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HomeMy WebLinkAbout1986-02-11; City Council; 8510; Use of City Vehicles and Mileage AllowanceCt ' OF CARLSBAD — AGEN[ BILL MTQ 2/11/86 PEPT FIN USE OF CITY VEHICLES AND MILEAGE ALLOWANCE DEPT. Ht CITY ATTY m CITY MGR. 44JBcc <Q_CL<c O u oo 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. 28 XXX 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 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)