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Guidelines for the establishment and use of cell phone allowances Both the employee and his or her supervisor should read University Cell Phone policy 55.075 prior to establishing a cell phone allowance. Refer questions on this topic to Payroll Manager John Goodwin at 740-593-1860, or email him
Reasons for the end of the University owned cell phone program: If a cell phone is owned by the University, IRS regulations subject the University, and the cell phone user, to requirements that are impractical to fulfill*. Requirements include daily logging of all calls (in and out) by the user, with business purpose noted, and the audit of those logs by departmental approvers and Finance Area auditors. If the phone is personally owned, the employee is compensated for business costs through an allowance (i.e. taxable income). Personal use is allowable and the tracking requirements do not exist. *The relevant regulations can be seen here: 1.274-5T Title 26. Note that for tax purposes, Cell Phones are considered “listed property.” Back to Topics
Definition of a Cell Phone: Some University employees use a wireless device as a cell phone, but they also use it for many other business purposes: Email, calendaring, internet connectivity and more. But for the purposes of University Cell Phone policy 55.075, any device that is being used, in any measure, to make or receive wireless calls, is defined as a “cell phone.” Back to Topics
Determining employee eligibility: Who is eligible? Any university employee who has a frequent need to use a cell phone for business purposes is eligible. What is meant by “a frequent need?” This refers to two types of needs: 1) The need for frequent use of a cell phone (e.g., an employee who must be often on the road or in the field, but who needs to remain in touch with others.) 2) The need to be frequently available for emergency contact (e.g., an employee whose duties require them to be quickly contacted, anywhere, anytime.) Back to Topics
Determining the dollar amount for the allowance: Follow these steps to determine the dollar amount ($150/mo, $1800/yr maximum): • Project business use to the best of your ability. What number of minutes per month is the employee likely to expend on business-related calls? If the device allows messaging, email retrieval, internet use and the like, what is the likely cost for its other business uses? Use any history you may have for this position to help with the projection. • Find a plan that best and most economically meets that projected business use. See below for links to providers. NOTE: Always mention your association with Ohio University. Most providers have discounts available to University employees. • If the employee already has a personal cell phone, there is no requirement to obtain a second phone. Project the costs that would be incurred for business use if the employee began using the current personal phone for business purposes as well as personal use. Consider changing the basic plan if indicated. • Using your projected costs and projected number of minutes for business use, determine annual job-related costs. Basic equipment costs may be taken into account. • Costs for cosmetic or technical extras or upgrades that have no business purpose, or any personal use that might be expected, cannot be included. • Estimate the costs for the Fiscal Year (Jul 1 through Jun 30), or the remainder of the Fiscal Year, if the request is mid-year. Use your estimate to make your Allowance Request. • Keep in mind the maximum allowable for cell phone allowances is $1800/annually ($150/mo). Back to Topics
Establishing the allowance: • Use the Allowance Request Form that is available through the Payroll Form Site. • Fill out the form completely, obtain signatures, attach a copy of a current phone bill, and forward the form with the attached copy of the bill to the Payroll Office at 214 HDL Ctr. • NOTE: Allowances expire at the end of each Fiscal Year, June 30. Use the form to renew as appropriate. Back to Topics
Tax issues: The employee’s cell phone allowance is taxable income. The department head may take this into account when determining the dollar amount of the allowance, though this consideration is not required by University policy. Departmental discretion: Departmental policy regarding issuing cell phone allowances may be more (but not less) restrictive than University policy. For example, the department may set a lower maximum dollar amount, or restrict the allowance to only those with local cell phone numbers, etc. How Payment to the Employee will be made: Payment will be made per pay period, as an addition to the employee’s payroll check. Payments will be equally divided among the pay periods. Note that the allowance does not constitute an increase in base pay, and will not be included in any percentage calculations for increase to base. Back to Topics
Departmental discretion: Departmental policy regarding issuing cell phone allowances may be more (but not less) restrictive than University policy. For example, the department may set a lower maximum dollar amount, or restrict the allowance to only those with local cell phone numbers, etc. How Payment to the Employee will be made: Payment will be made per pay period, as an addition to the employee’s payroll check. Payments will be equally divided among the pay periods. Note that the allowance does not constitute an increase in base pay, and will not be included in any percentage calculations for increase to base. Back to Topics
How Payment to the Employee will be made: Payment will be made per pay period, as an addition to the employee’s payroll check. Payments will be equally divided among the pay periods. Note that the allowance does not constitute an increase in base pay, and will not be included in any percentage calculations for increase to base. Back to Topics
Using the cell phone: The cell phone is personally owned, and may therefore be used for both personal and business calls. An employee with a cell phone allowance must maintain an active cell phone contract for the life of the allowance. Note that misuse of the phone – using it in ways inconsistent with University policy or with local, state or federal laws – will result in immediate cancellation of the cell phone allowance. Back to Topics
Department responsibilities and documentation requirements: • The department must maintain a file containing a copy of the Allowance Request Form and the phone bill submitted to the Payroll Office with the form. • It is the department head’s responsibility to review cell phone needs in his or her department on at least an annual basis, to determine if allowances should be changed, continued, discontinued, or if new allowances are needed. • A new Allowance Request Form with a current phone bill attached must be submitted to the Payroll Office annually for each employee. Back to Topics
Transitioning from University owned phones: The University will no longer own new cell phones. However, it has allowed the use of University owned cell phones in the past. Any University employee using such a phone has two years from the Effective Date of Policy 55.075 (03-FEB-2005) to comply with this policy. For those who continue to use University owned cell phones during this time, payment may be made as it is currently being made (i.e. PCard or Direct Payment form.) However, be aware that all personal calls must be marked and a refund must be submitted for any personal minutes. Submit PCard refunds using the PCard refund form. Submit all other refunds by attaching them to the Direct Payment form that is being submitted. After 03-FEB-2007, the University will no longer make direct payment to cell phone providers. Back to Topics
Ending a cell phone contract: Contract changes or cancellations (and associated fees): • As the result of the employee’s decision, misconduct, or misuse of the phone: If, prior to the end of the cell phone contract, a personal decision, or employee misconduct, or misuse of the phone, results in the need to end or change the cell phone contract, the employee will bear the cost of any fees associated. EXAMPLE: The employee quits, and no longer wants to retain the current cell phone contract for personal purposes. • As the result of a University decision (unrelated to employee misconduct): If, prior to the end of the cell phone contract period, a University decision (unrelated to employee misconduct) results in the need to end or change the cell phone contract, the University will bear the cost of any fees associated. EXAMPLE: The employee’s supervisor has changed the employee’s duties, and the allowance is no longer needed. The employee does not want to retain the current cell phone contract for personal purposes. Back to Topics
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