Topic: Personal truck used for work... how responsible should the business owner be?

[heffay]

So here's the story:

I drive all over the Phoenix Metro as an estimator for sales of sunscreens, security doors/gates, and other items for homes.  When I got the job in May it was understood that I would be driving my own vehicle.  At the time, I was using my wife's car since I was without, but soon bought a 96 chevy truck.  The truck was in great condition and while it had kinda high miles at 156k, not too high.  I'm watching the miles rack up at almost the speed of sound, it seems.  I've put over 12,000 miles on it in 4 months. 

The boss and I left the agreement at we would discuss each maintenance item at the time and he'd pay for certain things.  The only thing so far has been a single oil change.  Yes, I know, not enough oil changes.  2 weeks ago I got in a wreck that was just plain unavoidable.  I was forced out of my lane due to another wreck, and while they did not hit me, I hit someone on my other side.  The police did not ticket me because I was forced out of my lane, but my insurance is paying for the other guy's car since I came into his lane.  Fast forward to today and a cabinet flies out of a truck and people are swerving all over and I avoid the cars but not the cabinet, of course, shredding my tire. 

I'm pissed because I would not be putting all these miles on and risking my truck if it weren't for work.  Granted, I would be driving it, but I wouldn't be taking it 150+ miles a day thru the heart of Phoenix, every friggin day.  I'm getting to the point that I don't want to watch my truck die a fast death and me not get more than a few months out of it and in the end, be an owner of a beaten and battered truck when it could have been helped if the owner would buy and maintain his own truck.

He pays me a decent hourly wage but I don't really consider that part of the truck deal.  What he does give me for the truck is payment for all of my gas, even for the 80 mile round-trip from home to work and back, as well as all of the gas going to and from all the customers' homes.  So he doesn't exactly pay me the going federal mileage rate, but it equates to something similar, I've done the math.  By the way, that is about 51 cents a mile, it varies from year to year.

My insurance is paying for the body shop, not his.  I end up with a truck with a million miles on it that I can't sell but bought for a fairly shiny penny, not him. 

I'm about done driving my own truck for this and want to get a new job or tell him to buy his own truck, pay his own insurance, pay for all the maintenance, etc.

What do you think is fair in a situation like this?

[scunny]

hey Heff. I think he should provide the truck, insurance and all.

[Duke McDukiedook]

+1, if he values you as an employee.

[heffay]

Wife says with my recent "luck" I should be a stuntman.

Maybe I should buy a lottery ticket.

It should also be noted that about 2 weeks prior to the wreck I was washing the truck out in the drive, sprayed some water on the windshield and CRACK!  It was about 115 out that day and I think it was the fast temperature exchange as opposed to an existing small crack because the glass was perfect.  So, the morning of the wreck I call to have the windshield fixed and they're coming out the next day.  BANG CRASH BOOM

[Gordon]

Hmm... 

"Hey boss, I keep wrecking my truck, so why don't you buy one and let me drive yours instead?".


Kidding aside, it's worth asking at least.  Or at least some agreed upon monthly vehicle allowance instead of the case-by-case basis you're currently on.  He's definitely getting the better end of the deal with your current arrangement.     

[MCRider]

In a perfect world you should have an agreement. You track your business miles (which by the way does not count the commute from home to first jobsite, and from the last jobsite to home). You turn those in regularly and he pays the federal rate in a separate check, or as a clear line item on your pay stub. The Federal Rate is inclusive of insurance and repairs and depreciation, all costs (except the commute).

Or, same deal but based on actual expenses, you keep the records and turn them in regulalry, and prorate out the commute and any other personal mileage.

If he provides the vehicle to you, you must include a proper portion on your W2 for the value of the personal use.

Anything less is often done by businesses operating on the fringe, but is not proper. 

Ultimatums don't work very often. How much do you like your job.  Sorry.   

[754]

Sell the truck to him if you like driving it.
 sounds like he is paying your commute gas at around 400 a month.. how much is the truck worth roughly ?

[Stev-o]

I use my truck for work and get paid 55 cents/mile. Unless you have a contract stating what specifically he will cover, you are probably SOL.  Live and learn.

[Jerry Rxman Griffin aka MuthaF'er]

Geoffson,

YOUR choice to drive YOUR truck.

Usual deals are either a company vehicle or mileage reimbursement which includes any/all your expenses irregardless for the truck. Now if you have an accident and someone wants to sue do they go after you and your insurance or the owner of the business?! It's you driving your truck, not a company vehicle. Questionable call here especially when he says you agreed to drive your truck and then you'd still have to prove you were on company business. I think if he's paying for gas then he is accepting some legal responsibility then again YOU'D have to prove that. 

You know what you have to do: "I'm about done driving my own truck for this and want to get a new job or tell him to buy his own truck, pay his own insurance, pay for all the maintenance, etc." Those, I'm afraid are your 2 of your 3 choices. He's not going to do either of those so don't expect him to pay you mileage (#3) which would probably be your best option. What will happen is he will find another employee to do the same thing you've been doing. Can you be easily replaced by someone that can perform up to your standards. That's the real question you need to consider.

Signed,
Dad

[Don R]

The wrecks suck but, did you say the  value of the fuel from home to work and back adds up to about what mileage re-imbursement is worth? Do the math before you decide on you're course of action. You may be better off than you think.

[78 k550]

that really sucks Heffay.
It looks like your on your own with this one unless he wants to be real nice and reimburse you some of your lost money.
If you like it there and see some light at the end of the tunnel might be worth hanging around. If he is that caring about his employee's he might not care of high turnaround.

Paul

[heffay]

He does value me as an employee, he actually tells me regularly, gave me a $2.50/hr raise 2 weeks in, pays me holidays which he never did until a year of employment for previous employees. 

And actually MCRider, my "commute" would be covered by the fed rate because I have a home office.  I rarely go into our real office, maybe a couple times a week.

Now that I'm re-checking my math, its not that close.  Maybe I was trying to justify his end of the bargain.  Lets say I do 150 miles one day.  150 / 18mpg x 3.30$ per gal = $27.5 ... I dont even really need to do the other math to know theres a pretty big difference.  But here it is 150 x .55 = $82.50

I'm aware of possible ramifications... But I think he might be willing to negotiate if I do it right.  Heck, he gave me a week off when sales calls were slow so I could go remodel my buddy's house in cali and make some extra dough.  Thats why I'm here, getting advice, cuz I was all ready to go off half cocked yesterday after the tire blowout.

First things first though... Body shop, tires, another job offer, then go run the gauntlet.

[MCRider]

Use Test: For an employee to have a bona fide home office, besides the other tests that you probably pass, it must be for the convenience of the employer. Not for the convenience of the employee.

While i wouldn't tell you not to do it, I would tell you that if the employer maintains an office that other employees use, under an IRS exam yours may not stand up to this use test.

Just saying...

PS: One way to cover yourself on the "convenience of employer" issue is to have the employer state in writing in your employment agreement, that he expects you to maintain an offsite office that will facilitate the efficiency of carrying out your job.

[gnarlycharlie4u]

yea unfortunately if it's your truck it's your problem.
pizza hut doesn't cover their delivery guy's vehicles...

I'd recommend talking to him about having his insurance cover your vehicle or at least having him pay your insurance.
I mean it's your truck that's taking the beating from all that driving.

[MCRider]

yea unfortunately if it's your truck it's your problem.
pizza hut doesn't cover their delivery guy's vehicles...

I'd recommend talking to him about having his insurance cover your vehicle or at least having him pay your insurance.
I mean it's your truck that's taking the beating from all that driving.

I would say you want to try to avoid "hybrid" plans. Either its:
Your vehicle: reimbursed by 1. the Federal Rate, for business use only, or 2. actual expenses with personal use pro-rated and deducted. Or
His vehicle: with personal use calculated by IRS tables and dropped on your W2.

Either way, the plan should be in writing.

Anything else gets real messy.

[heffay]

Boss bought me a printer and other office supplies for my home office.  I've read all the related IRS stuff and I don't see anything to say it doesn't qualify.  I've also been self employed and a business owner most of my life, and many of those laws are similar, albeit not the same.  He really is a pretty good guy to work for, but I still think the situation could be better.

Use Test: For an employee to have a bona fide home office, besides the other tests that you probably pass, it must be for the convenience of the employer. Not for the convenience of the employee.

While i wouldn't tell you not to do it, I would tell you that if the employer maintains an office that other employees use, under an IRS exam yours may not stand up to this use test.

Just saying...

[fmctm1sw]

Is there any way you could "downsize?"  Do you need a truck?  When I delivered newspapers years back, they considered us "independent contractors."  Meaning we were completely on our own for everything, taxes too....

[MCRider]

Boss bought me a printer and other office supplies for my home office.  I've read all the related IRS stuff and I don't see anything to say it doesn't qualify.  I've also been self employed and a business owner most of my life, and many of those laws are similar, albeit not the same.  He really is a pretty good guy to work for, but I still think the situation could be better.

Use Test: For an employee to have a bona fide home office, besides the other tests that you probably pass, it must be for the convenience of the employer. Not for the convenience of the employee.

While i wouldn't tell you not to do it, I would tell you that if the employer maintains an office that other employees use, under an IRS exam yours may not stand up to this use test.

Just saying...

Did you read the "Use Test for Employees"?  Anyway, you've got the 2 toughest issues. Your first one, vehicle use, and the ancillary one, Office in home for employee use. Good luck.

[heffay]

A truck is kindof a necessity.  I have to remove screens from houses on occasion to take to the shop for rescreening as well as do installs infrequently.  The truck is/was nice enough I didn't want my wife taking it to campus and getting it destroyed by idiots. (I can do that just fine)    Otherwise, I would drive my wifes car more.  But even still, I'd rather my boss pay the 18mpg and we pay for my wife's 30mpg.

[heffay]

Did you read the "Use Test for Employees"?  Anyway, you've got the 2 toughest issues. Your first one, vehicle use, and the ancillary one, Office in home for employee use. Good luck.

From the IRS page: Generally, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.
Wife says: Every horizontal space is used if not already occupied by beer cans or dishes
passed that one 
Your business use must be for the convenience of your employer, and
You must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer.
Pass both of those too, I believe.

But even still... I'm not taking that deduction since that is not my current situation.  I think if he were to start paying me the federal wage, we'd probably stick to mileage once I enter our territory, which is about 25 miles from my home (since I don't always go to the office in the morning).  Its all a gray area with him though, as one might guess.

[MCRider]

Its the "convenience of employer" that is the trip up. The test for that is not up to us, its an IRS thing. They say if the employer is providing office space that is usable by the employee, then the employees office in home is for the convenience of the employee, not the employer.

Having the employer request the employee, in writing, to provide their own space so as to make the business more efficient, will help, but is not an absolute fix. The IRS really doesn't like people "creating" circumstances where their commuting expenses become deductable or reimbursable.

I understand this may be moot in your case.

Your employer may be struggling with this whoel vehicle use thing. Not wanting to accept the regulation that comes with growing, very understandable. He should get guidance from his tax preparer and take it to heart. Consult with you as to fairness. Then carry on.

Not try to make up a plan on his own. It will backfire and never work right. IMO

[MCRider]

I do believe in using your own interpretation as long as it has some basic logic, but with an understanding of what the IRS position is.

As far as vehicle reimbursement it really should be tied to IRS guidelines or it could get messy.

[Duanob]

I've always thought companies making employees use their own vehicles was just another corporate cop out. So they pay you mileage? They turn around and deduct the same amount to the feds, even steven, they pay nothing. If a company requires the use of a vehicle to do the job then that is the cost of doing business, it shouldn't be put on the backs of the employees. While I complain, our company does the same damn thing. Only we make the lowest paid employees use their vehicles, the couriers, and the project managers that make a decent salary get company vehicles. It pisses me off. Especially since gas is around $4 gallon and maintenance is going up, and depreciation for used vehicles is high as well. But I don't drive for our company so I don't use my vehicle.

Eh, what can you do......drink, get stoned, go postal, etc, etc.

[MCRider]

I've always thought companies making employees use their own vehicles was just another corporate cop out. So they pay you mileage? They turn around and deduct the same amount to the feds, even steven, they pay nothing. If a company requires the use of a vehicle to do the job then that is the cost of doing business, it shouldn't be put on the backs of the employees. While I complain, our company does the same damn thing. Only we make the lowest paid employees use their vehicles, the couriers, and the project managers that make a decent salary get company vehicles. It pisses me off. Especially since gas is around $4 gallon and maintenance is going up, and depreciation for used vehicles is high as well. But I don't drive for our company so I don't use my vehicle.


Eh, what can you do......drink, get stoned, go postal, etc, etc.

This post is wrong in so many ways. I'll just take the first. To say a company gets to write off an expense so they pay nothing is to admit you don't understand writeoffs. If you write off a dollar for an expense, your tax offset is your tax bracket. If your bracket is 30%, you save 30 cents in taxes. You're still out of pocket 70 cents for the expense. IF the emloyee takes in a reimbursement of $1 in an accountable plan, it is $1 tax free. At 55cents per mile, for most vehicles this is more than the cost of running it, so the difference is tax free income.

Employees being reimbursed at the Federal Rate under an accountable plan is a good deal for the employee. The employer benefits because they don't have to maintain a fleet, and the bookkeeping is much easier.

Corporate cop out? Sigh.

[Bob Wessner]

This thread reminds me of a tax course I took in college. Back then, way back then, the tax code was a book about 4" thick and each page was tissue paper thin. It was a hardcover book, published by Prentice-Hall as I recall. I can only imagine what the complete statutory tax code looks like now.  Good luck sorting it all out.