n-19-34.pdf

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Maximum Values For 2019 For Use With Vehicle Cents-Per-Mile and Fleet-Average
Valuation Rules

Notice 2019-34

This Notice 2019-34 provides the maximum fair market value of a vehicle for use
with the fleet-average and vehicle cents-per-mile special valuation rules under Treas.
Reg. § 1.61-21(d) and (e), respectively, for 2019. These special valuation rules may be
used to value an employee’s personal use of an employer-provided vehicle for income
and employment tax purposes.

I. PURPOSE
This Notice 2019-34 provides the maximum vehicle value for 2019 for purposes
of the special valuation rules provided in Treas. Reg. § 1.61-21(d) and (e) that may be
used to determine the value of personal use of an employer-provided vehicle. This
Notice 2019-34 also provides information about the way the Internal Revenue Service
(IRS) and the Department of the Treasury (Treasury Department) intend to publish this
maximum vehicle value in the future. Additionally, this Notice 2019-34 provides
temporary relief from the consistency requirements in Treas. Reg. § 1.61-21(e)(5) for
use with the vehicle cents-per-mile valuation rule. Finally, this Notice 2019-34 allows
flexibility with respect to the Treas. Reg. § 1.61-21(d)(5)(v)(B) rules relating to the period

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of use for the fleet-average valuation rule, which is an optional component of the
automobile lease valuation rule under Treas. Reg. § 1.61-21(d).
II. BACKGROUND
If an employer provides an employee with a vehicle that is available to the
employee for personal use, the value of the personal use generally must be included in
the employee’s income. Internal Revenue Code § 61(a)(1); Treas. Reg. § 1.61-21.
A. The Vehicle Cents-Per-Mile Rule
For employer-provided vehicles made available to employees for personal use
that meet the requirements of Treas. Reg. § 1.61-21(e)(1), generally the value of the
personal use may be determined under the vehicle cents-per-mile valuation rule of
Treas. Reg. § 1.61-21(e). However, Treas. Reg. § 1.61-21(e)(1)(iii) currently provides
that the value of the personal use may not be determined under the vehicle cents-per-
mile valuation rule for a calendar year if the fair market value of the vehicle (determined
pursuant to Treas. Reg. § 1.61-21(d)(5)(i) through (iv)) on the first date the vehicle is
made available to the employee exceeds a base value of $12,800 that is adjusted
annually under section 280F(d)(7).
Treas. Reg. § 1.61-21(e)(5)(i) states that an employer must adopt the vehicle
cents-per-mile valuation rule by the first day on which the vehicle is used by an
employee of the employer for personal use (or, if the commuting valuation rule of Treas.
Reg. § 1.61-21(f) is used when the vehicle is first used by an employee of the employer
for personal use and the employer switches to the vehicle cents-per-mile valuation rule,

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the first day on which the commuting valuation rule is not used). Treas. Reg.
§ 1.61-21(e)(5)(ii) provides, in part, that once the vehicle cents-per-mile valuation rule
has been adopted for a vehicle by an employer, the rule must be used by the employer
for all subsequent years in which the vehicle qualifies for use of the rule, except that the
employer may, for any year during which use of the vehicle qualifies for the commuting
valuation rule of Treas. Reg. § 1.61-21(f), use the commuting valuation rule with respect
to the vehicle.
B. The Fleet-Average Valuation Rule
For employer-provided automobiles available to employees for personal use for
an entire year, generally the value of the personal use may be determined under the
automobile lease valuation rule of Treas. Reg. § 1.61-21(d). Under this valuation rule,
the value of the personal use is the Annual Lease Value. Provided the requirements of
Treas. Reg. § 1.61-21(d)(5)(v) are met, an employer with a fleet of 20 or more
automobiles may use a fleet-average value for purposes of calculating the Annual
Lease Values of the automobiles in the employer’s fleet. The fleet-average value is the
average of the fair market values of all the automobiles in the fleet. However, Treas.
Reg. § 1.61-21(d)(5)(v)(D) provides that the value of an employee’s personal use of an
automobile may not be determined under the fleet-average valuation rule for a calendar
year if the fair market value of the automobile (determined pursuant to Treas. Reg.
§ 1.61-21(d)(5)(i) through (iv)) on the first date the automobile is made available to an
employee exceeds the base value of $16,500, as adjusted annually for inflation

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pursuant to section 280F(d)(7).
Treas. Reg. § 1.61-21(d)(5)(v)(B) generally provides that the fleet-average
valuation rule may be used by an employer as of January 1 of any calendar year
following the calendar year in which the employer acquires a sufficient number of
automobiles to total a fleet of 20 or more, each one satisfying the maximum value
limitation of Treas. Reg. § 1.61-21(d)(5)(v)(D). The Annual Lease Value calculated for
automobiles in the fleet, based on the fleet-average value, shall remain in effect for the
period that begins with the first January 1 the fleet-average valuation rule is applied by
the employer to the automobiles in the fleet and ends on December 31 of the
subsequent calendar year. The Annual Lease Value for each subsequent two-year
period is calculated by determining the fleet-average value of the automobiles in the
fleet as of the first January 1 of that period. An employer may cease using the fleet-
average valuation rule as of any January 1.
C. Notice 2019-08
Notice 2019-08 provides interim guidance on new procedures using section
280F(d)(7), as modified by sections 11002 and 13202 of the Tax Cuts and Jobs Act,
Pub. L. No. 115-97 (the “Act”), for calculating the inflation adjustments to the maximum
vehicle values for use with the special valuation rules under Treas. Reg. § 1.61-21(d)
and (e). Additionally, Notice 2019-08 states that the IRS and the Treasury Department
anticipate that further guidance on these issues will be issued in the form of proposed
regulations and expect that the regulations will be consistent with the rules set forth in

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Notice 2019-08.
Notice 2019-08 states that, consistent with the substantial increase in the dollar
limitations on depreciation deductions under section 280F(a), as modified by section
13202(a)(1) of the Act, the IRS and the Treasury Department intend to amend Treas.
Reg. § 1.61-21(d) and (e) to incorporate a higher base value of $50,000 as the
maximum value for use of the vehicle cents-per-mile and fleet-average valuation rules
effective for the 2018 calendar year. Notice 2019-08 further states that the IRS and the
Treasury Department intend that the regulations will be modified to provide that this
$50,000 base value will be adjusted annually using section 280F(d)(7) for 2019 and
subsequent years. Notice 2019-08 also provides that, for 2018, the maximum value for
use of the vehicle cents-per-mile and fleet-average valuation rules is $50,000. Finally,
Notice 2019-08 provides that, for 2018 and 2019, the IRS and the Treasury Department
will not publish separate maximum values for trucks and vans for use with the vehicle
cents-per-mile and fleet-average valuation rules.
D. The Maximum Standard Automobile Cost for an Allowance Under
a FAVR Plan
Rev. Proc. 2010-51, 2010-51 I.R.B. 883, provides rules for using optional
standard mileage rates in computing the deductible costs of operating an automobile for
business, charitable, medical, or moving expense purposes. Section 2.12(1) of Rev.
Proc. 2010-51 provides that the IRS publishes both the standard mileage rates for the
use of an automobile for business, charitable, medical, and moving expense purposes,

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and the maximum standard automobile cost for purposes of an allowance under a fixed
and variable rate (FAVR) plan, in a separate annual notice.
When Treas. Reg. § 1.61-21(d) and (e) are amended to incorporate a higher
base value of $50,000 as the maximum value for use of the vehicle cents-per-mile and
fleet-average valuation rules, the IRS and the Treasury Department expect that the
maximum value for use of the vehicle cents-per-mile and fleet-average valuation rules
for 2019 and subsequent years will be the same as the maximum standard automobile
cost for purposes of an allowance under a FAVR plan. The maximum standard
automobile cost for purposes of an allowance under a FAVR plan and the maximum
value for use of the vehicle cents-per-mile and fleet-average valuation rules will each be
calculated using the base value of $50,000, adjusted annually in accordance with
section 280F(d)(7). Accordingly, the IRS and the Treasury Department anticipate that
once Treas. Reg. § 1.61-21(d) and (e) are amended, the maximum value for use of the
vehicle cents-per-mile and fleet-average valuation rules will be published in the annual
notice providing the standard mileage rates for the use of an automobile for business,
charitable, medical, and moving expense purposes and the maximum standard
automobile cost for purposes of an allowance under a FAVR plan.
E. Notice 2019-02
Notice 2019-02, 2019-02 I.R.B. 281, provides the optional 2019 standard mileage
rates for taxpayers to use in computing the deductible costs of operating an automobile
for business, charitable, medical, or moving expense purposes. Section 5 of Notice

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2019-02 states that, for purposes of computing the allowance under a FAVR plan, the
standard automobile cost for 2019 may not exceed $50,400.
III. GUIDANCE
Based on the foregoing:
(1) The maximum value of an employer-provided vehicle (including cars, vans
and trucks) first made available to employees for personal use in calendar
year 2019 for which the vehicle cents-per-mile valuation rule provided under
Treas. Reg. § 1.61-21(e) may be applicable is $50,400.
(2) The maximum value of an employer-provided automobile (including vans and
trucks) first made available to employees for personal use in calendar year
2019 for which the fleet-average valuation rule provided under Treas. Reg.
§ 1.61-21(d)(5)(v) may be applicable is $50,400.
Furthermore, the Treasury Department and the IRS intend to revise Treas.
Reg. § 1.61-21(e) to provide that if an employer did not qualify under Treas. Reg.
§ 1.61-21(e)(5) to adopt the vehicle cents-per-mile valuation rule on the first day on
which a vehicle was used by an employee of the employer for personal use because,
under the rules in effect before 2018, the vehicle had a fair market value in excess of
the maximum permitted in accordance with Treas. Reg. § 1.61-21(e)(1)(iii), the
employer may first adopt the vehicle cents-per-mile valuation rule for the 2018 or 2019
taxable year based on the maximum fair market value of a vehicle for purposes of the
vehicle cents-per-mile valuation rule set forth in Notice 2019-08 or this Notice 2019-34,

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as applicable. Similarly, the IRS and Treasury Department intend that the proposed
regulations will further provide that if the commuting valuation rule of Treas. Reg.
§ 1.61-21(f) was used when the vehicle was first used by an employee of the employer
for personal use, and the employer did not qualify to switch to the vehicle cents-per-mile
rule on the first day on which the commuting valuation rule was not used because,
under the rules in effect before 2018, the vehicle had a fair market value in excess of
the maximum permitted in accordance with Treas. Reg. § 1.61-21(e)(1)(iii), the
employer may adopt the vehicle cents-per-mile valuation rule for the 2018 or 2019
taxable year based on the maximum fair market value of a vehicle for purposes of the
vehicle cents-per-mile valuation rule set forth in Notice 2019-08 or this Notice 2019-34,
as applicable. However, consistent with Treas. Reg. § 1.61-21(e)(5), an employer that
adopts the vehicle cents-per-mile valuation rule must continue to use the rule for all
subsequent years in which the vehicle qualifies for use of the rule, except that the
employer may, for any year during which use of the vehicle qualifies for the commuting
valuation rule of Treas. Reg. § 1.61-21(f), use the commuting valuation rule with respect
to the vehicle.
In addition, with respect to an employer that did not qualify to use the fleet-
average valuation rule prior to January 1, 2019, because the maximum value limitation
of Treas. Reg. § 1.61-21(d)(5)(v)(D) prior to 2018 could not be met, the Treasury
Department and the IRS intend to revise Treas. Reg. §1.61-21(d) to provide that an
employer may adopt the fleet-average valuation rule for 2018 or 2019, provided the

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requirements of § 1.61-21(d)(5)(v) are met for that year using the maximum vehicle
values set forth in Notice 2019-08 or this Notice 2019-34, respectively.
Employer-provided vehicles are noncash fringe benefits under section 3501(b).
Announcement 85-113, 1985-31 I.R.B. 31, provides guidelines for withholding, paying,
and reporting employment tax on taxable noncash fringe benefits. Announcement
85-113 provides generally that taxpayers may rely on the guidelines in the
announcement until the issuance of regulations that supersede the temporary and
proposed regulations under section 3501(b). No regulations have been issued under
section 3501(b) that supersede the announcement. Thus, Announcement 85-113
generally is applicable to current payments of noncash fringe benefits, including
vehicles.
Section 1 of Announcement 85-113 allows payors of certain noncash fringe
benefits to treat the benefits as paid on any day(s) during the year so long as they treat
benefits provided in a calendar year as paid not later than December 31 of the calendar
year. Section 5 of the announcement allows employers to treat certain benefits paid
during the last two months of the year (or any shorter period) as paid during the
subsequent calendar year.
Employers that wish to use the vehicle cents- per-mile rule or the fleet-average
valuation rule for 2019 based on the maximum values set forth in this notice may use
the rules in Announcement 85-113 or the adjustment process under section 6413 or the
refund claim process under section 6402 to correct any overpayment of federal

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employment taxes on these amounts (see the regulations under these sections, Rev.
Rul. 2009-39, 2009-52 I.R.B. 951, section 13 of Publication 15 (Circular E), Employer’s
Tax Guide, and the Instructions for Form 941-X, Adjusted Employer’s QUARTERLY
Federal Tax Return or Claim for Refund for information on these adjustment and refund
claim processes).
Until revised final regulations are published under Treas. Reg. § 1.61-21(d) and
(e), taxpayers may rely on the interim guidance provided in this Notice 2019-34.
REQUEST FOR COMMENTS
Interested parties are invited to submit comments on this notice by July 29,
2019. Comments should include a reference to Notice 2019-34. Comments may be
submitted electronically via the Federal eRulemaking Portal at www.regulations.gov

(type IRS-2019-34 in the search field on the regulations.gov homepage to find this
notice and submit comments). Alternatively, submissions may be sent to
CC:PA:LPD:PR (Notice 2019-34), Room 5203, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washington, DC 20044. Submissions also may be hand
delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to
CC:PA:LPD:PR (Notice 2019-34), Courier’s Desk, Internal Revenue Service, 1111
Constitution Avenue, NW, Washington, DC 20044. All comments submitted by the
public in response to this notice will be available for public inspection and copying in
their entirety.

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IV. DRAFTING INFORMATION
The principal author of this notice is Gabriel Minc of the Office of Associate Chief
Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes). For
further information regarding this notice contact Mr. Minc at (202) 317-4774 (not a toll-
free call).