Externally Provided Vehicles
Last Update Approved: November 20, 2013
Edited/Revised: July 8, 2015
Revised Effective: August 7, 2015
Middle Georgia State University (MGA) employees who are offered use of a vehicle by an external entity (such as a car dealership) to the institution must notify the Executive VP for Finance & Operations immediately, before accepting the vehicle. The Executive VP is the authorized College representative for accepting externally provided vehicles. A vehicle provided by an external agency for the University’s use is considered an employer provided vehicle for tax regulations.
Basic Taxability Rules
An employee’s personal use of an employer provided vehicle is a taxable fringe benefit generally treated as non-cash compensation paid to the employee. It must be included on the employee’s Form W-2, and applicable income tax, FICA and Medicare withholding rules apply [REG 1.61-21(a)(1)].
An employee’s business use of company car is considered a nontaxable working condition fringe benefit and is not reported on the employee’s Form W-2.
All employee use of an automobile is personal unless it is de minimis or the employee can substantiate total or partial use of the vehicle for business use. A benefit is de minimis when the value of the worker’s personal use is so small or insignificant that accounting for it would be unreasonable or administratively impractical. De minimis personal use is not treated as taxable income to the employee [REG 1.132-6(a)].
Employee Substantiation Requirements
MGA employees must maintain and supply to the Office of the Controller adequate records to substantiate the business use of an employer-provided vehicle. A copy of the employee’s mileage log and a signed form providing summary details will meet these requirements. The Office of the Controller must receive these documents by November 15th to be effective in that calendar year. All use must be treated as personal if these documents are not received.
Employer Withholding and Reporting Obligations
The payroll department must withhold the employee’s share of FICA taxes on the taxable value of a company car. The college must pay matching FICA tax on the taxable value as well. The college’s cost will be charged to the respective employee’s department.
Valuation of Vehicles
The Office of the Controller must use a method of valuation that is acceptable to the IRS, and they must comply with the IRS’s rules and regulations in applying that method.