HOW NAFA MITIGATED THE PANDEMIC-INDUCED PERSONAL USE TAX ISSUE

摘要

Since 1984, personal use of a company vehicle is considered a taxable fringe benefit by the IRS that is treated as income. There are several "safe harbor" fringe benefit valuations to determine the personal use fringe benefit of an employer-provided vehicle. The two methodologies used to calculate an employee's tax obligation are either the annual lease value (ALV) or a cents-per-mile valuation. Most commercial fleets use the annual lease value methodology. One impact of the COVID-19 pandemic was the creation of an unintended tax consequence using the ALV methodology that distorted the personal use taxation of employees assigned company-provided vehicles as a result of the shelter-in-place mandates.