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2. Overview. Review of New PolicyExceptions to Policy Implications for Employees and DepartmentsCompletion of New Cell Phone FormImplementation Steps . 3. Business
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1. University of CaliforniaNew Cell Phone PolicyUCOP Implementation
June 2009
2. 2 Overview
Review of New Policy
Exceptions to Policy
Implications for Employees and Departments
Completion of New Cell Phone Form
Implementation Steps
Background
Internal Revenue Code requires substantiation of business use in order to be exempt from income.
Meant for big ticket items
Recent IRS audit 2 campus (us) and 1 lab
UC not compliant with regulations
Paid fine & promised to be in compliance by June 1, 2009
Hoped legislation would be passed removing cell phone
Since it didnt happen, UCOP decided on 1 approach Background
Internal Revenue Code requires substantiation of business use in order to be exempt from income.
Meant for big ticket items
Recent IRS audit 2 campus (us) and 1 lab
UC not compliant with regulations
Paid fine & promised to be in compliance by June 1, 2009
Hoped legislation would be passed removing cell phone
Since it didnt happen, UCOP decided on 1 approach
3. 3 Business & Finance Bulletin G-46, Guidelines for the Purchase and Use of Cellular Phones and Other Portable Electronic Resources Revised in response to IRS audit settlement.
Under new policy, the value of a University-provided cell phone or a cell phone-enabled personal digital assistant (PDA) will be treated as a taxable fringe benefit subject to withholding for payroll taxes.
4. 4 Imputed Income/Cash Allowance The cost of an employees cell phone plan and device will be added to his/her taxable earnings as imputed income subject to withholding.
The employee will receive a taxable cash allowance to reimburse him/her for the tax on the imputed income. Since the allowance is taxable, it will be increased using the IRS gross-up formula to reimburse the employee for the taxes on the payment.
5. 5 Impact on Employees No disruption to current service levels
Incidental personal use will be allowed as long as plan minutes are not exceeded
Not required to comply with IRS substantiation rules
Minimal impact on net pay
6. 6 Exception to Policy Exceptions will be approved for shared phones and phones used for research.
If an exception is approved, the employee must comply with IRS substantiation rules.
Must annotate phone bill or keep log of calls.
Exception requests should be sent to EVP Katie Lapp.
7. 7 Excluded Equipment and Services Data-only PDAs (voice restricted)
Push-to-talk devices
Pagers
Laptops
Internet service
Home computers
8. 8 Reimbursement of Personal Use--UC-Provided Phone Employees are required to reimburse personal calls when they exceed their plan minutes.
Personal calls must be reimbursed at the excess-minute rate.
If the employee does not exceed the plan minutes, reimbursement is not required for any personal calls.
9. 9 Reimbursement of Business Use-- Personal Phone Reimbursement of business calls is allowable only if an employee exceeds his/her plan minutes.
Reimbursement will be calculated at the excess minute rate up to the number of minutes exceeding the plan limit for the month.
An employee must provide a copy of his/her cell phone bill identifying the business calls and noting the person called and the purpose of each call.
10. 10 Reimbursement of Business Use-- Personal Phone Employees may be reimbursed for some
services where it is cost-effective:
Data
Text Messaging
The cost of the voice plan and handset, or a
percentage of those costs, is not
reimbursable
11. 11 Cell Phone Imputed Income/Cash Allowance Form
New web-based fill-in form
Used to automatically calculate the cash allowance
Completed by department for:
New cell phone plan
Any changes or additions to plan
Any changes to employee exemptions
http://www.ucop.edu/ucophome/cao/paycoord/
12. 12 What should be included as income? Average cost of the monthly service plan, including taxes, and equipment
Cost of the equipment not included in plan:
Purchased after June 1, 2009 value should be imputed as a one-time transaction
Cost of one time purchases
Accessories (batteries, charger, etc.)
Expenses for repairs
Cost of replacing a lost or stolen device
Equipment upgrades
13. 13 Part I: Employee Information
14. 14 Part II: Calculation of Cash Allowance
15. 15
16. 16 Implementation Steps Determine which employees have UC- provided cell phones
Determine if the cell phones is still needed to perform job duties
Review service plans to insure correct level of business use and cost
Calculate imputed income based on monthly cell phone bills
17. 17 Implementation Steps Complete the Imputed Income/Cash Allowance Form by June 5, 2009
Fund cost of phone, phone plan, and cash allowance
Monitor monthly cell phone bills for excess minutes
Monitor changes in cell phone plans and adjust imputed income/cash allowance
Require employees to sign usage agreement in G-46
18. 18 Resources
Cell Phone Imputed Income/Cash Allowance Form, Instructions, and FAQs
http://www.ucop.edu/ucophome/cao/paycoord
Policy contact:
Mike ONeill, (510) 987-0905
Michael.oneill@ucop.edu
Payroll contact:
Ana Trejo, (510) 987-9057
Ana.trejo@ucop.edu