FAQs - Cellular Phones Policy
The frequently asked questions below are based on the Employee Mobile Communication Policies and Procedures effective February 1, 2006. They are for staff and faculty only.
University Allowance for Individually Owned Cellular Phones and Plans
What kinds of cell phones and plans can I choose from?
Why does the University want me to own my cellular telephone?
I have used a University owned cell phone for a long time with no problems. Why the change?
This seems ridiculous. Why are you putting us through this?
Is the allowance that I receive for my own cellular phone taxable?
How do I know I’m getting a fair allowance?
What if my actual business usage exceeds the amount of the allowance that I receive?
Does everyone get an allowance for a personally owned cell phone?
How do I know what cellular telephone or monthly plan to choose?
Which monthly plans have the best price?
What if my choice doesn’t work out for me?
What about smart phones – PDA/Phone combinations?
University-Owned Telephones
OK – How am I supposed to figure the personal call reimbursement amount?
Administration
If I am a supervisor, how do I select the correct allowance amount for an employee?
Who can I call for help on setting up my allowance?
What happens after I send my Allowance form into the Payroll Department?
When and how should I expect to see my allowance?
What is the appropriate account number to use for the allowance program?
How can I make a change to the chartfield an allowance is charged to?
If I have questions on the allowance once I receive it who should I talk to?
Making the switch between a University-owned phone and an individually-owned phone
What do I do if I want to stay with Cingular?
Can I switch from Cingular to another provider and keep my current phone number? How do I do that?
If I switch from Cingular to another provider can I keep my current device?
OK - What steps do I take to give the device to the employee?
IRS Documentation
Is there an IRS document that outlines their position on the subject of cellular phone taxation?
University Allowance for Individually-Owned Cellular Phones and Plans
What types of cell phones and plans can I choose from?
Visit our website at www.it.utah.edu/services/phones/cellular.php.
why does the university want me to own my cellular telephone?
The IRS requires that the business and personal use of University owned cell phones must be documented in a very detailed manner. While most departments require employees to account for and reimburse personal calls made on University cell phones, no departments are documenting and substantiating to the detail required by IRS rules. The IRS can declare that all undocumented use is personal and should be taxed as wages, even if the calls were mostly business calls. Receiving a taxable allowance for an individually owned cell phone removes this detailed documentation requirement.
I have used a University owned cell phone for a long time with no problems.
Why the change?
Internal Revenue Service authority considers cell phone use a taxable fringe benefit if the business and personal use cannot be substantiated. Only recently has this emerged as a problem in IRS and other audits.
This seems ridiculous. Why are you putting us through this?
While this may seem silly to us, the IRS takes it seriously. The IRS has already made cellular telephone use an audit issue for businesses and government institutions, including higher education.
The University provides me a cell phone with a plan that includes 600
minutes. I never exceed 600 minutes, including personal calls. Aren’t I OK?
No. IRS authority says that personal calls that are included in the base plan must be documented and reimbursed, or reported as wages.
Can I use a cell phone for personal calls when I purchase it with a taxable
allowance from the University?
Yes. Because you own the phone, you do not have to document personal calls. You will no longer be required to carry two phones, one for business and the other for personal use.
Is the allowance that I receive for my own cellular phone taxable?
Yes. The allowance amount is taxable income. Otherwise you would still be required to provide detailed documentation of your business and personal calls.
How do I know I’m getting a fair allowance?
With department approval, you will work with your supervisor to determine how much your allowance will be. You will receive an amount necessary to pay for required business use.
What if my actual business usage exceeds the amount of the allowance that
I receive?
The monthly allowance amount can be adjusted based on actual business usage – or – if your business use spikes one month, you may request an expense reimbursement for un-reimbursed business calls.
Does everyone get an allowance for a personally owned cell phone?
No. You should only receive an allowance if your job requires that you carry a cell phone where other less expensive means of communication are not adequate, and then only an amount necessary to cover business calls. Just because someone with your title gets an allowance doesn’t mean that you will if your specific duties do not require the use of a cellular phone.
Do I get retirement contributions or other benefits if I receive a taxable
allowance for my cell phone?
No. The allowance is not part of your salary – it is a taxable reimbursement not included when determining benefits.
How do I know what cellular telephone or monthly plan to choose?
The device and plan you select will be based on several factors. You should consider both business and personal service coverage. Your job may not require a camera phone, but you may find a camera phone to be a good option for you personally. You should consider your calling patterns. Is unlimited long distance necessary? Would free mobile to mobile minutes be a plus? What are the chances that you may exceed your base plan minutes and be required to pay expensive overage minutes? We recommend that you shop around and speak with the different vendor reps before making a decision.
Which monthly plans have the best price?
You should speak with the vendor representatives and check their websites. Price should only be one factor in your choice. The lowest price carrier may not meet your coverage and other needs.
What if my choice doesn’t work out for me?
You should take full advantage of any trial periods offered by the vendors. Pay strict attention to your level of service during that period and return the phone and cancel the plan if you are not receiving the level of service you need.
What about smart phones – PDA/Phone combinations?
If your job requires that you have access to email, calendaring or other PDA functions, your supervisor may approve the purchase of a specific smart phone, PC card or other device that is required to perform your job. If you want a smart phone, but your job doesn’t require it, you will pay the difference in the allowance amount and the actual cost of a smart phone or other more expensive device.
If I am authorized to use a smart phone to access University e-mail
calendaring or other services, can the University recommend which devices
will work best and will be supported by the University?
Remember that these products change regularly – so you should speak with the vendor representatives. Your department may specify a device that is supported.|
Even if I don't receive an allowance, as a University faculty or staff member am I eligible for the individual discounts the cellular vendors offer?
Yes! If you are a current University faculty or staff member you are invited to take advantage of any of the discounts offered by the cellular vendors under their individual liable pricing.
University-Owned Telephones
I only make personal cell phone calls during “free” calling periods, i.e.,
evenings and weekends, or using “free” cellular to cellular calling.
Because those calls are free, they don’t count, right?
No. You actually pay for “free” calls as a part of the base cellular service plan. So, personal calls made during “free” calling times should be documented and reimbursed.
I have been paying for personal calls made on the University owned cell
phone. Aren’t I meeting the IRS requirements?
You are if you have provided detailed documentation of personal use and business use and have paid a pro-rata share of your total cell phone bill.
I document my personal calls by marking them on my cell phone bill or
statement from NetCom. Isn’t that enough substantiation?
You would think so. But, under IRS authority it is not enough to mark personal calls and say that all the rest are business calls. IRS substantiation requirements include the “amount of each separate expenditure, the amount of business/investment use, the date of the expenditure or use, and the business or investment purpose.”
And . . . the IRS definition of adequate record keeping is that the cell phone user “shall maintain an account book, diary, statement of expense or similar record and documentary evidence which, in combination, are sufficient to establish each element of an expenditure.”
IRS Regulation 1-274-57
OK – How am I supposed to figure the personal call reimbursement amount?
Example 1
You have a 600 minute plan that costs $40.00 (plus fees and surcharges). You only used 300 minutes, but 100 of those were personal. Your total bill is $40.00. You should pay one third of the total bill. Use this formula: 100/300 x $40.00. This equals $13.33 plus the same prorated share of the fees and surcharges.
Example 2
You have a 600 minute plan that costs $40.00 (plus fees and surcharges). This month you made calls totaling 650 minutes. Your total bill is $57.50 ($40 plus $.35 per minute over 600 minutes). Of those minutes, 100 were for personal calls. You should pay 100/650 x $57.50. This equals $8.47 for personal calls. The prorated share of fees and surcharges should also be paid.
This is all very complicated. I don’t think I have the time or resources to
jump through all of these documentation, substantiation, and
reimbursement hoops. Now what?
If that is the case, you should not use a University owned telephone. Instead, you should work with your supervisor to apply for an allowance toward the purchase of your own cell phone and plan.
Can anything be done to exempt a University-owned
cell phone
from this policy if it is used 100%
for business
or if there
are other extenuating
circumstances
such as a phone used
for
on-call reasons that
several employees use
on a rotating basis?
Yes. An exemption can be granted by a Cognizant Vice President or Dean. A Department Cellular Services Agreement must be completed and signed by the individual responsible for the phone, the Department Head, and Cognizant VP/Dean. The completed form is to be retained by the responsible department and available for auditing purposes if necessary.
Administration
If I am a supervisor, how do I select the correct allowance amount for
an employee?
The allowance amount must be based on the business requirements of the employee’s position. Amounts may be selected in $10 increments from $30 to $150. The $10 dollar increments allow you to select a plan that closely approximates actual business need.
Because the allowance is taxable, the actual amount that an employee receives will be less than the selected allowance amount. Departments are encouraged to determine an amount based on job function that is fair to the employee and the department. This should consider business usage only and not added personal usage.
A goal of the cellular allowance is to release an employee from burdensome and expensive administrative time spent on cellular usage substantiation requirements. The cost for this benefit is the reduction of the allowance due to employment taxes such as FICA and any federal and state employment withholding based on the employee's current withholding certificate on file. It is not an appropriate use of University resources to initiate a personal tax projection for allowance purposes. You may keep in mind the general tax rates of 7.65% for FICA and MEDHI tax and a combined federal and Utah income tax rate of 20% - 30%. Such percentages should apply to almost any University employee on a cellular allowance.
Who can I call for help on setting up my allowance?
Call the Help Desk at 581-4000 Option 2 to speak to a Service Coordinator.
What happens after I send my Allowance form into the Payroll Department?
As long as the Payroll Department receives your Allowance form by the 7th of the month you can expect to receive your allowance on the 22nd of the month it is in effect.
When and how should I expect to see my allowance?
You will see your allowance on the 22nd of the month as a Direct Deposit. You will not receive a paper advice on the allowance. It is available online only through the Campus Information System (CIS) under your Payroll information.
What is the appropriate account number to use for the allowance program?
The following account definitions are found in the Administrative Financials in CIS. We suggest you use an account in one of the defined ranges listed below:
Note that telcom costs may not be charged to Contracts and Grant projects (Fund 5000) unless a telcom category is specifically identified in the contract or grant.
63200 - 63219 Telcom - Monthly Recurring Charges - Telecommunication monthly recurring charges such as telephone line and equipment.
63300 - 63319 Telcom - Other Charges - Telecommunication other charges and credits such as installation and repair charges, network support center hourly charges, cellular monthly plan, and other miscellaneous charges.
63400 - 63419 Telcom - Toll Charges - Telecommunication toll/usage charges such as long distance calls and cellular airtime charges.
63500 - 63519 Telcom - Miscellaneous - Telecommunication costs that should not be appropriately charged to monthly recurring, other charges, or toll accounts.
How can I make a change to the chartfield an allowance is charged to?
To change the chartfield send in a new Allowance form with the new chartfield. Explain what you are asking for in the "comment/explanation" section of the form. The new Allowance Agreement supersedes previously executed agreements.
If I have questions on the allowance once I receive it who should I talk to?
First talk to your manager. You or s/he may need to contact the Payroll Department at 581-7873.
Making the switch between a University-owned phone and an individually-owned phone
Who does this apply to?
Anyone who uses a Cingular device and whose department is billed through NetCom for the monthly service.
What do I do if I want to stay with Cingular?
Let your manager know. A TEO must be sent to NetCom with the following information:
- Your name
- Your cell phone number
- A notation indicating you are staying with Cingular and need the account changed from University to individual.
NetCom will contact Cingular and give them authorization to release the account to you. NetCom will then give you an 800 number for Cingular so you can provide them with your personal information and complete the process of setting up your own account.
Can I switch from Cingular to another provider and keep my current phone number? How do I do that?
First of all, decide which company you want to go with. Refer to the OIT cellular web pages at www.it.utah.edu/services/phones/cellular.php and work through the appropriate representatives of the other providers.
Once you have signed up for new service and purchased your new device, let your manager know. A TEO must be sent to NetCom with the following information:
- Your name
- Your cell phone number
- A notation indicating which provider you are going to switch to and the fact that you want to keep the same phone number.
NetCom will contact the sales representative of the new provider and give them some pertinent account information.
The new provider will then contact Cingular and get your number ported over.
During this short time period you will probably have to carry both your old Cingular phone and your new phone. As soon as the porting of your number is accomplished your service will be available through the new phone only.
If your phone was purchased after 7/1/05 you should turn the old Cingular phone into your manager.
If your phone was purchased prior to 7/1/05 you may keep the old device.
If I switch from Cingular to another provider can I keep my current device?
No. Each time you switch from one provider to another you must obtain a device from the new provider. This may even apply if you are changing plans within the Cingular environment. (Some current Cingular devices are actually from the old AT&T provider and will not work with all Cingular plans).
In the past, we have always been required to send cell phones to
University surplus and salvage in order to transfer the ownership of a
University owned cellular device to an employee. Are we still
required to do that?
If a cell phone is given to an employee or if the cell phone is no longer needed because the employee is going to a different vendor, a Retirement/Transfer form needs to be completed.
If the cell phone is no longer needed, the phone should be sent to Surplus & Salvage along with the Retirement/Transfer form.
If the cell phone is given to the employee, you are required to determine the value of the cell phone. For help in determining the fair market value of a device follow the example cited below:
For instance, if the University purchased the device prior to 7/1/05, regardless of price - it is deemed today to be worth approximately $75 or less. If the device was purchased after 7/1/05 - and the employee wants to get on the allowance program before 6/30/06 - assume that the fair market value is 50% of the original purchase price. If that amount is more than $75, the entire amount needs to be added to the employee’s wages. The general guideline in effect at the University is that an award to an employee of tangible property with a fair market value of $75 or less does not need to be reported as wages to the employee.
The department is required to self-report how much a high-end device originally cost (good faith effort) and when it was purchased. To self-report use the section defined as "business justification and/or comment and explanation" on the Allowance form.
OK - What steps do I take to give the device to the employee?
Complete the University Retirement Transfer form. The proper code to use is TROFF, which is used to transfer items to another entity off campus. In addition, if the current fair market value of the item is greater than $75, then the entire value of the property needs to be reported as wages. (For a general explanation see www.tax.utah.edu - Employee Awards.) In order to adjust the wages and to ensure the proper University employment tax withholdings are applied, additional information needs to be added to the Retirement/Transfer form. Required information is employee name, employee ID, and total value of property distributed to employee.
IRS Documentation
Is there an IRS document that outlines their position on the subject of cellular phone taxation?
Yes. The IRS has published an article on their website at the following url: http://www.irs.gov/govt/fslg/article/0,,id=167154,00.html
For More
- More Frequently Asked Questions
- Cell Phone Plans - Individuals and Departments
- Employee Mobile Communication Agreement and Procedures
- Cellular Phone Policy - revised Dec 2005
- For more information, call 581-4000 and choose option 2 for phone services.
