Department of Energy’s Workplace Challenge Needs Some IRS Clarification

MAR 27 2015 BY BARRY BRENTS 3

EV Everywhere Program Needs Some IRS Clarifications For Businesses If It Is A Taxable Benefit

EV Everywhere Program Needs Some IRS Clarifications For Businesses If It Is A Taxable Benefit

If a company participates in the US Dep’t of Energy’s EV Everywhere Workplace Challenge will the EV charging benefits as taxable to its employees? Senate Finance Committee Ranking Member Ron Wyden (D-Ore) wants the IRS to reassure businesses that they will not treat EV workplace charging as a taxable benefit.

EV Everywhere Challenge Issued By DoE

EV Everywhere Challenge Issued By DoE

Clarification is needed because the tax rules for these benefits are vague and that ambiguity Senator Wyden says, is hampering the U.S. DOE’s Workplace Charging Challenge. Workplace charging can qualify as tax-free fringe benefit if its value is de minimis so that “after taking into account the frequency with which similar fringes are provided, so small as to make accounting or it unreasonable or administratively impracticable.”

In a letter to the IRS Commissioner, Senator Wyden makes the case for treating workplace charging as a tax-free benefit. For a typical commuter the average monthly benefit of workplace charging can be as small as $13 and only 1/3 of drivers primarily charge their vehicles at work.

The extra time and equipment that would be needed to track the charging benefits and including it into income could triple the cost of the charging station. Still, the de minimis standard is just vague enough to keep some U.S. companies from participating in the Workplace Challenge out of fear that the charging benefits might create an unintended tax liability.

As Senator Wyden’s letter points out, definitive guidance from the IRS that workplace charging benefits are not taxable could eliminate the risk and remove a significant obstacle to the U.S. Dep’t of Energy’s efforts to increase EV adoption through workplace charging.

Senate Finance Committee Ranking Member Ron Wyden (D-Ore) wants the IRS to reassure businesses that they will not treat EV workplace charging as a taxable benefit.

Editor’s Note: Our thanks to Mr. Brents for covering all the ins and outs of the EV Everywhere Workplace Challenge .  Barry is a tax attorney in the Bay Area.  He also maintains a website called PlugIncentives.com, where he track incentives around the country for light-duty electric vehicles and EV charging stations. 

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3 Comments on "Department of Energy’s Workplace Challenge Needs Some IRS Clarification"

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More clarification is better, especially if it brings workplace charging to more employers. We need to make installing charging as simple and easy as possible for employers. My preferred model is 80% L1/20% L2, but particular situations are necessarily highly variable.

The clarification and standardization of the tax treatment of charging at work is an inevitable consequence of our acculturation to plug-in cars. Go Sen. Wyden!

PS, Maybe you can give clarification to GAO to allow workplace charging in the Fed Gov’t?

Of course the Senate could simply write a law specifically legislating that charging at work not be taxed as a benefit.

At that same time they could write legislation that would allow companies to reimburse employees who charge company cars at home and put that in their books as an expense the same as a gas receipt. Instead right now it would have to be accounted for as a taxable benefit (like a bonus check) with an increased tax burden to both the company and employee.

But we now have a Congress that is openly hostile to anything Green, so we can forget about any of that.

Another tricky subject with this Workplace Challenge is whether the DoE, as an employer, can even participate in its own challenge. There are hurdles with spending tax-payer money on infrastructure for their employees, regardless of who pays for the electricity. Such hurdles were more relaxed in decades past, and are still ignored by the occasional congressman or two these days 😉