"Truck pay" ~ 1099MISC, box 1 rent????

[elfling]

Oaky, this situation is a totally new one for me. Client is a pipeline worker in PA. Company has him take his own pick up truck to job site. Fine, commuting miles do not count in any way. From the initial "meet everyone point' each day my client then travels up and down the line to various crews for all kinds of tasks using his personal vehicle. Acceptable work mileage.

One would think this should be a simple case for form 2106. However, company adds $98 per day Truck Pay to his net pay. I have the pay stub showing this to be so. This figure is not included on the W2 form at all. Instead, he has received a 1099-MISC showing $9430 (96 days @ $98) in box 1, Rents. (There's the confusion?????) I fail to see how his truck is being rented by the company. But if we treat it as such, is the methodology correct?

1040, line 21, other income = $9430

Between the mileage (using SMR) and a few tolls, his outlay totals $2843. So,

1040, line 36, notation PPR.= $2843

Increases overall income by $6587

Am I on track here or totally into left filed?

[Medlin Software, Dennis]

Not an expert on this...Saw this once, from a payroll perspective. The employer changed (properly IMO) to adding the amount as part of their pay, and paying all employer taxes on what used to be "rent".

[ATS]

not a expert but can you not write off his commute to the job site?

I used to work in construction. trucks are rented mostly. because they have so many.

it easier for them to have a truck for 5 years and then let it go to a closed auction.

I would say do it as they have it as rent.

but do trust me on the rent. I promise you they do rent a ton of things. they actually have to rent out a percentage of their business for street scape and pipeline work.

[Medlin Software, Dennis]

http://www.irs.gov/pub/irs-drop/rr-02-35.pdf (edited to an irs.gov link)

This is the ruling I gave to the employer the one time I ran into this.

If this is still the law, the OP is in a tough spot. The proper way to file is to show it as income, pay the employee part, and let the IRS deal with the employer. The client/employee may not want to "rock the boat", and want you to treat it incorrectly (according to the ruling) as a proper 1099.

[taxtrio]

Rent paid to the owner of equipment; when the owner operates the equipment is called rent received for the use of personal property. It goes on Sch C. with the appropriate deductions. It is NOT treated the same as "rent" received for real estate that would go on Sch E. Do not put on Sch E...

His company "rents" his truck from him and just pays him separately for it. I have seen this several times before.. Sch C., and SE on the profit. after deductions.

Taxtrio

[Medlin Software, Dennis]

From the RR, for those not wanting to use the link:

"Whether amounts paid to employees for employee-provided equipment, including vehicles, that are used by the employee to provide services as an employee are wages subject to federal employment taxes?"

"Situation 2 – Business A also hires laborer D to perform services as an employee. Employee D uses D’s pickup truck for transportation along the pipeline. Employee D is paid an hourly wage of $X for the performance of services as an employee and is also paid an additional amount of $Y per day for providing the pickup truck. Business A does not require D to substantiate mileage or actual employee business expenses incurred while performing services as an employee of A. Employee D is not required to return any of the daily amounts paid for the pickup truck if the amount paid exceeds the employee business expenses D incurred in connection with the pickup truck while performing services as an employee of A. (Laborer D is not an independent contractor.)"

"Under the facts specified in Situations 1 and 2, the amounts paid to employees B, C, and D for providing equipment, including vehicles, used in performing services for the employer as an employee are not paid under an accountable plan. Each arrangement fails the business connection requirement because in each situation the employer pays an amount to the employee regardless of whether the employee incurs (or is reasonably expected to incur) business expenses that would be deductible under §§ 161 through 198. Each arrangement fails to require the employee to substantiate employee business expenses, as required by § 1.62-2(e). Finally, the arrangements do not require the return of excess as required under § 1.62-2(f)."

"In Situations 1 and 2, because the amounts paid to the employee for providing equipment, including vehicles, for use in performing services as an employee are not paid under an accountable plan, they are wages subject to the withholding and payment of income and employment taxes."

(THE ONE EXCEPTION I SEE, WHICH WOULD NOT APPLY TO OP:)

"Under the authority of § 7805( , a taxpayer that actually paid amounts separate from wages for the use of employee-provided equipment (such as described in Situation 1 and the truck described in Rev. Rul. 68-624) and reported these payments on timely issued Forms 1099 for calendar years beginning before January 1, 2002, may continue to report these payments on Form 1099 for periods ending on or before December 31, 2002."

"Situation 1 – Business A is engaged in pipeline construction and repair. A hires welder B and heavy equipment mechanic C to perform services as employees in connection with the construction of a pipeline. Business A requires B to provide and maintain a welding rig for B=s use in providing welding services and requires C to provide and maintain a mechanics rig for C=s use in performing repair and maintenance services at the work site on the employer=s heavy equipment. B and C are required to provide rigs sufficient to perform the required employee services. (Neither employee B nor C is an independent contractor.)
A welding rig consists of a truck equipped with a welding machine and other specialized welding equipment required to perform welding services. B is paid an hourly wage of $X for the performance of services as an employee. In addition, A pays B an hourly amount of $Y per hour for providing the welding rig. This rig reimbursement is only paid for those hours that B performs services as A’s employee."