Tax Reporting on Personal Use of State Motor Vehicles

The personal use of state owned or leased vehicles is considered a non-cash fringe benefit subject to reporting and taxes.  Under provisions of the Internal Revenue Code, the State of Maryland elected to not withhold Federal or State income tax on this fringe benefit. FICA (Social Security and Medicare) taxes will be withheld from employees who are FICA taxable.

This year the reportable taxing period covers November 1, 2007 through October 31, 2008.  As in prior years, the Fleet Management division of the Department of Budget and Management will submit reports to the Central Payroll Bureau for the affected employees.  These reports will be processed in the pay period ending November 18, 2008 for employees of the Regular Payroll system.  Those received too late for the November 18th pay period will be processed for the pay period ending December 2, 2008 and December 16, 2008.  Receipt of Auto Fringe Benefit Reports by Central Payroll Bureau after December 16, 2008 will result in a W-2 correction that may require the taxpayer to file an amended tax return.

The value of the fringe benefit will be posted to the employee’s Federal and State taxable earnings, and FICA tax, where applicable, will be deducted from current pay.  These actions will appear on the employee’s earnings statement as “AUTO FR VAL” and on the annual Wage and Tax Statement (Form W-2) as an increase to taxable wages and FICA tax.

Questions regarding the Vehicle Fringe Benefit Program should be directed to the Department of Budget and Management’s Auto Fringe Coordinator at 410-260-7337.