Company Vehicles

youngm · August 2003

Our company currently provides vehicles for our employees who are responsible for making service calls for customers. The decision has been made to eliminate the company provided vehicles and to have our staff use their own vehicles for these service calls. Are we required to reimburse our employees for mileage on their personal vehicles when in use for company business?

Balloonman · August 2003

I don't know if you are "required", but good luck to you if you take away the company cars and don't pay the IRS rate of $0.365 a mile!!!!!
My $0.02 worth.
DJ The Balloonman

jmpmo · August 2003

Our sales people use their own vehicles and we reimburse mileage. I agree with balloon, you can say you won't but it will go over like a "lead-balloon."

sonny · August 2003

Ditto the above and I would be sure you have a method in place to ensure your employees have adequate insurance. Couldn't their rates go up if they are using their personal vehicles for a lot of business reasons? Don't think your campers are going to be happy!

Crout · August 2003

No....you have to compensate their time, not their vehicles.

Parabeagle · August 2003

Even if you aren't required to, it's the only decent, ethical thing to do. They are using their personal resources to accomplish company business. Reimburse the mileage (and the time) they're using their POVs to accomplish their deliveries. Otherwise, you will be about as popular as Hitler at a bar mitzvah.

Balloonman · August 2003

Parabeagle I am offended by your remark! ROFL..........no not really... x:D ....Don is right must compensate the time, but I would not work for a company that did not compensate for milage.
My $0.02 worth.

Terri · August 2003

We pay our GM an additional $250 a month, plus the IRS mileage rate.

dmartenson · August 2003

We used to provide company vehicles for each of our account managers (people out in the field taking care of our clients). Then we had a hugh increase in premiums based on bad driving records, the cost became prohibitive, or the insurance company would not longer write the policy, so we had to stop the madness.

Now we pay mileage for personal vehicle use. In addition, we try to make this sweeter by giving them a monthly car allowance (based on exhibited historical driving knowledge)to offset their out-of-pocket expenses. We also provide a corporate credit card on which they are allowed to charge their gasoline.

Then, after all this is said and done, they provide us with their actual mileage and odometer readings, and we figure out exactly how much they should have received, subtract out their "advance" car allowance, subtract out any gas they have charged, and we reconcile monthly. Sometimes we owe them a little more money, and sometimes they owe us a little bit back. We always correct the shortage/overage on the next "advance" car allowance.

This may sound confusing, so if you don't understand, let me know and I will try to clear up. It seems to work well for us, and our employees are able to use the advanced car allowance for their car payment, or repairs, new tires, etc.

I would like to think that we are not doing anything against IRS regs. Any comments?

NaeNae55 · August 2003

There is not a law that requires you to reimburse for mileage, but most companies do so. It is difficult to expect your employees to pay for a good car and the gas for it without helping them along.

The 2003 rate is .36/mile (.365 was 2002). You can set up your reimbursement plan anyway you want to. That is, you can reimburse your employees exactly the IRS rate, a higher rate, or a lower rate.

If you do not reimburse at all, your employees can claim the mileage expense (at the IRS rate) on their personal income taxes.

If you reimburse the IRS rate, you count it as a business expense and it does not get included in the employee's income (many organizaations pay the employee for mileage through accounts payable rather than payroll to avoid any confusion about income).

If you reimburse for more than the IRS rate, every cent reimbursed more than the actual IRS rate is considered income to the employee.

If you reimburse for less than the IRS rate, the employee can claim the difference on their income taxes.

We have a situation where an employee is only reimbursed the amount in the budget. The employee then claims the difference between what the IRS allows and what we have paid her every year on her income taxes.

Clear as mud?

HRQ · August 2003

NaeNae55,

I didn't see your reply 'til after posting mine. Looks like we said the same thing except you knew a bit more: that reimbursement over the max is taxable.

So in just two days, I've learned about sterile bandaids AND taxable mileage reimbursement from you! x:D

HRQ · August 2003

My understanding from a tax seminar put on by our payroll company (ADP) is that employers are never "required" to pay mileage. An employee may report any un-reimbursed mileage at whatever the current rate is, when they file their taxes at year-end.

When the rate increased from $.34, my boss (always looking for ways to keep costs down or at least from going UP) said we would NOT increase our reimbursement rate. If we wanted the extra $.02/mile, we could keep our mileage reports and check stubs and report the extra $.02 at the end of the year.

As far as I know, this is perfectly legal.

I do agree, however, that taking away the vehicles AND not paying mileage for use personal vehicles would probably be a major morale downer.

deniseE · August 2003

I'm not sure what your company does, or if your company cars were marked with your logo, or if you are making residential calls or business calls...but:

The car your employees drive will be representing your company.

Depending on your business...is it OK for the first impression to be your employees beat up station wagon, littered with kid-stuff and yesterday's lunch in the back seat?

If you are making residential calls, the appearance of the car may undermine the credibility of your company.

Just something else to think about.

pecohr · August 2003

I was thinking the same thing as Denise. What does the employees vehicle say about your company? We used to have a salesman that drove a lime green Gremlin which was always dirty. When we addressed with him that we wanted his car cleaned up, inside and out he returned approximately 500 pens (i'm not exaggerating) that he pulled from the back seat area of his car. Each night at the end of his day he would fling into the back whatever he had in his pocket/s.8-|

Company Vehicles

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