FREE RIDES: Are they a taxable benefit for officers who get them to commute?
the blogger who's running for City Board of Directors against incumbent Director Doris Wright
, has added a new question to those he's been peppering the city with about the police department.
As we've noted before, the police force in a majority-minority city is overwhelmingly white (363 of 560 officers are white); most don't live in Little Rock (376 of 560) and about a third of the force (between 188 and 201), again an overwhelmingly white contingent, get to drive police cars home, most of them (more than 136) to cities other than Little Rock. Racop has been gathering updates on the precise figures and on the amount of money the city pays to fill up these cars with gas, which is only a portion of the depreciation and other costs incurred
from the commuting.
But now he's posed
a question several readers have asked:
According to IRS Publication 15-B (Employer’s Tax Guide to Fringe Benefits - https://www.irs.gov/pub/irs-pdf/p463.pdf ), “Any use of a company-provided vehicle that is not substantiated as business use is included in income.”
As with all non-cash benefits, the IRS requires an employer to calculate the fair market value of the benefit. For vehicles, they are required to use one of three methods for the computation: Cents-Per-Mile Rule, Commuting Rule, and Lease Value Rule.
Can you provide conformation that the employees listed in the attachment – “Fuel Info.xlsx” - have the value of the benefit , i.e., use of a city owned vehicle as a take home vehicle, included in their W-2’s and state the method the city of Little Rock uses to calculate the value?
Good questions. Police have justified the practice by saying assigned cars allow officers to respond quicker
to emergency calls. Does that make it a business use?
Here's the list Racop received
of how much gas pumped by each officer with a car.
I think it would be easy to justify drive-home cars in Little Rock. The high visibility and symbolism of a policeman nearby seems
an obvious crime deterrent. In Cabot? Not so much benefit to Little Rock taxpayers.
UPDATE: A city spokesman told me there is a taxable benefit ascribed to cars that city employees are allowed to drive home. But .... if a car is a marked emergency services car (a police patrol car), the city believes the car is exempt from taxation under federal law. Racop has also received a partial response that indicates there are exemption
for unmarked police cars as well. He was told there are some "imputed wages" for some employees and a fuller response is promised.