Relief for Valuing Personal Use of Company Vehicles
The IRS is offering relief during the pandemic for employers using certain valuation rules for employees’ personal use of company cars.
In guidance (Notice 2021-7), the agency said those who are valuing that use according to the lease-valuation rule may instead use the cents-per-mile method, for inclusion in income and other purposes.
Using the lease-valuation rule has resulted in a higher value required to be included in income in this year of less travel. The cents-per-mile rule results in more accurate income by reflecting only the value relating to actual personal use.
The relief applies beginning March 13, 2020. Employers and employees are permitted to use either valuation method, as long as some requirements are met. Employees may use the valuation method only if their employer also adopts it.
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