Purpose: To determine if the District is in compliance with state and federal regulations for employee use of District Vehicle

Source: 26CFR, Section 1.61-21

IRS Publication 15B 2014 Employer's Guide to Fringe Benefits

Conclusion:

Auditor Notes: Imputed tax is calculated on Gross pay plus Gr Term LI plus fringe benefit for use of District Vehicle less income deferred for retirement plan contributions.

None of the employees tested kept a log of mileage based on personal vs business use and did not record the purpose of each trip.

Since we were unable to verify commuter or personal use mileage vs. business mileage, we took a conservative approach and considered the use of the vehicle to be 100% personal use.

We recorded the mileage of the vehicle at December 31, 2013 and used Kelly Blue Book to obtain the FMV of the vehicle.

We used the FMV to determine the value to be included in income per IRS Publication 15B -- Annual Lease Table.

ASSIGN Employee ID

VEHICLE

ID

BRYANT, DAN 1088 503

MICHAEL TOLLEY 27510 518

MCEVOY, PEGI 2286 550

Additional Procedure: We compared payroll records to vehicle assignments prepared by the Fleets Management department and noted one employee assigned a vehicle for personal use that was not included

in the payroll analysis for imputed tax. As a result the employee paid no tax on the use of a district vehicle for school year 2013. see line highlighted in orange.

Ref

ASSIGNED

DRIVER

VEHICLE

ID

1 MICHELE DRORBAUGH(HOME ONLY JAN, FEB, MAR) 609

2 BRYANT, DAN 503

3 DORSEY, LARRY 596

4 ERIC BERSTROM(HOME ONLY)/DONALD ABELES 475

5 MICHAEL TOLLEY 518

6 NORIEGA, ANNETTE 619

7 SMITH, WRIGHT 611

8 YVONNE CARPENTER(HOME ONLY JAN, FEB, MAR) 610

9 EVELYN GREEN 566

10 JOHN JACKSON 13811 LIEBL, ED 552

12 MCEVOY, PEGI 550

13 MICHELE A WHITE 564

14 PITTMAN, RANSOM 488

Personal use of a district vehicle encompasses any activity that is not business related, including commuting. An employee using a district vehicle is required to keep a log that

includes date, mileage and purpose of each trip. At the end of the year the percentage of mileage used for business vs. personal use can be determined based on the log. If the

employee does not have a vehicle log and business vs. personal use cannot be substantiated, the IRS will assume the vehicle was used entirely for personal use. Any use of a

district provided vehicle that cannot be substantiated as business use is included in income.

Based on our testing of the 14 employees using District vehicles for commuter purposes only 3 were complete and accurately reported to the IRS. Of the remaining 11 employees, the fringe benefit reported to the IRS was

undervalued due to incomplete information and/or the use of an incorrect valuation method.

To determine if the District is in compliance with state and federal regulations for employee use of District Vehicle

IRS Publication 15B 2014 Employer's Guide to Fringe Benefits

Imputed tax is calculated on Gross pay plus Gr Term LI plus fringe benefit for use of District Vehicle less income deferred for retirement plan contributions.

None of the employees tested kept a log of mileage based on personal vs business use and did not record the purpose of each trip.

Since we were unable to verify commuter or personal use mileage vs. business mileage, we took a conservative approach and considered the use of the vehicle to be 100% personal use.

We recorded the mileage of the vehicle at December 31, 2013 and used Kelly Blue Book to obtain the FMV of the vehicle.

We used the FMV to determine the value to be included in income per IRS Publication 15B -- Annual Lease Table.

COST CENTER Type1 MAKE MODEL YEAR

36197641CM PICKUP FORD RANGER 1999

41001211A0 PASSENGER CAR CHEVROLET CAVALIER 1997

3A197671C0 PASSENGER CAR DODGE AVENGER 2008

We compared payroll records to vehicle assignments prepared by the Fleets Management department and noted one employee assigned a vehicle for personal use that was not included

in the payroll analysis for imputed tax. As a result the employee paid no tax on the use of a district vehicle for school year 2013. see line highlighted in orange.

COST CENTER Type1 MAKE MODEL YEAR

34199511A0 PASSENGER CAR CHEVROLET CAVALIER 2001

36197641CM PICKUP FORD RANGER 1999

3A197671C0 PASSENGER CAR CHEVROLET COBALT 2010

3A197671C0 PASSENGER CAR JEEP LIBERTY 2005

41001211A0 PASSENGER CAR CHEVROLET CAVALIER 1997

34199511A0 PASSENGER CAR CHEVROLET CAVALIER 2000

34199511A0 PASSENGER CAR CHEVROLET CAVALIER 2001

34199511A0 PASSENGER CAR CHEVROLET CAVALIER 2001

34199511A0 PASSENGER CAR CHEVROLET CAVALIER 1999

34199511A0 PASSENGER VAN CHEVROLET ASTRO 19993A197671C0 PASSENGER CAR FORD ESCAPE 2009

3A197671C0 PASSENGER CAR DODGE AVENGER 2008

34199511A0 PASSENGER CAR CHEVROLET CAVALIER 1999

34199511A0 PASSENGER VAN FORD WINDSTAR 2000

Personal use of a district vehicle encompasses any activity that is not business related, including commuting. An employee using a district vehicle is required to keep a log that

includes date, mileage and purpose of each trip. At the end of the year the percentage of mileage used for business vs. personal use can be determined based on the log. If the

employee does not have a vehicle log and business vs. personal use cannot be substantiated, the IRS will assume the vehicle was used entirely for personal use. Any use of a

district provided vehicle that cannot be substantiated as business use is included in income.

Based on our testing of the 14 employees using District vehicles for commuter purposes only 3 were complete and accurately reported to the IRS. Of the remaining 11 employees, the fringe benefit reported to the IRS was

undervalued due to incomplete information and/or the use of an incorrect valuation method.

Imputed tax is calculated on Gross pay plus Gr Term LI plus fringe benefit for use of District Vehicle less income deferred for retirement plan contributions.

Since we were unable to verify commuter or personal use mileage vs. business mileage, we took a conservative approach and considered the use of the vehicle to be 100% personal use.

Mileage as of 12/31/13 FMV per KBB

Auditor Calc

Lease Value Dist Reported Difference

131,437 1,211$ 850$ $687 163$

66,761 2,000$ 1,100$ $726 374$

46,000 8,300$ 2,600$ $723 1,877$

2,414$

We compared payroll records to vehicle assignments prepared by the Fleets Management department and noted one employee assigned a vehicle for personal use that was not included

in the payroll analysis for imputed tax. As a result the employee paid no tax on the use of a district vehicle for school year 2013. see line highlighted in orange. A=

B=

VIN # PLATE

VEHICLE

LOCATION

AT END OF

WORK SHIFT AREA Employee ID

1G1JC524X17342078 58482C HOME TRANSPORTATION 801917

1FTYR10V6XTA99779 74622C HOME CRITICAL 1088

1G1AB5F5IA7197080 46697D HOME SECURITY 27356

1J4GL48565W696519 76499C HOME SECURITY 3449

1G1JC5247V7284842 44036C HOME EDUCATION DIRECTOR 27510

1G1JC5246Y7457805 41958C HOME TRANSPORTATION 4723

1G1JC524117342177 58481C HOME TRANSPORTATION 18913

1G1JC524617277455 56682C HOME TRANSPORTATION 807763

1G1JC52F937328242 65965C HOME TRANSPORTATION 11486

1GNDM19W7XB186841 53421C HOME TRANSPORTATION 57091FMCU927X9KA57531 88600C HOME SECURITY 19434

1B3LC46R78N253284 85704C HOME SECURITY 2286

1G1JC524XX7321420 51748C HOME TRANSPORTATION 21086

2FMZA5048YBD02937 77096C HOME TRANSPORTATION 489

Personal use of a district vehicle encompasses any activity that is not business related, including commuting. An employee using a district vehicle is required to keep a log that

includes date, mileage and purpose of each trip. At the end of the year the percentage of mileage used for business vs. personal use can be determined based on the log. If the

employee does not have a vehicle log and business vs. personal use cannot be substantiated, the IRS will assume the vehicle was used entirely for personal use. Any use of a

district provided vehicle that cannot be substantiated as business use is included in income.

Attribute

Based on our testing of the 14 employees using District vehicles for commuter purposes only 3 were complete and accurately reported to the IRS. Of the remaining 11 employees, the fringe benefit reported to the IRS was

undervalued due to incomplete information and/or the use of an incorrect valuation method.

Included in IRS reporting of FB

Calc and Correct Method applied

DATE

ASSIGNED A B

10/7/2013 Y Y Benefit Calc for 3 mos per instructions

10/12/2013 Y N Incorrect method applied

9/25/2013 Y N Calc for 6 mos only

9/27/2013 N N No commuter benefit reported

9/23/2013 Y N Incorrect method applied

9/4/2013 Y Y

9/4/2013 Y N Calc for 6 mos only

10/7/2013 Y Y Benefit Calc for 3 mos per instructions

10/3/2013 Y N Calc for 6 mos only

10/13/2013 Y N Calc for 6 mos only9/25/2013 Y N Calc for 6 mos only

10/1/2013 Y N Incorrect method applied

10/7/2013 Y N Calc for 6 mos only

9/4/2013 N N No commuter benefit reported

Attribute