Cellular and Communication Devices and Services Guidelines

Cellular and Communication Devices and Services Guidelines

West Virginia School of Osteopathic Medicine
WVSOM Process and Procedures

Effective Date:            December 1, 2009
Issue Date:                  December 1, 2009
Prepared by:               Larry J. Ware, Vice President for Finance and Administration

Forward

The following provisions do not apply to employees who may occasionally use cellular or other third-party personal communication devices and services for work purposes. The occasional use of personal communication devices for work-related purposes is equivalent to the occasional use of other personal equipment (e.g., a land line at home). Consistent with long-standing reimbursement policies, if the occasional use has a cost and the employee is able to substantiate that cost with invoice documentation from the service provider, given department approval, the employee may submit a claim for reimbursement for that particular and specific use of the employee’s personal equipment.

Compliance with Tax Law

The IRS tax code characterizes cellular wireless devices as “listed property” which imposes stringent detailed recordkeeping requirements, particularly if there are components of business and personal use. Under the tax regulations, deductions for expenses attributable to the business use of wireless devices are disallowed unless they can be substantiated by adequate records. In addition, this substantiation rule does not permit an employer to adopt “de minimis” personal use policies; therefore, each monthly bill must be reviewed for personal use, charges related to personal use must be reimbursed by the employee, and documentation must be retained by the employer. If records are not kept or are considered insufficient, the value of the benefits must be included in the employee’s gross income and treated as wages for tax purposes.

Tax Code References

Summary Text	Tax Code
Tax code defines wireless devices (cell phones, PDA’s blackberrys) as “listed property”	Internal Revenue Code (IRC) §280F(d) (4) (A)(v)
The nature of “listed property” lends itself to personal use. Therefore, it is subject to detailed substantiation and recordkeeping requirements. Employers and employees are required to keep records of business and personal use.	IRC §274(d)(4) Treas. Reg §162.2
Business use is excludable form employee’s compensation as a working condition fringe benefit. However, personal use is compensation to employees.	Treas. Reg § 1.274-5T(e) (general)
If sufficient records are not kept to substantiate the business use, all use is treated a compensation for payroll tax purposes.	Treas. Reg § 1.274-5T
The IRS does not permit “de minimus” personal use policies to streamline or minimize recordkeeping requirements.	IRC § 274(d) Treas. Reg §1274-6T(a)(2) and 1.2746T(a)(3) (general)

Applicability

These provisions apply when WVSOM determines it is essential for an employee to:

carry a third-party communication device so as to be available to the School while away from campus.
use a third-party communication device as an integral, non-optional tool in performing assigned duties.

Examples of third-party communication devices and services include cellular phones, personal digital assistants, and laptop data cards. Stipends may also be approved for DSL, cable modem and similar services on an exception basis. Forms and procedures for cellular devices and services are also applicable to these other School-required communication devices.

Authorization

The requirement for an employee to use a cellular or other third-party communication device is the decision of the employee’s supervisor. The supervisor will complete an Authorization for Cellular Services and Allowance Request form to specify details concerning the required usage. The form will be routed to the appropriate Vice President or the President for approval.

Employee-Owned Device

The School will provide to the employee an expense allowance to be used toward device acquisition and monthly service charges. This expense allowance may not be used as a salary supplement. The employee need not provide documentation of business vs. personal use for an employee-owned device; therefore, no further expense allowances or reimbursements beyond the approved stipend will be made.

The stipend will be determined by the supervisor, based on his/her judgment of the type and amount of expected campus-required usage. The employee may upgrade the device or service plan at his/her own cost. Standard stipends for devices and services are detailed on the Employee-Owned Cellular Payment Request form. An administrator may request an exception to the above limits if necessary to support unusual business usage. Such requests must be supported by plan and cost documentation and approved by the division’s vice president / or the President and by the campus CFO.

The stipend for purchase of an employee-owned device is permitted once every two years. The stipend for monthly service charges are paid annually. To process a cellular device/service allowance, complete the Authorization for Cellular Services and Allowance Request form. The expense allowance will be reportable as taxable W-2 income, and is not re-payable to the School.

The employee may choose any device and third-party provider service plan which supports and is compatible with the use required by WVSOM. The arrangement is between the employee and the provider; the School is not involved in the contract with the provider. However, the employee may elect to consult with Business Affairs to determine discounts available to individuals through WVSOM arranged plans. Fees for phone numbers changes and replacement of lost or damaged equipment are the employee’s responsibility.