I think you many be looking for trouble where none may ever exist.
I'm discussing the Internal Revenue Code as if I were getting ready to represent the IRS or a taxpayer before the U.S. Tax Court. Before, that there must be an audit and a failure to reach a settlement on several different levels.
If the district is never audited, then there will never be an issue. I presume that you have a CPA, or some reputable tax professional who prepares your annual tax returns. That person is responsible for ensuring that things are done appropriately, or at least asking the right questions to ensure that the taxpayer/district is aware of its legal obligations.
You won't be the first or the last employer to overlook de minimis personal miles, or to argue that the amount of commuter mileage was so small as to not be worth logging. But, I don't actually know how much the employee is actually using the vehicle for personal matters, either. The botXXXXX XXXXXne here is that you need to discuss the issue with your tax preparer, because that's the person who is responsible for the returns.
Assuming, however that the district were audited, and it was discovered that the manager had used an ordinary pickup truck as a company car and that he/she never logged any of the vehicle use, then, yes, the IRS could assess penalties to the district, for failing to properly report income and maintain records for the business use of the vehicle. The tax would be based on the entire fair market value of the vehicle use during each tax year audited.
For a good discussion of the issue, see this link
Hope this helps
NOTICE: My goal here is to educate others about the law. I am always available to answer your follow-up questions after you click Accept – however, if you do not click Accept, the website gets paid, and I receive nothing. This is true, even if you are on a subscription plan. So please click Accept, so that I will be able to continue to provide this service for others in the future.
And, if you need to contact me again, please put my user id on the title line of your question (“To Socrateaser”), and the system will send me an alert. Thanks!