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WVAHEFO Spring 2011 Conference. Can You Hear Me Now OR…. How WVU Learned to Love the IRS and it’s Cell Phone Carrier. Can You Hear Me Now. The IRS WVU Policy Guidelines Exceptions University Responsibility Accounts Personal Responsibility Accounts Q & A. The IRS.
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WVAHEFO Spring 2011 Conference Can You Hear Me Now OR…
Can You Hear Me Now • The IRS • WVU Policy • Guidelines • Exceptions • University Responsibility Accounts • Personal Responsibility Accounts • Q & A
The IRS • The Small Business Jobs Act (SBJA) removed “cell phones” as “listed property” retroactively to January 1, 2010. • The law does NOT provide, however, that “de minimis” personal use is non-taxable. • The IRS retains the authority to continue to tax employer provided cell phones on audit.
The IRS • De minimis fringe benefits include property or services, provided by an employer for an employee, with a value so small that accounting for it is unreasonable or administratively impractical. The value of the benefit is determined by the frequency it is provided to each individual employee, or, if this is not administratively practical, by the frequency provided by that employer to the workforce as a whole. IRC §132(e); Reg. §1.132-6(b) • Example: An employer gives employees snacks each day valued at one dollar. Even though small in amount, the benefit is provided on a regular basis and is, therefore, taxable as wages. The law does not specify a dollar threshold for benefits to qualify as de minimis. • http://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf
The IRS – What Employers Can Do • Limit the personal use of cell phones to occasional personal use during business and peak hours, and exclude the personal use as a de minimisfringe benefit. • Limit the use of business cell phones to general business use and require year-end compliance certifications and tax accordingly. • Issue cell phones only to employees for whom a cell phone is necessary to “properly perform their duties,” and tax consistent with the legislative history applicable to the personal use of automobiles.
The IRS – What Employers Can Do • Allow personal use, deem a certain amount of the cost of the cell phone and usage as personal, and include a specified dollar amount in every employee’s wages. • Adopt and enforce a policy of no personal use (and possibly require the employee to show that the employee has another cell phone for personal use). • Limit personal use and only tax those employees who certify at year-end that their personal use exceeds a stated percentage.
WVU Policy GUIDELINES • The university may provide for payment of Cellular Telephone Service for university employees when appropriate to support university business and where funding is available in the employing unit. • The appropriate level of phone service is determined in the employing unit and is based on university needs, employee duties and budgetary concerns. • Service plans will be reviewed annually to ensure the plans are needed to conduct the business of the University. • Departments and employees must obtain service from the current contract provider unless there is a fully documented exception. • Cellular Telephone services and equipment may not be charged to grants.
WVU Policy EXCEPTIONS • Employees and/or Departments may obtain service from a non-contract cellular provider if: • The contract service provider cannot provide reliable cellular service to the geographic locations (including international locations) required by university operations. • The contract service provider cannot provide certain equipment or services that may be required by university operations. Examples of such equipment or services may include but not be limited to certain data services, security requirements or enhancements, clinical or operational applications required to perform work requirements, public safety, and technical support requirements, etc.
WVU Policy WVU will provide “University Responsibility Accounts” to employees who qualify for a “Business Use Only Account”, but that is the only type of cell phone service that qualifies as non-taxable, and can be paid by direct invoice to WVU. Eligibility for a URA account is determined by duties and responsibilities, and not by position or title.
WVU Policy • University Responsibility Accounts (URA) are provided only to those accounts where: • Phones are left on site and/or are shared with other employees to conduct university business; • The employee is “on call” to provide technical support or customer service outside the office or from home; • The employee is required to have service by regulations that apply to their departments operations, e.g., NCAA; • Accounts are audited monthly by the appropriate business office and employees are required to reimburse the University for any and all Personal Calls at the rate of $.10/minute.
WVU Policy All other cellular telephone service, is considered a taxable benefit to the employee, and will be converted to a “Personal Responsibility Account”. WVU will provide a monthly “Allowance” to reimburse and tax all employees who are required to maintain cellular telephone service for business use according to IRS regulations.
WVU Policy • Personal Responsibility Accounts (PRA) – for Employees with Business and Personal Use • Deans, Directors, and their authorized designees, must provide all employees for whom they require PRA service with a signed authorization form; • The Allowance amount will be added to each employee’s payroll and taxed accordingly.
