23-1: Personal use of employer-provided vehicles

Effective: July 2, 2001
Revised: May 18, 2026
References: Utah Code 67-22-1, Utah Code 67-22-2, Administrative Code R27-3, IRS Publication 15-B, IRS Commuting Rule, IRS Lease Value Rule, 10-18: Commute travel expenses, FI 28: Certification of a qualified nonpersonal use vehicle,FI 29: Commute use authorization & payroll notification, FI 30: Recurring vehicle fringe benefit election, State vehicle fringe benefit computation form

Purpose

This policy explains when an employee’s personal use of an employer-provided vehicle is taxable income, including when an employee takes a fleet vehicle home overnight.

This policy doesn’t address the proper usage of employer-provided vehicles. Read Administrative Code R27-3 to learn more about the proper use of vehicles.

This policy does not allow the IRS Cents-Per-Mile Rule to be used to value taxable fringe benefit amounts due to its administrative requirements and the valuation usually resulting in higher taxable amounts than the Lease Value Rule.

Definitions

Agency – Any agency, board, bureau, commission, office, department, or other administrative subunit of state government. This definition includes the executive, legislative, and judicial branches.

Commissioner – The executive leader of an agency.

Commuting – Travel by an employee between their residence and their administratively assigned office or from their residence to their first work location and from their last work location to their residence if they don’t report regularly to their administratively assigned office. Commutes qualify as personal use, as required by the IRS.

De minimis personal use – Personal use of a state vehicle that is so infrequent and minimal that accounting for it would be unreasonable or administratively impracticable.

Employer-provided vehicle – State fleet vehicles, state-provided vehicles, and state-paid rental vehicles.

GovOps – The Department of Government Operations.

Payroll – The GovOps Division of Finance payroll team.

Personal use – Driving for non-business purposes, including commuting.

Principal place of business – A fixed location that’s used exclusively and regularly for substantial administrative or management activities.

State Finance – The GovOps Division of Finance.

Policy

A – Employees must comply with state and IRS requirements when using an employer-provided vehicle

1 – When using an employer-provided vehicle, employees must follow:

Administrative Code R27-3 for vehicle use standards; and
IRS Publication 15-B for reporting taxable income.

2 – Agencies must maintain documentation of compliance with Administrative Code R27-3 and IRS Publication 15-B.

B – Commute and other personal use of employer-provided vehicles may be allowed

1 – Employer-provided vehicles that are assigned to appointed or elected officials as part of their compensation package may be used for both business and personal use depending on the statutory authorization. See section G-J for taxation and mandatory reporting procedures.

2 – The commissioner or designee may approve an employee to use an employer-provided vehicle for commuting when the agency can clearly demonstrate the following conditions:

24-hour on-call emergency: When a potential emergency could endanger human life or cause significant property damage if there’s a delay in response time;
Virtual office: When an employee is required to work out of a vehicle a minimum of 80% of the time, and the assigned vehicle is required to perform the critical duties assigned to the employee; or
Practicality: When it’s more practical for the employee to go directly to an alternate work site rather than report to a specific office to pick up a state vehicle.

3 – Commute use is any time an employee drives an employer-provided vehicle between their residence and their administratively assigned office regardless of the direction or from their residence to their first work location and from their last work location to their residence if they don’t report regularly to their administratively assigned office, as outlined in policy 10-18: Commute travel expenses. For example, an employee takes a fleet vehicle home and keeps it overnight because they are driving to a different work location in the morning, and it’s more practical to begin their trip from their home rather than go in the opposite direction to pick up the car.

4 – Agencies are responsible to ensure approved commute use is reported to payroll. For example, an employee is assigned a fleet vehicle because their job requires them to be on-call 24 hours a day, or an employee takes a fleet vehicle home overnight commuting to their home. See section C-J for taxation and mandatory reporting procedures.

5 – An employee’s use of a qualified nonpersonal use vehicle is a working condition fringe benefit and is nontaxable. See section J for mandatory reporting procedures.

6 – Any personal use of employer-provided vehicles other than commuting isn’t allowed without statutory authorization.

C – The IRS Commuting Rule may be used to determine the taxable amount of the vehicle fringe benefit

1 – The taxable amount of an employee’s personal use of an employer-provided vehicle is determined using the IRS Commuting Rule if:

the vehicle and its commute use are required by the employer for legitimate business reasons and are not provided as a form of compensation to the employee;
the employee doesn’t use the state vehicle for personal use other than commuting or de minimis personal use;
the employee isn’t an appointed official; and
the employee’s total salary and wages are less than a highly compensated employee (less than $160,000 per year).

1a – If any of the requirements of the IRS Commuting Rule aren’t met, the taxable amount of the employee’s personal use must be determined by the IRS Lease Value Rule. See section G.

1b – Employees and elected officials with employer-provided vehicles as authorized by Utah Code may not use the IRS Commuting Rule. See section G.

2 – The IRS Commuting Rule assigns the commute value at $1.50 per one-way commute or $3 round trip.

D – Agencies must notify payroll of commute use

1 – Agencies must ensure that form FI 29: Commute use authorization & payroll notification is completed and approved by the required authorities when employees are allowed to commute in an employer-provided vehicle. The form FI 29 is used to document:

the commissioner or designee’s approval for an employee to use an employer-provided vehicle for commuting; and
the non-cash taxable value of the commuting fringe benefit.

2 – Employees assigned employer-provided vehicles and approved for long-term commute use (more than one month) must receive a recurring non-cash taxable value based on the number of work days in a pay period. The taxable value is equal to the number of work days multiplied by $3.

2a – The employee must report the number of days they work in a pay period based on their regular schedule. The default is 10 days in a pay period, assuming a 5 day workweek or $30. The number of days in a workweek is used because generally employees with long-term commute privileges don’t report regularly to an administrative office and have various temporary work locations as outlined in policy 10-18 section D.

2b – If an employee is reporting less than 10 days, they must justify the number of days selected.

2c – Employees may decrease their recurring commute amounts based on actual commutes using the form FI 48: Employee reimbursement/earnings request if they attach documentation of the dates they didn’t commute and the reason why. For example, if an employee was on paid leave, they document the days they didn’t commute in the employer-provided vehicle because they were on paid leave. The number of days multiplied by negative $3 is the amount they would put on the FI 48.

3 – Employees approved to use an employer-provided vehicle for short-term commute use (less than one month) must receive a non-cash taxable amount of $3 per round trip commute based on the number of days they will commute in an employer-provided vehicle.

3a – Commutes occurring less than once per month don’t need to be reported.

3b – The dates the employer-provided vehicle will be used for commuting must be reported.

4 – The employee’s supervisor or fleet coordinator must submit the completed form to payroll by submitting a ticket to [email protected] so that the non-cash taxable value can be added to the employee’s taxable income.

4a – Both the employee and the supervisor are responsible to ensure the amount was properly added by payroll.

4b – Supervisors must notify payroll to stop the recurring commute amounts by submitting a ticket to [email protected] when an employee is no longer commuting in an employer-provided vehicle.

5 – Employees cannot park the vehicle overnight at an alternate location or state building instead of their home to avoid taxable commutes.

6 – In cases of carpooling in an employer-provided vehicle with authorized commute use, the non-cash taxable amount of $3 per round trip must be added to the gross taxable income of each employee in the vehicle.

7 – If an employee doesn’t qualify to use the IRS Commuting Rule, they must contact State Finance for assistance in using the IRS Lease Value Rule.

E – Payroll must add the taxable amount to the employee’s income according to the IRS Commuting Rule

1 – Payroll must add the taxable values to the employees taxable income according to the amounts reported and approved by the proper authorities on the form FI 29: Commute use authorization & payroll notification.

2 – Payroll may not stop recurring taxable commutes unless directed by the employee’s supervisor.

F – The IRS Lease Value Rule may be used to determine the taxable amount of the vehicle fringe benefit

1 – The taxable amount of an employee’s personal use of a state vehicle is determined by the IRS Lease Value Rule if they don’t qualify for the IRS Commuting Rule (see section C). In summary, an employee must use the Lease Value Rule if any of the following statements apply:

They are an elected official;
receive an employer-provided vehicle as a form of compensation;
are a highly compensated employee (earns more than $160,000 per year); or
drive a state vehicle authorized by the Utah Code for personal use other than commuting.

2 – The IRS Lease Value Rule assigns the taxable value of personal use based on the vehicle’s annual lease value and adds a value for state-paid fuel at 5.5 cents per mile.

3 – Under the IRS Lease Value Rule, any personal use of an employer-provided vehicle is taxable, including commuting.

G – Fleet Operations responsibilities

1 – Fleet must notify newly appointed or elected officials assigned a state vehicle with personal use privileges that they are required to keep trip logs that meet the requirements in section H.

2 – The GovOps Division of Fleet Operations must notify the payroll supervisor of newly appointed or elected officials assigned a state vehicle with personal use privileges or a current appointed or elected official assigned a new car.

3 – The GovOps Division of Fleet Operations must provide the payroll supervisor the following information for each appointed or elected official:

the employee’s name;
the date the car was assigned;
the employee’s identification number; and
the fair market value of the vehicle assigned.

H – Employees using the IRS Lease Value Rule must keep trip logs according to the IRS Leave Value Rule

1 – Employees who use a state vehicle for personal purposes must document business use of the state vehicle in a detailed trip log as required by the IRS.

2 – Trip logs must show the beginning and ending odometer readings of the vehicle for the annual period.

3 – Trip logs must include the following for each business trip:

number of miles driven;
date of the trip;
starting location;
destination; and
business purpose.

4 – Trip logs must be reported to State Finance annually with their completed State vehicle fringe benefit computation form.

5 – If trip logs don’t contain the required information or aren’t submitted by the due date, payroll may choose to use the entire lease value of the vehicle as the vehicle fringe benefit amount. Inadequate mileage records put the state and employee at risk for IRS tax penalties and interest. By adding the full value, this risk is eliminated.

I – Payroll must calculate the taxable amount of the employee’s fringe benefit according to the IRS Lease Value Rule

1 – At the beginning of the tax year, the payroll supervisor provides newly appointed or elected officials or those assigned a new car with form FI 30: Recurring vehicle fringe benefit election. The officials are responsible for completing this form so that they can elect to have their vehicle fringe benefit value:

allocated over the year through smaller additions each pay period; or
added at the end of the year in lump sum.

1a – Appointed and elected officials who don’t submit FI 30: Recurring vehicle fringe benefit election will have the vehicle fringe benefit amount added at the end of the year in lump sum.

2 – The payroll supervisor provides appointed and elected officials who receive a state vehicle through statutory authority with a link to the State vehicle fringe benefit computation form in late October or early November of each year. The officials are responsible for completing the form in time for year-end reporting.

3 – Appointed or elected officials who use a state car must complete the State vehicle fringe benefit computation form and submit it and their trip log to payroll by the deadline established by the payroll supervisor. The total miles driven as calculated by the odometer readings and the reported business and personal mileage documented on the computation form must be the same as those on the trip logs.

3a – Appointed and elected officials who don’t submit the State vehicle fringe benefit computation form by the due date will have the full lease value of the vehicle added to their paycheck as the vehicle fringe amount.

3b – Employees with state vehicles who leave state employment prior to the end of the calendar year must complete the State vehicle fringe benefit computation form and submit it and their trip logs to payroll upon separation of employment. If they don’t submit the computation form and their trip log, these employees will be assigned the full lease value of their assigned vehicle prorated to their last official day.

4 – The payroll supervisor will calculate the non-cash taxable amount of the personal use, including fuel, using the completed State vehicle fringe benefit computation form, trip logs, and the cost or fair market value of the vehicle.

4a – If the employee elected to have amounts added throughout the year, the payroll supervisor will deduct the additions from the calculated amount so that the annual vehicle fringe value is accurate.

5 – Payroll must have the vehicle fringe benefit amount added to the employee’s taxable income by the last pay period of the calendar year. It’s not an option to add no vehicle fringe amount or to report it in the next calendar year. The IRS requires timely reporting, so annual reporting is required to avoid the risk of IRS tax penalties and interest.

J – Qualified nonpersonal use vehicles must be certified

1 – A qualified nonpersonal use vehicle is any vehicle an employee isn’t likely to use more than minimally for personal purposes because of its design, for example a police vehicle, fire vehicle, or ambulance. See IRS Publication 15-B for a complete list of qualified nonpersonal use vehicles.

2 – Employees driving qualified nonpersonal use vehicles must complete and submit form FI 28: Certification of a qualified nonpersonal use vehicle to payroll by submitting a ticket to [email protected]. The FI 28 documents agency management’s certification that the vehicle meets the requirements of a qualified nonpersonal use vehicle and that no vehicle fringe benefit amount is required to be added to the employee’s taxable income.

2a – Law enforcement officers who have received statutory personal use authorization of their law enforcement vehicles do not need to fill out the form.

3 – Agencies are responsible for any related IRS tax penalties and interest for not properly identifying qualified non-personal use vehicles.