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City allegedly violated IRS regulations

Vehicles taken home by employees are a taxable benefit by law.

By JEFF M. HARDISON
jhardison@lakecityreporter.com
Published: Wednesday, September 10, 2008 6:14 AM EDT
Some of the 57 Lake City municipal employees who take vehicles to and from work are receiving a taxable fringe benefit, according to the Internal Revenue Service.

Lake City City Manager Scott Reynolds told the Lake City Reporter that questions from the newspaper led Lake City Finance Department Director Dorothy “Tweetie” Tyre to discover that the city has not been taking out taxes for tangible fringe benefits, even though it should have.

Reynolds said the city is working with the IRS to resolve any issues.

Generally, when an employer provides a vehicle, it is reported as a taxable fringe benefit, IRS Tax Law Specialist Sam Catalano said. The information related to that reportable income is included in IRS Publication 15-B, he said. There are some exceptions.

The most common assessment is $1.50 for a one-way trip or $3 for a round trip, Catalano said, although there are other means to determine the value.

According to IRS regulations, there are exemptions. A qualified non-personal use vehicle can be used for commuting but not considered a taxable fringe benefit.

Vehicles that are exempt include marked and unmarked law enforcement vehicles, marked fire vehicles, bucket trucks, cranes and derricks, dump trucks,

flatbed trucks and “qualified”

specialized repair trucks.


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The following are comments from the readers. In no way do they represent the view of lakecityreporter.com.

Holy Tax Audit Batman wrote on Sep 10, 2008 9:50 AM:

" This is why you hire city management staff with the requisite experience and education. When you fail to hire city management staff without the proper experience and education, things fall through the cracks, like this. The question now is who is responsible for the tax liability. It would seem unfair to give the tax liability to the employee, albeit the IRS does not care. Way to go Hot-Dog, to quote one of the Chief's "it happened on your watch". LOL...LOL "

School System wrote on Sep 10, 2008 1:02 PM:

" Someone should look into this matter in regard to the school system, especially some transportation department personnel who use cars for personal business such as tanning salons, grocery stores, and shopping. "

what do you expect wrote on Sep 10, 2008 3:57 PM:

" You have a city manager with no education and no experience. There's going to be a 10 year learning curve. Give the poor guy a break. He takes his orders from 2 blocks down Marion. "

Chief wrote on Sep 10, 2008 6:00 PM:

" Well, well,well, Holy Tax Audit Batman, Have you ever heard the expression " Who cares" . I can see you have already put your foot in your big mouth. As a Chief would say . You get 10 demerits !

Retired Navy Chief and laughing all the way to the bank. LOL LOL "

Mygawd wrote on Sep 10, 2008 7:18 PM:

" Look for more of these mistakes as our former customer service rep/city manager realizes he has no clue what he is doing. "

Senior Chief wrote on Sep 10, 2008 7:40 PM:

" Lest we all forget, Scott Reynolds served as the city’s assistant finance director prior to being ordained King of Lake City. Surely he was aware of this requirement, after all he is the best the city has to offer. "

SCHOOL SYSTEM wrote on Sep 10, 2008 9:03 PM:

" In response to school system you are exactly right! How many school district cars/trucks are driven home and where do they go? Thank goodnes there will be a new superintendent soon (it cant happen fast enough) and all of the favoritism/nepotism that currently occurs will end. "

Lotto wrote on Sep 10, 2008 9:28 PM:

" Someone should definitely look into the school system's use of vehicles....like employees going to Fargo,Ga. to purchase lottery tickets, on school time, for the big boss! Let's see those log books! Believe it! "

Cell phone abusers wrote on Sep 10, 2008 9:33 PM:

" Are those school system employees the same ones who constantly went over their allotted air time on the cell phones the system used to pay for....even over Christmas break and the summer? Imagine that! "

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