Car Allowance with Fuel Reimbursement: A Costly Combination

A flat, taxable car allowance with fuel reimbursement is like driving with one foot on the brakes and one foot on the gas.

This blended approach may seem like an ideal way to reimburse mobile employees, but it actually creates more problems than it solves.  A flat car allowance generates one set of problems. Fuel reimbursement generates another.  Add the two together, and what do you get?

An even bigger set of problems

Car allowance problems:

Overcompensates some employees and under-compensates others
Vehicle expenses vary by geographic location (e.g. gas prices, territory size, etc.)
The allowance amount is arbitrary, rather than based on actual data
An allowance is taxable, reducing employee benefits and increasing payroll taxes

Fuel reimbursement problems:

Business vs. personal fuel use can be difficult to distinguish and track
Employees often abuse an honor system for reporting mileage of fuel
A fuel card requires a properly enforced personal chargeback system
Fuel reimbursement cannot account for variations in gas mileage (e.g. Hummer vs. Prius)
Flat allowance and fuel reimbursement both create unfair situations and can incentivize undesirable employee behavior.

mBurse is the equitable and cost-effective alternative.

An mBurse solution will:

  • Allow your organization to take control of its costs through data-driven policies.
  • Ensure geographically cost-sensitive reimbursements for all employees.
  • Boost employee morale and productivity through fair, individualized reimbursement.
  • Create a tool to attract and retain, reducing turnover costs.
  • Provide helpful administrative tools thats integrate with existing systems.
  • Allow you to measure business travel ROI and productivity.

Hallmarks of a quality business vehicle policy:

Risk Mitigation
Annual motor vehicle record checks, insurance verification, and state labor code-compliance
Cost Saving
Savings and benefit analysis with reporting analytics that save money
Technology
Integration with your existing systems to save time by automative administrative tasks

We are a team of tax mavens, technological innovators and reimbursement specialists driven by our core values and purpose.  Our core values and high standards of quality and ethics drive us to provide the best solutions and services while exceeding our client’s expectations.

As an mBurse client, you have the advantage of obtaining multiple services from one organization with a single point of contact, making it easy for you to outsource these functions without the administrative work.  We partner with our clients to create innovative solutions delivering immediate and measurable value driven results for their business and stakeholders.

It's time to stop the slow leak of money caused by inequitable auto allowance policies.