
multiplied by 60 days
|TOTAL QUARTERLY AMOUNT||$ 459.00|
|- cents per mile|
|20 miles/day at 31.5 cents/mile by 60 days|
|TOTAL QUARTERLY AMOUNT||= $ 378.00|
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.
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).
In example 1 above, 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.
In example 2 above, 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 $ 228.00 ($ 378.00 - 150.00).
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.
Submit the required paperwork to his/her business office for inclusion in a payroll transaction.
Special forms are available to facilitate this process. Certain categories of vehicle use are exempt from taxation. 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.
Agencies are to notify concerned employees of the preceding requirements and of the change to the cents-per-mile valuation rate (a half cent increase to 31.5 cents per mile from the 1996 rate of 31 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, 1996 through October 31, 1997.
Questions may be directed to the Office of the State Comptroller as follows:
|Computation and Benefits:|| Policy Evaluation & Review Division, |
|Payroll Procedures:|| Payroll Services Division,|
|Department of Administrative Services,|
Director of State Fleet Operations,
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