The wage limit used in the definition of a “control employee” for a governmental employer under the commuting-only valuation rule has increased from $165,300 to $172,100 in 2023 [Office of Policy Management, Salary Table No. 2023-EX, Rates of Basic Pay for the Executive Schedule Office of Policy Management, Salary Table No. 2023-EX, Rates of Basic Pay for the Executive Schedule].
Under the commuting-only valuation rule (see Payroll Guide ¶3580), the value of a vehicle provided to an employee for commuting use is determined by multiplying each one-way commute (that is, from home to work or from work to home) by $1.50. To use this rule, the following requirements must be met:
- (1) The employee must be required for bona fide noncompensatory business reasons — i.e., unsafe conditions — to travel between home and work (commute) in a company road vehicle that is not otherwise available for personal use.
- (2) The employer must have a written policy under which it does not allow the employee to use the vehicle for personal purposes other than for commuting or de minimis personal use.
- (3) The employee must not use the vehicle for personal purposes other than commuting and de minimis personal use.
- (4) If the vehicle is an automobile (any four-wheeled vehicle, such as a car, pickup truck, or van), the employee who uses it for commuting must not be a “control employee.”
A “control employee” for a government employer is either an elected official, or a government employee whose compensation equals or exceeds the compensation paid to a federal government employee holding an Executive Level V position. For 2023, a federal government employee holding an Executive Level V position must be paid $172,100.
The IRS had previously announced that a compensation limit of $265,000 should be used to determine whether a worker is a “control employee” for a nongovernmental employer in 2023 [Notice 2022-55].
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