Editors Note: This is the fourth story in a series of stories about the board of Weld County Commissioners and issues brought to the Weld County Council for reasons to audit the board’s performance. The previous three look at the commissioner’s decision to form a charter review committee, the criticisms leveled at the commissioners by residents, and criticism over a county-wide training for emergency response. Next up, Complete Colorado will look at accusations the board is having ex-parte communications with companies that will come before it for land-use and other quasi-judicial decisions.
GREELEY — For years, Weld County residents have asked to put an end to footing the bill for commissioners to drive back and forth to work at a cost of hundreds of thousands of dollars.
With the possibility of a charter review committee still floating in the air, they may finally get their chance.
However, in the meantime, the bigger problem might be that the county appears to be in violation of IRS tax code as the reimbursements have gone untaxed for decades, putting the county at risk of large penalties if it were ever audited.
For decades, the county has paid mileage to commissioners to travel from their homes to the Weld County administration offices. Although not liked by many, the fringe benefit is allowed under county charter.
However, how that benefit is handled is suspect.
A Colorado Open Records Request revealed that just since 2000, the county has paid out approximately $500,000 or more for six of 10 commissioners to drive to the office each day, but the county has never taxed commissioners for the benefit that is not deductible under Internal Revenue Service codes.
The $500,000 figure does not include actual reimbursable mileage when commissioners travel to other events or in the course of business. It is only for mileage from home to office.
Weld released all the records they had since 2008, when it first started scanning and storing expense records electronically. Complete Colorado came up with the $500,000 figure by averaging amounts in the records available. The figure is not exact because the county records only go back to 2008. However, since county officials confirmed that commissioners have been collecting mileage as long as anyone can remember, Complete Colorado considered a conservative average monthly reimbursement for each of the commissioners over the course of their term to arrive at the estimated amount.
According to records and the methodology used:
- Robert Masden served from 2000-2008; he charged 70 miles roundtrip from his home in Hudson. For eight years that amounts to about $67,000.
- Bill Jerke served from 2000-2008; he charged 14 miles roundtrip from his home in LaSalle. For eight years that amounts to about $19,000.
- Dave Long’s served from 2000-2012; he charged 120 miles roundtrip from his home in New Raymer. For 12 years that amounts to about $158,000.
- Doug Rademacher served from 2006-2014; he charged 54 miles roundtrip from his home near Mead in Southwest Weld. For eight years that amounts to about $58,000.
- Bill Garcia served from 2006-2014. Garcia resided in both Evans and Greeley. His records were harder to determine. Sometimes he charged 12 miles, sometimes 14 or 15 or 18. He almost never put a description of what his miles were used for unless they were other trips. So Complete Colorado averaged his reimbursement at $175 per month based on total miles that were not documented as other trips.
- Barbara Kirkmeyer served from 1993-2001 and then again from 2008 to present. She is running for an unprecedented fifth term. Although the county charter term limits commissioners to three terms, that provision was not in place until 2007. Kirkmeyer’s previous two terms were not considered when she ran again in 2008. So under the charter, if she is re-elected, this will be her final term. Her mileage reports were also more complicated. Kirkmeyer charges 85 miles roundtrip from her home in southeast Weld County, but when she has to report somewhere other than Greeley for her first stop of the day, she charges from her home to that stop and then Greeley. IRS says in this scenario the reimbursable amount is only the amount that is excess of the commuting miles. So Complete Colorado averaged 85 miles each way for every day that she ended up in Greeley. Over 16 years, Kirkmeyer has collected about $154,000 in commuting reimbursement.
- Mike Freeman (Ault) has served since 2012. He has never charged for mileage from his home to the Greeley office. However, he charges for trips south of Greeley from his home rather than from the office.
- Sean Conway (Greeley) was elected in 2008, Julie Cozad (Milliken) and Steve Moreno (Greeley) were elected in 2014. None of the three have ever charged for mileage from their home.
Despite repeated calls from the public to stop paying commuting mileage as a fringe benefit, the county stands behind its ability to do so. And the county charter allows for it.
Jennifer Finch, director of communications for the county said the benefit is to encourage residents from the far reaching corners of the county to run for commissioner without concern for the added expense of driving into Greeley every day.
Commissioners are making a fulltime salary. Currently, they make $87,300 per year. All commissioners will make 105,000 beginning in 2017.
However, the bigger problem might be in how the benefit is treated. Internal Revenue Tax code is clear, commuting miles from home to work are almost never tax deductible and should be treated as a fringe benefit and taxed.
According to the IRS “Transportation expenses between your home and you main or regular place of work are personal commuting expenses,” and are never deductible.
Main or regular place of work is defined by the IRS as “your principal place of business.” In the case of the county this would be the administration building where all five commissioners have their own offices and conduct their work sessions and other meetings on a daily basis.
Under the code, “you cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main of regular place of work … You cannot deduct commuting expenses no matter how far your home is from your regular place of work.”
The county has also argued that this system is cheaper than if they supplied a company vehicle, but another IRS rule, the “Commuting Rule,” outlines how the county would have to determine the value of the transportation to tax the commissioners with if the commissioners were offered a company vehicle.
“This amount must be included in the employee’s wages or reimbursed by the employee,” it reads in Circular E, Publication 15-B on page 23 of the 2016 IRS code book.
Director of Finance Don Warden disagrees.
The tax treatment and accounting of the reimbursement of county commissioners has been examined and discussed with the external audit firms that do the county audit and all have concurred with the IRS reporting that Weld County does in this situation,” Warden said. “The reimbursement is in accordance with the IRS rules under an accountable plan. If accountable plan rules are met, no tax reporting is necessary. If they are not met, the reimbursement is included on the employee’s W-2, and the employee may deduct allowable business expenses on his or her Form 1040.”
The accountable plan allows for mileage not to be taxed when those expenses are incurred in the performance of an employee’s work. This is the argument the county makes that driving to the office every day is a requirement of their job.
Jeffrey Hare, a former County Councilman and Certified Public Accountant has been arguing with the county for years that its reasoning is not sound. Hare said using the county’s argument, all county employees should be offered the same plan. He used the example of some who may live in Greeley, but work in the south county office and must drive to work perform their duties. In some cases, employees are transferred to the south county office without option.
In 2014, three sheriff deputies filed for reimbursement to challenge the policy. The county refused their arguments. According to a story by then Greeley Tribune reporter Sherrie Peif “a 1998 personnel policy that says, “Travel between work and residence is not reimbursed.”
Hare said the role of the County Council to set the salary and the council should have the right to take away the benefit.
“It is clear this is being deemed as compensation otherwise they would not have justification for giving this benefit to the commissioners and not the rest of the employees in the county,” Hare said.
Hare said the last time the council considered salary increases in 2014 County Attorney Bruce Barker argued the reimbursement was compensation but not salary, and that the council only had authority over salary.
“Either they would have to offer the exact same policy to everyone else, or deem it compensation that only the commissioners get, and that should only be authorized by council,” Hare said. “And if it’s compensation, then they are at risk for not taxing it, which is the only way it can be viewed since the IRS does not allow for deductions for commuting miles.”
Finally, Hare said the county is at great risk for an audit for failure to tax the mileage.
“Given the fact they are not deeming this as compensation as part of the total amount they are being paid there are multiple levels of fines the IRS could, and quite frankly should, be enforcing against the county,” Hare said.
Warden said there are no plans to change the reporting policies at this time.
“It is our opinion and current and past auditors’ opinions we are in compliance with IRS regulations,” Warden said.
Your two cents?
Do you want to express your opinion on the matter? The Weld County Council will discuss commissioner salaries tonight at its regular meeting, contact them at email@example.com.
To contact a commissioner about this or any other subject email:
- District 1: Mike Freeman firstname.lastname@example.org
- District 2: Julie Cozad email@example.com
- District 3: Barbara Kirkmeyerbkirkmeyer@weldgov.com
- At-Large: Sean Conway firstname.lastname@example.org
- At-Large: Steve Moreno email@example.com
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