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Car expenses - employee’s use personal car on employer’s business.
In some cases it is necessary to determine the costs involved when employees use their cars on their employer’s business in order to determine MW compliance. For example, car expenses are frequently an issue for delivery drivers employed by pizza or other carry-out type restaurants.
(a) As an enforcement policy, the Internal Revenue Service (IRS) standard business mileage rate found in IRS Publication 917, “Business Use of a Car” may be used (in lieu of actual costs and associated recordkeeping) to determine or evaluate the employer’s wage payment practices for FLSA purposes. The IRS standard business mileage rate (currently 28 cents per mile)(EDIT: Now it is 55 cents per mile as of Jan 1 2009) represents depreciation, maintenance and repairs, gasoline (including taxes), oil, insurance, and vehicle registration fees. In situations where the IRS rate changes during the investigation period, the applicable rates should be applied on a pro-rata basis.
As you seem to be already aware, calculating and properly accounting for all of those expenses can be a chore. I assume that is why no pizza shops that I know of track actual expenses of drivers personal cars. If you would like to explore further the details of calculating those expenses in a method that the DOL approves of, I suggest that you go the information referred to in document "IRS Publication 917, “Business Use of a Car” to answer your questions. I take the easier route and just use the current approved rate of 55 cents per mile.
As the information in Pub 917 is now covered in Pub 463, I suggest you look there for your answer.
http://www.irs.gov/publications/p463/ch04.html#d0e3326
The DOL accepts the methods published by the IRS. Here is what the DOL says about what the IRS determines about how to calculate vehicle expenses:Help me define exactly what “vehicle expenses” are. Is the cost of the vehicle (payments) an expense? Is the cost of a new tire an expense? Is the cost of a transmission repair and expense? Are those expenses only if the breakdown happens while on the job?
Also, over what time period are these expenses to be amortized to determine if minimum wage was paid?
To summarize my current questions to you:
Thanks!
- Exactly what are “vehicle expenses” in the context of your statement?
- Over what time period are those vehicle expenses amortized to calculate if minimum wage was paid?
http://www.dol.gov/esa/whd/FOH/FOH_Ch30.pdfFrom page 31 of the DOL Field Operations Handbook (FOH) chapter 30
Car expenses - employee’s use personal car on employer’s business.
In some cases it is necessary to determine the costs involved when employees use their cars on their employer’s business in order to determine MW compliance. For example, car expenses are frequently an issue for delivery drivers employed by pizza or other carry-out type restaurants.
(a) As an enforcement policy, the Internal Revenue Service (IRS) standard business mileage rate found in IRS Publication 917, “Business Use of a Car” may be used (in lieu of actual costs and associated recordkeeping) to determine or evaluate the employer’s wage payment practices for FLSA purposes. The IRS standard business mileage rate (currently 28 cents per mile)(EDIT: Now it is 55 cents per mile as of Jan 1 2009) represents depreciation, maintenance and repairs, gasoline (including taxes), oil, insurance, and vehicle registration fees. In situations where the IRS rate changes during the investigation period, the applicable rates should be applied on a pro-rata basis.
As you seem to be already aware, calculating and properly accounting for all of those expenses can be a chore. I assume that is why no pizza shops that I know of track actual expenses of drivers personal cars. If you would like to explore further the details of calculating those expenses in a method that the DOL approves of, I suggest that you go the information referred to in document "IRS Publication 917, “Business Use of a Car” to answer your questions. I take the easier route and just use the current approved rate of 55 cents per mile.
As the information in Pub 917 is now covered in Pub 463, I suggest you look there for your answer.
http://www.irs.gov/publications/p463/ch04.html#d0e3326