At his July 3rd whine-fest in Sarasota Florida, Donald Trump claimed that there was no reason for his accountant Allan Weisselberg to be arrested, and complained about the complexity of US tax laws:
“They go after good, hard-working people for not paying taxes on a company car,” Trump said. “You didn’t pay tax on the car or a company apartment. You used an apartment because you need an apartment because you have to travel too far where your house is. You didn’t pay tax. Or education for your grandchildren. I don’t even know. Do you have to? Does anybody know the answer to that stuff?”
Trump happens to be contradicting himself again. In a 2016 interview with the Associated Press Trump boasted that: “I think nobody knows more about taxes than I do, maybe in the history of the world. Nobody knows more about taxes.” So why is this master of the American tax code suddenly pleading ignorance? Do you really have to pay taxes on benefits like cars, apartments and tuition for your employees’ children?
A quick rundown: yes, you do have to pay taxes on a company car if you use it for any kind of personal use. You are expected to record your mileage for business versus personal use, and pay for every mile of personal use put on the vehicle. An employer provided vehicle is considered a form of non-cash fringe benefit. Additional information on how to calculate tax liabilities for fringe benefits are provided in IRS Publication 15-B. There is absolutely no excuse for someone who maintained a personal lawyer and multiple accountants on his company payroll to be ignorant of the proper method for calculating employee vehicle tax liabilities.
If your employer provides you with an apartment, and that employer is in the business of leasing real estate, and the nature of the lodging provided meets certain requirements, then the provision of lodging is done according to the rules on “Lodging on your business premises” mentioned in publication 15-B which is cited above. If the lodging does not meet certain requirements, then it is deemed an additional non-cash fringe benefit and the employee must pay tax on the fair market rental rate for that unit.
Calculation of taxes on education benefits are also explained in 15-B, and the key matter here is that typically educational benefits can only be taxed at a reduced rate if they are for the employee and relate directly to that employee’s occupation. Tuition benefits for other family members are handled according to “Tuition exchange” rules if you are an employee of an educational institution. If you are not employed by an educational institution that participates in a tuition exchange program with other colleges or universities, then tuition for children of employees may be categorized as a personal gift to the family of the student, and the student’s caregiver would have to pay tax on any amount that exceeds certain gift thresholds. Additional information is available on the IRS website.
Again, there is absolutely no reason for a man who had lawyers and accountants on his company staff to be ignorant of state and Federal tax laws. Given his prior claims that he “knows more about our tax laws than anybody”, Trump’s recent claims of ignorance ring quite hollow.