Can the North Carolina State Highway Patrol assign State-owned vehicles to civilian (non-sworn) employees like radio technicians and mechanics to drive home and back, and if so, do those civilian employees have to pay the State a commuting fee?

Plain-English summary

Colonel R.A. Barefoot ran the State Highway Patrol in 1993 and had a fleet question. State-owned passenger vehicles came with a commuting fee under N.C.G.S. § 143-341(8)i.7a; an employee who drove a State vehicle between home and work reimbursed the State at a rate set by the Department of Administration. But the statute had a catch-all exception for "any other vehicle exempted by Internal Revenue Service's regulations." Could the Patrol assign vehicles to civilian (non-sworn) personnel like radio technicians, communication center supervisors, and mechanic supervisors who were on-call and required to respond to emergencies? And if so, did the commuting fee apply?

Special Deputy Attorney General Isaac T. Avery III answered yes to assignment and no to the fee.

The legal pathway ran through a 1989 IRS opinion letter. In response to a question from the South Carolina Emergency Management Department, the IRS Southeast Region director Michael R. Allen had written to U.S. Representative Arthur Ravenel, Jr. that government emergency-response vehicles driven to and from work as part of the employee's job duties were not a taxable fringe benefit. The NC Department of Administration adopted that interpretation by an April 11, 1991 internal memorandum from James E. Rhodes to Assistant Secretary E.B. Jackson.

Because both the federal Internal Revenue Code and N.C.G.S. § 143-341(8)i.7a included the catch-all phrase "any other vehicle exempted by Internal Revenue Service's regulations," the IRS exemption automatically flowed into NC law. A civilian on-call Highway Patrol employee who needed to respond to emergencies from home fell under the exemption, so no fringe-benefit tax applied and no commuting fee was owed.

Special-purpose vans got a separate IRS escape hatch. The IRS treated vans modified so they could not realistically be used for personal driving as exempt under the de minimis personal-use rule (Federal Register, Vol. 50, No. 215, p. 84). The Patrol's radio engineer vans had shelving filling most of the cargo area and bore the Highway Patrol insignia. They qualified.

Net result: the Patrol could put civilian on-call staff in State vehicles, and those staff drove home and to work without writing checks back to the State.

Currency note

This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The IRS rules on qualified nonpersonal-use vehicles and de minimis fringe benefits (now in Treas. Reg. § 1.61-21 and IRS Publication 15-B) have been updated repeatedly since 1993. The NC commuting-fee schedule under the Department of Administration's motor pool rules has also been adjusted. The structural rule (NC law adopts the IRS exemption by reference) has been durable.

Background and statutory framework

State motor pool rules try to balance two policy goals. The State wants its vehicles available where they are needed, which sometimes means at an employee's home overnight so the employee can respond from there. But the State does not want to subsidize its employees' private commuting on the taxpayer's dime; commuting is not agency business. The commuting fee in N.C.G.S. § 143-341(8)i.7a was the compromise. Employees with take-home vehicles paid a use rate to the State for the home-to-work portion. The fee deterred unjustified take-home assignments and recovered the personal-benefit portion of the use.

Some vehicles do not fit the personal-benefit framework. A police car with a radio and prisoner cage is not really useful as personal transportation. A van filled with calibration equipment is not a family car. The federal tax code recognizes this with a "qualified nonpersonal-use vehicle" category and a "de minimis fringe" rule. Vehicles with mostly job-specific modifications (clearly-marked emergency response, mounted specialized equipment, prisoner partitions) are treated as not generating taxable personal benefit when used for incidental personal driving like the home-to-work trip.

The NC statute tracked the federal rule by referencing "any other vehicle exempted by Internal Revenue Service's regulations." That clause did most of the work in this opinion. Once the IRS had issued an opinion letter and the NC Department of Administration accepted it, NC commuting policy automatically followed. The AG did not need to read the catch-all narrowly; the statute's plain text imported IRS exemption rules wholesale.

The opinion also illustrates the role of agency-level adoption of IRS interpretations. The 1989 IRS letter to South Carolina was not binding on North Carolina. But the NC Department of Administration's 1991 internal memo formally adopting the interpretation gave it operational effect for State agencies. The AG could rely on that two-step (IRS guidance plus DOA adoption) to conclude the exemption applied.

Common questions

What counted as an "on-call" employee for this purpose?

The opinion described a non-law-enforcement civilian employee who was required to respond to emergencies. Radio technicians and communication-center supervisors were the listed examples. The job had to involve genuine emergency response responsibilities, not just being reachable by phone. A regular nine-to-five employee with a State vehicle would not qualify.

Did sworn troopers qualify under the same exemption?

Sworn troopers operating marked patrol cars qualify under a separate IRS category for clearly-marked police vehicles, also imported into NC law through the same statutory catch-all. The 1993 opinion was specifically about civilian (non-sworn) personnel, where the on-call emergency-response basis was the legal hook.

What if the vehicle was used for personal errands beyond commuting?

The on-call IRS exemption and the de minimis exemption both contemplated incidental personal use, primarily the home-to-work commute. Substantial personal use, like running family errands or weekend road trips, would push the use back into taxable territory and would also typically violate State agency vehicle-use policy. The 1993 opinion did not approve personal use beyond the commuting case.

Did the State have to keep records of who used what vehicle for commuting?

The opinion did not directly address recordkeeping, but the Department of Administration's commuting policy at 1 N.C.A.C. 38.0402 included documentation requirements. Each agency typically had to log assigned vehicles, the assigned employee, and the basis for the assignment.

Source

• Landing page: https://ncdoj.gov/opinions/authorization-of-civilian-employees-to-commute-in-state-owned-vehicles-payment-of-fee/

Citations

• N.C.G.S. § 143-341(8)i.7a
• 1 N.C.A.C. 38.0402
• IRS Federal Register, Vol. 50, No. 215, p. 84 (qualified nonpersonal-use vehicles / de minimis personal use)
• IRS letter from Michael R. Allen, Southeast Region Director, to Hon. Arthur Ravenel, Jr. (July 18, 1989)
• NC Department of Administration memorandum from James E. Rhodes to Assistant Secretary E.B. Jackson (April 11, 1991)

Original opinion text

May 17, 1993

TO: COLONEL R.A. BAREFOOT
STATE HIGHWAY PATROL

FROM: ISAAC T. AVERY, III
SPECIAL DEPUTY ATTORNEY GENERAL

RE: AUTHORIZATION OF CIVILIAN EMPLOYEES TO COMMUTE IN STATE-OWNED VEHICLES/PAYMENT OF FEE

The question you pose is whether civilian personnel of the Highway Patrol are authorized to commute in State-owned vehicles; and if so, are these employees required to pay a commuting fee. Yes, they are authorized to commute in State-owned vehicles if you so choose to assign them a vehicle; and no, under Internal Revenue Service interpretation, these persons would not have to claim this as a taxable fringe benefit. Consequently, a commuting fee need not be paid to the State.

State law provides that the Department of Administration, with the approval of the Governor, may adopt and enforce rules relating to the permanent assignment of State motor vehicles and the use and reimbursement for those vehicles for commuting. N.C.G.S. 143-341(8)i.7a. The statute further requires every individual who uses a State-owned passenger vehicle to drive between his official work station and his home to reimburse the State for these trips at a rate computed by the Department of Administration. However, certain vehicles are exempt from this fee. This statute tracks the federal Internal Revenue Code provisions on taxation of fringe benefits which lists use of the same vehicle for commuting as being exempt from federal taxation. Both the federal regulations and State law include a catch-all provision of "any other vehicle exempted by Internal Revenue Service's regulations." The Department of Administration has adopted a commuting policy. This policy incorporates State statutes including the exemptions. See 1 N.C.A.C. 38.0402.

The Internal Revenue Service has issued commuting policy opinions on certain vehicles. In response to a question by the South Carolina Emergency Management Department, the Internal Revenue Service opined that government emergency vehicles driven to and from work as a matter of job responsibility are not taxable. (See July 18, 1989 letter from Michael R. Allen, Director, Internal Revenue Service, Southeast Region, to the Honorable Arthur Ravenel, Jr.) The North Carolina Department of Administration agreed with this interpretation by April 11, 1991 memorandum from James E. Rhodes to Assistant Secretary E.B. Jackson.

Based upon the opinion of the Internal Revenue Service, any vehicle assigned to a non-law enforcement civilian employee who is on-call and required to respond to emergencies is exempt from federal taxation. The use of a State vehicle by a radio technician, a communication centers supervisor, a mechanic supervisor, or other civilian personnel who are on-call and required to respond to emergencies, falls under this exemption.

In addition to the opinion letter, under the interpretation given by the Internal Revenue Service in the Federal Register, Volume 50, No. 215, p. 84, vans that have been specially modified with the result that they are not likely to be used more than a de minimus amount for personal use, for example, permanent shelving that fills most of the cargo area carrying equipment, plus specially painted with the company name, are exempt. Vans issued to radio engineers fall under this provision due to the installed shelves for carrying tools and the Highway Patrol insignia being displayed on the vans.

If you need further information concerning this matter, please do not hesitate to contact our office.