Welcome to this IRS presentation on employer-provided vehicles.

In this presentation you’ll learn: How driving an employer-owned vehicle might become a taxable noncash fringe benefit for an employee.

When employee personal use of a vehicle must be included in compensation.

Where Publication 15-B, Employer's Tax Guide to Fringe Benefits, discusses withholding, depositing, and reporting requirements for taxable noncash fringe benefits.

Before we begin, please know this material isn’t official guidance.

Any stories, names and incidents portrayed in this production are fictional.

Now let’s get started. Do employees drive the vehicles owned by your organization?

Do you realize that when an employee uses an employer-owned vehicle, it might be taxable to them?

Even when an employer requires an employee to drive a company-owned vehicle home so that they can be available off duty, there may be a taxable event because the employee is using the employer’s vehicle to drive to and from work for their daily commute.

Employee use of employer-owned vehicles to accomplish duties is necessary and certainly not unusual.

But, you must consider two issues when you allow your employees to use a vehicle in performing their job.

the value is a working condition benefit. When an employee uses a vehicle for both business and personal use, the value of the working condition benefit is the business use.

Anytime an employer provides a benefit to an employee, it’s considered a form of pay for the performance of services.

You must estimate the benefit’s value and include it in the worker's compensation – unless there is a specific exclusion for it.

When your employees use an employer-owned vehicle for personal use - that is a taxable fringe benefit and you must report the value of that use on their W-2.

Personal use of a vehicle means nonwork-related purposes such as: the commute between home and work, using it on the weekend or for a vacation, or someone other than your employee using it like a family member, friend, or neighbor.

Some employer-owned vehicles are known as “qualified nonpersonal use vehicles,” and all use is a working condition benefit.

Typically, a vehicle the employee isn’t likely to use more than minimally for personal purposes because of its design qualifies as a nonpersonal use vehicle – such as a tow truck or school bus.

See the description of qualified nonpersonal use vehicles to sort out when employer provided vehicle use is taxable and how to value the personal use of an employer-owned vehicle, read Publication 15-B, Employer's Tax Guide to Fringe Benefits as it's the primary resource on the topic of fringe benefits. Visit Section 3 “Fringe Benefit Valuation Rules” for the valuation rules on vehicle use. In general, the fair market value of an employer-provided vehicle is the amount the employee would have to pay a third party to lease the same or similar vehicle on the same or comparable terms in the geographic area where the employee uses the vehicle.

The cents per mile rule, the commuting rule and the lease value rule are the three methods to calculate a value for personal use of a vehicle - but you must use the method that corresponds with your unique facts and circumstances.

Section 4 of Publication 15-B, Employer's Tax Guide to Fringe Benefits, discusses the tax code requirements for withholding, depositing, and reporting taxable noncash fringe benefits.

An employee’s personal use of an employer-owned automobile is considered a part of an employee’s taxable income and it’s vital to to document business use.

If you can’t determine business versus personal use, the IRS deems the use 100% personal to the employee.

Any use of a company-provided vehicle that isn’t substantiated as business use is included in income, according to the rules in Pub. 15B.

For the latest information about Pub. 15-B, such as recent legislation after its published date, go to IRS.gov and type Publication 15B in the search bar. Click on the PDF and download the publication.

Thanks for watching. Have a wonderful day.