HomeMy WebLinkAbout1986-02-11; City Council; 8510; Use of City Vehicles and Mileage AllowanceCt ' OF CARLSBAD — AGEN[ BILL
MTQ 2/11/86
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USE OF CITY VEHICLES AND MILEAGE ALLOWANCE
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RECOMMENDED ACTION:
Adopt Resolution NO. j*3 J^T which establishes policy and authorization for the
use of City vehicles and mileage allowance.
ITEM EXPLANATION
The Internal Revenue Service recently published guidelines for identifying
noncash employee benefits from use of employer-provided vehicles. For the
City of Carlsbad, these guidelines are pertinent to employees who, at the
City's request and for the City's benefit, use City-provided vehicles to
commute to and from work.
Certain vehicles are exempt from taxation. These include:
A. Vehicles used by employees on the job that are kept on the
employer's premises when not in use. Personal use including
commuting are prohibited. (Note: City Administrative Order
No. 3, dated June 28, 1985, prohibits the use of City vehicles
for personal use.)
B. Clearly marked police and fire vehicles where the police officer
or firefighter is on call at all times (including ambulances).
C. Utility trucks where the employee is required to drive the truck
home for the purpose of responding to water or sewer utility
emergencies.
D. Unmarked law enforcement vehicles where NO personal use occurs
incidental to law enforcement. This includes the requirement
that the employee must have the power to arrest and carry a
firearm even during any commute usage.
Vehicles that do not fall into these categories are subject to taxation.
Based on the value of these nonexempt vehicles and on the status of the City
employees assigned these vehicles (i.e., these employees are not key employees
by IRS definition), the noncash benefit to the employee for employer-
provided vehicles is $3.00 per round trip per day. However, if the employee
keeps a mileage log, the benefit accrues at $.21 per mile between home and
work. The City will not withhold taxes of this noncash benefit and so
informed the employees before January 31, 1986, as required by IRS.
For employees and officials who receive a mileage allowance, the City will
begin reporting all allowances as wages on the W-2 beginning in 1986, as
advised by our tax consultant. The employee or official will keep records
supporting the deduction for business mileage on the individuals' tax return.
FISCAL IMPACT:b If the City does not report employer-provided vehicles, or mileage allowances
to the IRS and Franchise Tax Board, then the City could be subject to a
"failure to report" penalty by the taxing authorities.
EXHIBITS:
Resolution No. fB?^ > which establishes policy and authorization for the
use of city vehicles and mileage allowance.
1 RESOLUTION NO. 8395
2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, ESTABLISHING POLICY AND
3 AUTHORIZATION FOR THE USE OF CITY VEHICLES AND
MILEAGE ALLOWANCE.
4
5 WHEREAS, the City Council desires to establish written policy
6 relative to the use of City vehicles and payment of a mileage allowance
7 by designated personnel;
8 WHEREAS, the policy outlined herein is intended to comply with
9 and meet the requirements of federal legislation relative to taxation
10 for the use of a city vehicle and payment of a mileage allowance;
11 WHEREAS, each person so designated and affected by this policy,
12 shall be notified in writing of the effects of this policy on individual
13 taxes and that the City of Carlsbad will not withhold any taxes from the
14 increased monetary benefit which will accrue to designated personnel;
15 WHEREAS, the City Council of the City of Carlsbad hereby designates
16 and authorizes the City Manager to administer and insure compliance with
17 all applicable requirements relative to the policy as outlined herein.
18 NOW, THEREFORE, BE IT RESOLVED that the City Council of the City
19 of Carlsbad establishes the following policy:
20 1. The required use of a city vehicles as assigned to a city
21 employee is specifically for purposes of commuting to and from residence
22 and the work place, and for such other official city purposes as may be
23 required as a result of work assignments.
24 2. The required use is considered to be in the best interests
25 of the city, and therefore, a benefit to the city, inasmuch as the employees
26 who are assigned a city vehicle are subject to recall in the event of
27 an unexpected or emergency situation that may arise from time to time.
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3. A fee of $3.00 per day will be included as a part of the gross
salary and shown on the W-2 at year end for each employee who receives
a nonexempt, noncash benefit from an employer-provided vehicle. However,
if the employee keeps adequate records, the benefit will accrue at $0.21
per mile.
4. Annual mileage allowances given to City employees will be
included as part of the gross salary and shown on the W-2 at year end.
PASSED, APPROVED AND ADOPTED by the Carlsbad City Council at its
regular meeting held on the llth day of February , 1986, by the
following vote, to wit:
AYES: Council Members Casler, Lewis, Kulchin, Chick and Pettine
NOES: None
ABSENT: None
MARY H. CAS1ER, Mayor
ATTEST:
ALETHA L. RAUTENKRANZ, CityClerk
(SEAL)