DAYTONA BEACH, Fla. — A new report obtained today by nine investigators shows that some Daytona Beach employees may not be paying federal taxes on their car allowances. The findings come from an auditor hired by commissioners to review the city’s finances.
Channel 9 Volusia County Reporter Demie Johnson began investigating the city’s policies and spending in November after a commissioner raised concerns.
The 11-page report shows the city of Daytona Beach spends more than $350,000 a year on employee car allowances, many of whom have office-based jobs.
A city auditor was not able to find mileage logs or an explanation of use, meaning some staff members may not be paying federal taxes on their car allowances because the payments aren’t being reported to the IRS as income.
Other findings raise concerns about city employees receiving car allowances as part of their compensation package, rather than for job-related expenses.
We also got a breakdown of how much each person is being paid per week and year. It shows office workers, such as the city’s chief financial officer, with a car allowance of almost $4,000 a year.
You won’t see people like the city manager or fire chief on that list because they opted out of the car allowance. But they both drive vehicles paid for by the city.
The city responded to the audit, saying:
Several statements in the report are incorrect, and the report itself is incomplete because it does not include management responses and corrective action plans as required. A formal response will be provided once senior staff have an opportunity to fully review the audit’s findings.
While the city appreciates the auditor’s review of its auto allowance practices, we strongly disagree with several key conclusions and characterizations in the summary and findings. These conclusions are not supported by documentation of how the city’s program actually operates. For example, the report states that “the city may be failing to properly report these payments as taxable wages.” In fact, the city’s auto allowance program is intentionally structured as a taxable, nonaccountable plan. Under IRS rules, this means the city is not required to collect mileage logs to remain in compliance. All amounts paid under the program are treated as taxable income to the employee and reported on their W-2.
The auditor will review the last report we presented to you on November 17 during tomorrow night’s commission meeting. It was on the city’s travel expenses. We will be at the meeting when that happens.
You can read the full audit and see a breakdown of how much each employee is paid here:
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