Cell Phones

Taxability for Personal Use of University Cell Phones: 

Taxability for Personal Use of University Cell Phones 5/9/2007

Cell Phone Personal Use: 

Cell Phone Personal Use The need to implement a personal-use procedure has been reviewed and approved by the President’s Council Why now? Increased IRS Scrutiny of cell phones and their personal use by employees Protect employees and University from IRS audit risk Becoming standard practice among businesses, including universities

Cell Phone Personal Use: 

Cell Phone Personal Use Treasury Regulations and numerous court cases require that personal use of employer-provided cell phones be treated as taxable income unless the employee tracks all calls and reimburses the employer for personal use. Alternatively, the employer can add personal cell phone usage to employee’s taxable earnings on the W-2. The University has opted for this approach.

Cell Phone Personal Use: 

Cell Phone Personal Use Personal use will be determined through an Annual Declaration of Personal Use Form (handout) Signed by the employee and the supervisor Revised forms can be turned in as facts change, but at least on an annual basis using one month’s data Employee’s responsibility to justify the percentage if requested

Cell Phone Personal Use: 

Cell Phone Personal Use Calculation Method: All minutes used are accounted for…that is, business minutes + personal minutes = total minutes used (including “free minutes”) Personal minutes divided by total minutes used = personal-use percentage

Cell Phone Personal Use: 

Cell Phone Personal Use Taxable amount for W-2: Total cost for the month for the employee times the personal-use percentage Personal-use amount will be added to employee’s taxable earnings and payroll taxes will be deducted from employee’s net pay

Cell Phone Personal Use: 

Cell Phone Personal Use What if the cell phone is the only phone provided by BYU? Unfortunately, tax regulations treat cell phones and land lines differently. All employees provided a cell phone, must account for the personal calls Land-line phones do not have this same level of accountability

Cell Phone Personal Use: 

Cell Phone Personal Use Implementation Period: Forms will be emailed to employees by June 1st Return declarations to Cell Phone Office (Purchasing) by June 30th Will begin in September 2007 for August cell-phone activity

Cell Phone Personal Use: 

Cell Phone Personal Use Questions?