606  Assignment of Motor Pool Vehicle to the President

Approved by Board of Trustees
Effective Date: June 5, 2017
Responsible Division: Business and Finance
Responsible Office:  Business and Finance
Responsible Officer:  Associate Vice President, Business and Finance

I. Purpose

This policy establishes that Middle Tennessee State University (MTSU or University) Motor Pool vehicles may be assigned to the University President for his/her official use. 

II. General

A.  At the time of employment, the President may elect to receive:

1.  assignment of a University motor pool vehicle for his/her use; or

2.  a motor vehicle allowance.

B.  This election should be made at either:

1.  the time of employment, or

2.  as assigned motor pool vehicles are replaced.

a.  This replacement should occur as needed based on the useful life of the vehicle and accumulated mileage.

b.  In no circumstances should the replacement cycle be less than three (3) years.

C.  Once the President elects to take the motor vehicle allowance, he/she cannot change to an assigned vehicle.

III. Vehicle Assignment

A.  An appropriate motor vehicle is defined as a late model (no more than five [5] years old) four (4)-door passenger sedan. Operating and maintenance costs of the assigned motor pool vehicle shall be the responsibility of the President’s office. In recognition that use of the assigned motor vehicle may include non-business use, the President is required to maintain appropriate types and amounts of insurance to cover any non-business use of the motor vehicle.

B.  To the degree that the motor pool vehicle assigned is used for non-business purposes, MTSU will report on the employee’s Form W-2 the value of such personal use in the employee’s income as compensation subject to withholding for federal income taxes and applicable FICA taxes. Additionally, these amounts shall be considered as compensation for employee benefit purposes.

IV. Vehicle Allowance

A.  The President shall receive a monthly cash allowance from MTSU, should this option be selected. In recognition of this payment, the President shall be responsible for all expenses attendant to the:

1.  Purchase or lease (and replacement as needed) of a motor vehicle appropriately suited for the conduct of University business. An appropriate motor vehicle is defined as a late model (no more than five [5] years old) four (4)-door passenger vehicle.

2.  Operation, insurance, maintenance, and repair cost of said motor vehicle.

B.  The monthly automobile allowance amount shall be set in the President’s employment agreement. The allowance consists of two (2) components:

1.  A capital component based on the estimated monthly lease value of an appropriately suited motor vehicle; and,

2.  An operating component that applies a mileage rate that considers only the marginal operational cost of a vehicle and assumes twelve thousand (12,000) business miles are driven annually.

a.  It is the responsibility of the Business and Finance area of MTSU to initially calculate and periodically update the monthly automobile allowance amount.

b.  The monthly automobile allowance will be reviewed and adjusted periodically in conjunction with future compensation studies for the President.

C.  The monthly automobile allowance, under Internal Revenue Service (IRS) Regulations, must be included in the compensation on the employee’s Form W-2 and is subject to federal withholding and applicable FICA taxes. Additionally, automobile allowance payments are considered compensation for employee benefit purposes.

D.  The President is eligible to be reimbursed for business related mileage exceeding twelve thousand (12,000) miles annually. If requesting such reimbursement, the President must provide MTSU with a log that documents that the vehicle, for which the allowance is paid, has been used for twelve thousand (12,000) business related miles. The log submitted should comply with IRS guidance for documentation of business usage of a motor vehicle. Once this annual twelve thousand (12,000)-mile threshold is achieved, the President may submit mileage reimbursement requests for any business related miles that exceed twelve thousand (12,000) miles. The reimbursement rate shall equal the current approved mileage rate, less the then current IRS standard mileage rate attributed to depreciation. Mileage reimbursement paid under this item is not considered compensation for income tax purposes and is not subject to federal withholding and applicable FICA taxes.

Forms: none.

Revisions: none.

Last Reviewed: April 2022.

References: IRS Regulations.