President Reagan signed into law on May 24, 1985, the Conference Report to H.R. 1869, which became Public Law 99-44. As of the printing of this Technical Bulletin, Public Law 99-44 had not been printed. This bulletin was based upon the Conference Report, which may have not included all the provisions included in the law upon its publication

Ellis, Richard M.

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University of Tennessee, Knoxville: Trace

University of Tennessee, Knoxville TRACE: Tennessee Research and Creative Exchange MTAS Publications: Technical Bulletins Municipal Technical Advisory Service (MTAS) 6-18-1985 Technical Bulletins: Congressional Action Modifies IRS Vehicle Requirements Richard M. Ellis Municipal Technical Advisory Service Follow this and additional works at: https://trace.tennessee.edu/utk_mtastech  Part of the Public Administration Commons The MTAS publications provided on this website are archival documents intended for informational purposes only and should not be considered as authoritative. The content contained in these publications may be outdated, and the laws referenced therein may have changed or may not be applicable to your city or circumstances. For current information, please visit the MTAS website at: mtas.tennessee.edu. Recommended Citation Ellis, Richard M., "Technical Bulletins: Congressional Action Modifies IRS Vehicle Requirements" (1985). MTAS Publications: Technical Bulletins. https://trace.tennessee.edu/utk_mtastech/214 This Bulletin is brought to you for free and open access by the Municipal Technical Advisory Service (MTAS) at TRACE: Tennessee Research and Creative Exchange. It has been accepted for inclusion in MTAS Publications: Technical Bulletins by an authorized administrator of TRACE: Tennessee Research and Creative Exchange. For more information, please contact trace@utk.edu. .. • • TECHNICAL BULLETIN MUNICIPAL TECHNICAL ADVISORY SERVICE THE UNIVERSITY OF TENNESSEE IN COO PERATION WITH THE TENNESSEE MUNICIPAL LE AGUE U.T. El4-1050-00-003-86 June 18, 1985 CONGRESSIONAL ACTION MODIFIES IRS VEHICLE REQUIREMENTS By Richard M. Ellis, Management Programs Consultant President Reagan signed into law May 24, 1985, the Conference Report to H.R. 1869, which became Public Law 99-44. As of the printing of this technical bulletin, Public Law 99-44 has not been printed. This bullet.in is based upon the Conference Report, which may not include all the provisions which will be included in the law when it is published. However, since we are nearly to the end of the second quarter when you. must report the value of vehicular fringe benefits, we felt it imperative that you receive as much information as we have available. When we receive the published Public Law 99-44, we will prepare a follow-up technical bulletin indicating areas of change and more specific information on compliance. You will want to re-read the technical bulletin dated March 8, 1985, entitled "Changes in IRS Rules Regarding Employee Fringe Benefits." Much of the information presented here will refer to this bulletin. Section 1 of H.R. 1869 repeals the contemporaneous records r equirement. Your employees will not be required to maintain logs of vehicle use, as originally required under IRS regulation.a. · However, there are other record keeping requirements that will be established in regulations to be published in October, and which will be more clearly explained in Public Law 99-44 when published. This information will be throughly discussed in a subsequent technical bulletin; Section 2 of H.R. 1869 defines a "qualified n onpersonal use v ehicle" and establishes that the use of su·ch city-owned vehicles by an employee does not constitute fringe benefit income and therefore is not subject to taxation. The term "qualified nonpersonal use vehicle" means any vehicle which, by reason of its nature, is not likely to be used more than a de minimis amount(the term de minimis relates to incidental stops by employees, such as t.o stop for a meal or to stop by a grocery store or laundry enroute to and from the work place and . ' . • - 2 -home). The Conference Report, and we assume the subsequent Public Law 99-44, includes the following vehicles in this definition: (a) clearly marked police and fire vehicles; (b) delivery trucks with seating for only the driver, or only for the driver plus a folding jump seat; (c) flatbed trucks; (d) any vehicle designed to carry cargo with a loaded gross vehicle weight over 14,000 pounds; (e) passenger buses used as such with a capacity of at least 20 passengers; (f) ambulances used as such or hearses used as such; (g) bucket trucks (cherry pickers); (h) cranes and derricks; (i) forklifts; (j) cement mixers; (k) dump trucks (including garbage trucks); (1) refrigerated trucks; (m) tractors; (n) combines; (o) school buses; (p) qualified moving vans; (q) specialized utility repair trucks which are specially designed and used to carry heavy tools, testing equipment., or parts and the employer requires the employee to drive the truck home in order to be able to respond in emergency situations for purposes of restoring or maintaining electricity, gas, telephone, water, sewer, or steam utility services. It must be pointed out that the Conference Report specifi­cally excluded vans or pickups that were not specially equipped to store and/or carry heavy tools, parts, etc., required to carry out. emergency repair and maintenance work. • This section is effective Jan. 1, 1986, and there is no requirement. to • withhold benefits from employees utilizing these types of vehicles during this tax year. The Conference Report. did indicate that IRS is authorized to consider regulations which would include unmarked law enforcement vehicles in the except.ions listed above, which will more than likely be included in regulations to be published in October. Section 3 of H.R. 1869 provides that an employer may elect not to deduct and withhold income taxes with respect. to the non-cash fringe benefit attributable to an employee's personal use of a city-owned vehicle. An employer making this election must so notify the employee (at such time and in such manner as will be provided in Treasury regulations, (which are not due for publication until October 1985), and must include the fair market value of the benefit on the W-2 Form furnished to the employee. The employer must still withhold Social Security taxes. This provision is effective Jan. 1, 1985, although it is not clear how to implement the provisions of the withholding election since regulations will not be forthcoming until October of this year. We hope some clarification will be included when Public Law 99-44 is published • , .• . , • • • • • . ".,�'1':'-'?�'�1kt:;-: �-1�i:;;-�-:-·:f?�·r�:::-.-�};:;_1i:· ·-.-- , .. \:.<��/L)·1, - 3 -Although there are still a few uncertainties regarding comp liance wi1:h t.he IRS regulations relating to vehicular fringe ben efits, cit.ies must. begin l:o report personal use value, using either the commuting value ($3,00 per day), l:he annual lease value, or the daily lease value method o utlined i n  the technical bulletin dated March 8, 1985, The report for this quarter must include the first two quarters o f  this· year for all vehicle use except that specifically exempted under Section 2 of H,R 1869 as stipulated above. For addi l:ional information concerning this matter, contact Rich Ellis at the Knoxville office of MTAS, (615) 974-5301, or the municipal management consultant for your city, \·-'t:P ,.-;;.__� .. r . . , 

Technical Bulletins: Congressional Action Modifies IRS Vehicle Requirements

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Technical Bulletins: Congressional Action Modifies IRS Vehicle Requirements

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University of Tennessee, Knoxville: Trace