Washington Is Trying ‘to Kill a Gnat With a Sledgehammer’ : Tax Law Changes on Car Use Have Businesses Spinning Their Wheels
On New Year’s Day, San Diego employers and their accountants cringed at the prospect of keeping onerous mileage records to convince the federal government that company cars were being used for business.
New federal laws required drivers to keep “contemporaneous written records” each time a driver got behind the steering wheel of a company vehicle.
Although two subsequent regulation changes by the Department of the Treasury and a still-brewing congressional debate have reduced the paper work burden, drivers still aren’t free to keep both hands on the wheel and their minds on business.
And accountants, for their part, are still worried about the added paper work the regulation created.
“You can’t argue with the intent because there were some abuses of (business car usage). But what (Washington) did was try to kill a gnat with a sledgehammer,” said one San Diego executive.
While the original ruling required drivers to log individual trips, accountants are now advising clients to maintain simpler daily records.
That hasn’t eliminated the griping, however. “This thing is a bookkeeping nightmare, even with the modifications,” the executive complained.
“There’s still a lot of dust that hasn’t settled,” said Jerry Ringer, assistant to the president at Cubic Corp. “The last word we heard was that (the Treasury Department) had held an April 18 meeting. But there still hasn’t been any disposition of the matter, so we don’t understand exactly what is required.”
Consequently, although Cubic hasn’t changed the way it tracks car use, it has developed “sophisticated plans” in the event that Washington again settles on contemporaneous record keeping, said Ringer. “It’s taken some time and expense to comply so far,” he noted.
While the Treasury Department has reversed field several times, the Signal Cos. of La Jolla has maintained its existing company car-use accounting. “We’ve always kept track of personal use,” said a company spokesperson. “We’ll keep doing that.”
The new regulations bother San Diego accountants.
“The law put us in the role of policeman, which is a role we didn’t want,” said Mary Smalligan, a partner with Delloite, Haskins & Sells’ San Diego office.
Accountants might get to turn in their badges, however, after a U.S. House and Senate conference committee can agree on a new law governing company car use. That would allow the Treasury Department to write yet another revised set of regulations.
Until then, Smalligan advised, it’s wise to “maintain adequate evidence of business use” and not count on a return to the old days.
‘Never Going Back’
“We’re never going back to the nirvana enjoyed before,” said Lee Czarapata, a spokesman for Runzheimer International, a Wisconsin travel management consulting firm. “It should loosen up, but I don’t think things will ever get back to the way they were.”
It’s not surprising that honest taxpayers are being hurt the most by the indecision in Washington. “I’d say that those (businesses) making a genuine effort to comply to the spirit and letter of the law are the most frustrated,” Smalligan said.
