Town tweaks use, taxation of its vehicles

Babylon Town has passed its first law on the use and taxation of town-owned vehicles.

The town was told during a routine audit by the Internal Revenue Service to enact the legislation, said town spokesman Tim Ruggeri. In addition to laying out the rules for taxation of vehicles used for commuting purposes, the law passed last week maps out proper use of town vehicles. This includes who is eligible to use a vehicle and how it is to be used, such as requirements that employees "are to lock the doors of a town vehicle when not in use" and "must wear seat belts in town vehicles which are so equipped."

There are 340 town vehicles, Ruggeri said, and 46 employees who use town vehicles for commuting, ranging from commissioners and executive assistants to maintenance and automotive mechanics.

Previously, the town did not require employees to provide a log of vehicle use for commuting. Instead, department heads were in charge of tracking daily vehicle use, and employees had a payroll deduction amounting to about $3 per day, Ruggeri said.

IRS instructions state any "fringe benefit" such as vehicles provided by employers "is taxable and must be included in the recipient's pay unless the law specifically excludes it." The IRS mandates employees be taxed on the percentage of the vehicle's lease value -- based on a four-year lease -- as determined by the IRS, with the amount added to annual income.

Under the new town law, employees must log business and personal mileage as well as the date and purpose of each trip, and provide the information each month to the personnel department. Employees who do not comply are subject to disciplinary action and/or would lose their vehicle.