00-P-031 Employee Taxability for the Personal (Commuting) Use of a State-Owned Vehicle (Supersedes Informational Circular 00-P-025)
|DATE:||June 19, 2000|
|SUBJECT:||Employee Taxability for the Personal (Commuting) Use of a State-Owned Vehicle|
|CONTACT:||Roger Basinger||(785) 296-5387||(firstname.lastname@example.org)|
|SUMMARY:||Information Concerning Employee Use of State-Owned Vehicles|
Informational Circular 00-P-025 contains the following statement:
"Field employees, such as inspectors, who work (travel) out of their homes and have no office or duty location, are subject to these reporting requirements. For these employees, travel between home and the first business contact of a morning, travel between the last business contact of the day and home, and incidental trips are considered commuting for IRS reporting purposes."
According to this statement, the mileage discussed above would be classified as commuting and would be subject to fringe benefit income reporting for income tax purposes. This statement is based on IRS Publications 463 (Travel, Entertainment, Gift, and Car Expenses) and 587 (Business Use of Your Home). The publications state that an employee's home office must qualify as the employee's 'principal place of business' to classify the transportation costs between the employee home and work locations as business miles. To qualify as the employee's 'principal place of business' several tests had to be met including the 'exclusive use test.' The 'exclusive use test' states that a portion of the employee's home is set aside and not used for any purpose other than business. Due to the concerns that employees could not meet this test, the wording in the Informational Circular No. 00-P-025 was changed to the statement noted above.
Since the issuance of Informational Circular No. 00-P-025, Payroll Services has received a legal opinion from the Department of Administration's Legal Section concerning this issue. The opinion states that the case law supports the argument that the employee's home is the 'principal place of business' under the circumstance described above. The case law indicates that while the 'exclusive use test' needs to be met to claim the home office expense deduction; the test does not need to be met to qualify the employee's home as the 'principal place of business' for transportation expenses.
Based on the Department of Administration Legal Section's research, employees who work at home and have no office, do not have commuting miles for travel between their home and first business stop of the day or for travel between the last business stop of the day and home. Please note that any incidental travel will still be considered commuting and will be subject to fringe benefit income reporting. Should you have any question concerning this issue, please contact Roger Basinger with Payroll Services at the telephone number or e-mail address listed above.