Kansas Department of Administration

04-P-016 Employee Taxability of State-Owned Vehicles (Revises 03-p-041)

DATE: November 13, 2003
SUBJECT: Employee Taxability of State-Owned Vehicles
EFFECTIVE DATE: January 1, 2004
CONTACT: Roger Basinger (785) 296-5387 roger.basinger@da.state.ks.us
APPROVAL: Approved by Dale Brunton
SUMMARY: IRS Changes to Cents-Per-Mile Valuation Rule for Calendar Year 2004

The Internal Revenue Service (IRS) has increased the mileage rate from 36 cents (for 2003) to 37.5 cents (for 2004) under the Cents-Per-Mile method of valuing an employee's personal (commuting) use of a state-owned vehicle. The new rate becomes effective January 1, 2004. The Cents-Per-Mile valuation is one of several methodologies that can be used to calculate fringe benefit income. Using this methodology, fringe benefit income is calculated by multiplying the 37.5 cents rate by the number of personal (commuting) miles driven by the employee in the state-owned vehicle. To be eligible to use the Cents-Per-Mile method, at least 50% of the vehicles total mileage is used for the employer's trade or business, or the vehicle is primarily used by employees and the total mileage for the vehicle exceeds 10,000 miles per year. The Cents-Per-Mile method may not be used for 'luxury' vehicles. If a vehicle is first made available to an employee for personal (commuting) use in calendar year 2004 and the agency wishes to use the Cents-Per-Mile method, please contact Payroll Services for the 'luxury' vehicle definition. Agencies and employees are also reminded that the only personal use of a state vehicle allowed under state law is to commute between the employee's work station and home, and then in only limited situations.

Please note that this Informational Circular does not impact the State's privately owned vehicle mileage reimbursement rate.


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