The value of an employer-provided car or other vehicle for commuting is $1.50 per one-way commute (that is, from home to work or from work to home), if you, the employer, meet all the following requirements:
- you own or lease the vehicle and you provide it to one or more of your employees for use in connection with your trade or business and it is in fact used in your trade or business
- you require, for bona fide non-compensatory business reasons, the employee to commute to or from work in the vehicle
- you establish a written policy under which the employee may not use the vehicle for personal purposes other than for commuting and minimal personal use (such as a personal errand on the way between a business delivery and the employee's home)
- the employee does not (except for minimal personal use) use the vehicle for any personal purpose other than commuting
- the employee required to use the vehicle for commuting is not one of your control employees.
An employee is a control employee if any of the following conditions are met:
Instead of using the preceding definition, you can choose to define a control employee as a highly compensated employee, which, for 2011, is an employee who either is a five percent owner at any time during the year or the preceding year or received more than $110,000 (for 2011) or $115,000 (for 2012) in pay for the preceding year. You can ignore the pay test if the employee was not also in the top 20% of employees when ranked by pay for the preceding year.
- the employee is a director;
- the employee receives annual pay of more than $195,000 (for 2011) or $205,000 (for 2012)
- the employee owns one percent or more equity, profit, or capital interest in the company; or
- the employee is a board- or shareholder-appointed, confirmed, or elected officer of the company whose pay is at least $95,000 (in 2011) or $100,000 (in 2012).
If more than one employee commutes in the vehicle (such as in an employer-sponsored car pool), the amount includible in the income of each employee is $1.50 per one-way commute. Similar rules apply when an employer provides transportation to employees for commuting purposes due to unsafe conditions. The unsafe conditions may exist around the individual's home or the workplace.