May 17, 1993
TO: COLONEL R.A. BAREFOOT
STATE HIGHWAY PATROL
FROM: ISAAC T. AVERY, III
SPECIAL DEPUTY ATTORNEY GENERAL
AUTHORIZATION OF CIVILIAN EMPLOYEES TO COMMUTE IN STATE-OWNED VEHICLES/PAYMENT OF FEE RE:
The question you pose is whether civilian personnel of the Highway Patrol are authorized to commute in State-owned vehicles; and if so, are these employees required to pay a commuting fee. Yes, they are authorized to commute in State-owned vehicles if you so choose to assign them a vehicle; and no, under Internal Revenue Service interpretation, these persons would not have to claim this as a taxable fringe benefit. Consequently, a commuting fee need not be paid to the State.
State law provides that the Department of Administration, with the approval of the Governor, may adopt and enforce rules relating to the permanent assignment of State motor vehicles and the use and reimbursement for those vehicles for commuting. N.C.G.S. 143-341(8)i.7a. The statute further requires every individual who uses a State-owned passenger vehicle to drive between his official work station and his home to reimburse the State for these trips at a rate computed by the Department of Administration. However, certain vehicles are exempt from this fee. This statute tracks the federal Internal Revenue Code provisions on taxation of fringe benefits which lists use of the same vehicle for commuting as being exempt from federal taxation. Both the federal regulations and State law include a catch-all provision of "any other vehicle exempted by Internal Revenue Service’s regulations." The Department of Administration has adopted a commuting policy. This policy incorporates State statutes including the exemptions. See 1 N.C.A.C. 38.0402.
The Internal Revenue Service has issued commuting policy opinions on certain vehicles. In response to a question by the South Carolina Emergency Management Department, the Internal Revenue Service opined that government emergency vehicles driven to and from work as a matter of job responsibility are not taxable. (See July 18, 1989 letter from Michael R. Allen, Director, Internal Revenue Service, Southeast Region, to the Honorable Arthur Ravenel, Jr.) The North Carolina Department of Administration agreed with this interpretation by April 11, 1991 memorandum from James E. Rhodes to Assistant Secretary E.B. Jackson.
Based upon the opinion of the Internal Revenue Service, any vehicle assigned to a non-law enforcement civilian employee who is on-call and required to respond to emergencies is exempt from federal taxation. The use of a State vehicle by a radio technician, a communication centers supervisor, a mechanic supervisor, or other civilian personnel who are on-call and required to respond to emergencies, falls under this exemption.
In addition to the opinion letter, under the interpretation given by the Internal Revenue Service in the Federal Register, Volume 50, No. 215, p. 84, vans that have been specially modified with the result that they are not likely to be used more than a de minimus amount for personal use–for example, permanent shelving that fills most of the cargo area carrying equipment, plus specially painted with the company name–are exempt. Vans issued to radio engineers fall under this provision due to the installed shelves for carrying tools and the Highway Patrol insignia being displayed on the vans.
If you need further information concerning this matter, please do not hesitate to contact our office.