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Question:  Are company cars considered a non-taxable item if the lease and insurance are paid for by the employer?


Answer
: The IRS has specific rules regarding whether or not a benefit should be taxed.

Source – http://www.irs.gov/pub/irs-pdf/p15b.pdf

Vehicle allocation rules:  If you provide a car for an employee’s use, the amount you can exclude as a working condition benefit is the amount that would be allowable as a deductible business expense if the employee paid for its use. If the employee uses the car for both business and personal use, the value of the working condition benefit is the part determined to be for business use of the vehicle.

However, instead of excluding the value of the working condition benefit, you can include the entire annual lease value of the car in the employee’s wages. The employee can then claim any deductible business expense for the car as an itemized deduction on his or her personal income tax return. This option is available only if you use the lease value rule (discussed in section 3) to value the benefit.

Qualified non-personal ­use vehicles. All of an employee’s use of a qualified non-personal-use vehicle is a working condition benefit. A qualified non-personal-use vehicle is any vehicle the employee is not likely to use more than minimally for personal purposes because of its design. Qualified non-personal-use vehicles generally include all of the following vehicles.

  • Clearly marked, through painted insignia or words, police, fire, and public safety vehicles.
  • Unmarked vehicles used by law enforcement officers if the use is officially authorized.
  • An ambulance or hearse used for its specific purpose.
  • Any vehicle designed to carry cargo with a loaded gross vehicle weight over 14,000 pounds.
  • Delivery trucks with seating for the driver only, or the driver plus a folding jump seat.
  • A passenger bus with a capacity of at least 20 passengers used for its specific purpose.
  • School buses.
  • Tractors and other special-purpose farm vehicles.
  • Bucket trucks, cement mixers, combines, cranes and derricks, dump trucks (including garbage trucks), flatbed trucks, forklifts, qualified moving vans, qualified specialized utility repair trucks, and refrigerated trucks.”
(Source)

 

Question:  Are employers required to pay salaried exempt employees for days off? Is there a written guideline stating if an employee is entitled to salary, regardless of the hours worked per week?


Answer
:  Exempt employees must be paid on a salary basis, which means they get paid a set amount for the week regardless of the hours they actually work whether it be under or over the standard 40 hour workweek.

According to Section 541.118 of the Department of Labor’s FLSA regulations, “An employee will not be considered to be ‘on a salary basis’ if deductions from his predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. So if the employee is ready, willing, and able to work, deductions may not be made for time when work is not available.”

As a general rule under federal law, an exempt employee must be paid full salary for any workweek in which he/she performs any work.

The following specific rules apply with regard to various deductions from an exempt employee’s salary:

  • Deductions may not be made due to variations in the quality or quantity of the work performed;
  • Deductions may not be made for time when work is not available if the employee is ready, willing, and able to work;
  • Deductions may be imposed when the employee absents himself from work for a full day or more for personal reasons (i.e. vacation), other than sickness, accident, or disability;
  • Deductions may be made for absences of one full day or more occasioned by sickness, accident, or disability if deduction is made in accordance with a bona fide plan, policy, or practice of providing compensation for loss of salary for sickness, accident, and disability, even if the employee has no time available in his/her sick pay bank;
  • Deductions may be made for penalties imposed in good faith for infractions of safety rules of major significance;
  • Deductions may be made for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions;
  • Deductions may be made in weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act;
  • An employee’s salary may be prorated in full day increments for the initial and final weeks of work; and
  • Deductions may not be made for partial day or week absences caused by parent-teacher conferences, jury duty, attendance as a witness, or temporary military leave (although the employer can offset the amounts employees receive as fees for service).
In summary, if you offer vacation and/or sick time to your exempt employees you can require that they use it for correlating absences, if they exhaust all their vacation/sick time and they do not work for a full work day you can make deductions, but only in full-day increments, not partial days. (Source)
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