Posted: June 1, 2011 in Uncategorized
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In light of the City of Riverside being a public entity reporting the use of publicly owned vehicle appears more trickier due their exempt status over the private sector.  If a vehicle is noted as a safety officer vehicle, it maintains exempt status.  Placing cold plates on public vehicles would indicate exempt status. Both of these would not be TAXABLE.  Therefore city council members who had cold plate vehicles, paid no taxes.  An imminent abuse of the use of cold plates are that public vehicles can be used for personal purposes and not be taxed.  This isn’t rocket science, and city hall knows it, but inadvertently play the “I didn’t know that” card, then when that they do know, “we will make it right and fix it” card. Then there is the cover-up part, “Now, we can go forward and put this behind us, and get to something really important, the work of the people.”

A monthly $350.00 fuel expense, by the way, is taxable according to the IRS.  One city council member, Mike Gardner, takes the $350.00 fuel expense.  Pocketing the money for other than  what it was intended would be a form of abuse.  You just can’t pocket the money for personal use just because you have a Segway. Regardless, his $4,200 per year allowance is taxable.  Still, in my opinion $350 is to much.  Since no one has an idea of how to track themselves, the best way is to submit your expenses for reimbursement. In this manner they our forced to be responsible for documenting their own expenses. But the cast of characters have done more than consistently perjure themselves, and in my opinion, have broken the law without having to take responsible punishment.  Preferential treatment? That’s a good question.  You, me and  especially the public at large would definitely not be able to get away with any of this activity.  The five year old explanations abound, “I dunno”, “I didn’t know that” or “the difference between personal use and business can be blurry”.  Well I’m here to clarify, because the IRS is very clear regards to the use of vehicles for business.  Many people think there is a culture of entitlement looming in City Hall, and that many there are very bad people, but it doesn’t compare with the IRS, who can just be bad to work with.  This makes me worried that even Chief Financial Officer, Paul Sundeen, should have counseled city hall personal regards to these rules, especially City Attorney, Greg Priamos should have given the legal implications of these rules.  But we probably didn’t think of calling BB&K for a consult. Not only are there legal implications for councilpeople who didn’t report personal use, but the city could have implications for not reporting the value of the vehicle as wages and/or documenting the use.  This should be embarrassing for the city but also a reflection of a lack of leadership qualities and a dereliction of duty.  City Hall states that council members can utilize their public vehicles for personal use as long as they report it to the IRS.  No one in the private sector could even think of getting away with this.  Steve Adams states he uses his taxpayer vehicle half the time for business and half the time for personal, based on a 50/50 rule. Folks it doesn’t exist!  Andy Melendrez says sixty percent of the time he uses it for business and forty for personal, based on a 60/40 rule. Again,it doesn’t exist.   According to City Finance Director, Bret Mason, he agrees there is no formula, council members are responsible for reporting their personal mileage totals for tax purposes.  Well, folks, again even Bret is wrong.  It is the Cities fiduciary duty to the taxpayer to be the watch dog of public vehicles, and to follow IRS rules according to their Fringe Benefit Guide.

I believe many of these elected officials just don’t get it.  You join the armed service to be of service to your country by defending it.   Public service is the same, you run to be elected because you want to be of service to the community.  Therefore, no perks or entitlements.  This would lead to corruptible offenses and abuses, of which we now see.  All you have to do is hear what comes out of their mouth as in the case of city councilman, Paul Davis, who whines that the $350.00 monthly allowance wouldn’t even cost his gas, let alone a car payment, insurance and maintenance.  Would you want this person representing your community? This is a slap and insult to the community at large.   But why should the City of Riverside be the exception, where other small cities no where the size of ours are following IRS rules and have no confusion as to the requirements.  City councilman Steve Adams who later this year turned in his Chrysler 300, insisted the city uses the 50/50 rule to ensure council members don’t underpay their taxes, since the IRS counts personal use of a city owed vehicle as a taxable benefit.  Steve a career politician is unfortunately wrong on this issue, and its not me saying it, it’s the IRS.  You can run, but you cannot hide from the IRS…  when I contacted the IRS this is what was collaborated except the run and hide part. The City is beginning to find themselves in the unfortunate position of being the fish out of water, a place you don’t want to be.  Especially when you are being watched.

Paul Davis ran up 6,879 miles in six months and claimed no personal use; well that’s a document I’ll be requesting, to see the where, why, and when the city business took place. Andy Melendrez states Tom DeSantis, Ex-Assistant City Manager, told him of the 60/40 rule. Well if you know Tom’s track record here at the city and the county, it’s not completely consistent, and I believe he was documenting car use on post-it notes.  Adams, Rusty, Hart and Melendrez claimed fifty percent and reported that business portion to the IRS.  But Andy Melendrez, stated earlier of the 60/40 rule. OK these people are representing the people, but do they really know what they are doing? That’s the question. Further, if doing the people work is such a hardship, why would they feel inclined to do it at all?  There are sacrifices for the common good to make things better.  Again, these are people who do not care about our city, this I deduce based on their statements.

Without getting deep into details of IRS tax law, anytime you use a public vehicle for personal use, it is taxable and considered income.  The income is based on the value of the vehicle.  Otherwise, you are required to substantiate the business use in order to exclude the value of the vehicle use as income.  Responsible parties for documentation are yourself/councilperson and the City.  Therefore, when records/documentation are not provided by the employee/councilperson, the value of that vehicle as provided by the original purchase price or lease value, for the period of time the employee/councilperson uses it, is converted to wages by the employer/City.  It is then up to the employee/councilperson to substantiate business use to the IRS.  If records/documentation are provided by the employee or councilperson, the business portion will be deducted minus the personal use if it applies, with the value of the personal use converted to taxable wages.   Cold Plates, un-taxable, nice while it lasted…..IRS well, they don’t take tax evasion lightly.


  1. […] did an article on this very subject back in June of 2011, called, Riverside City Hall: Vehicle Ignorance Prevails: IRS Use For Public Us….  But, Riverside Police Chief Sergio Diaz said repainting the cars would be a waste of money. Some […]

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