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?
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?
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.
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.
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 requirements of the employee’s position. Amounts may be selected in $25 increments from $25 to $150. The $25 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. If department budgets allow, an allowance amount may be selected which covers additional taxes paid by the employee.
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/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.
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.
