Computing
and Information Services

Background

The Internal Revenue Service (IRS) considers employer provided cell phones and personal digital assistants (PDAs) to be “listed property” for the purposes of tax treatment (section 280F (d)(4)(A)(v))[1].  A significant amount of record keeping is needed in order to qualify the use of the cell phone or PDA for business related purposes.  Section 274(d)(4) of the IRS code describes the steps necessary to document such business use of listed property and includes (a) the amount of the expense, (b) the time and place of the call, and (c) the business purpose of the call[2].  This amount of record keeping is not only onerous for the employee, but also for the employer.

Policy

As a result of these requirements, Vassar College no longer owns cellular telephones or PDAs, or contracts with cellular providers for monthly service for cellular phones or PDAs (except in a very few cases, as described below).  Instead, those employees who have a documented business need for a cellular telephone or PDA will receive a taxable allowance for such service as described below.  The Controller’s Office and Computing and Information Services jointly developed this policy and these procedures.

Procedure

All employees with a business-related need for a cellular telephone or Personal Digital Assistant (PDA) allowance must complete the “Cellular Phone / PDA Allowance Request Form.”  This form must be approved by the employee’s direct supervisor as well as by the appropriate Senior Officer.  Once completed, the original, signed form should be sent to the Controller’s Office with a copy kept by the department.   Once received and processed by the Controller’s Office, a taxable monthly allowance will be added to the employee’s first paycheck of each month.  The Controller’s Office will also forward a copy of the form to the Telecommunications Office.

This allowance amount will be charged to the appropriate departmental operating budget as indicated on the eligibility form. 

Important Note:  The implementation of this policy dictates that neither the employee’s corporate credit card nor the departmental purchasing card may be used to pay for cellular phone charges.

Cellular/PDA Service Allowance

The amount of monthly allowance is based upon a typical contract necessary to meet business related needs for either voice services or, in the case of a PDA, for voice and data services. The College offers three levels of taxable monthly allowances for voice plans and two levels of allowances for PDA plans:

If an employee is not approved for a monthly allowance but incurs expense for individual telephone calls it is also possible to be reimbursed for actual usage.  In order to be reimbursed in this manner the employee needs to submit an expense report through their department to the Accounts Payable department with a copy of the telephone bill clearly showing which calls were business related and describing the specific purpose for each of those calls.

Note that this allowance does not represent an increase in base pay.  The allowance will continue unless the Controller’s Office is notified in writing either by the employee, or the supervisor that the allowance is to cease.

A yearly review of the need for a cellular telephone or PDA will be conducted by the supervisor and Senior Officer.

No additional reimbursement will be provided to those receiving a monthly allowance even if the monthly charges to the employee exceed the allowance amount.  However, allowances can be changed at any time should circumstances or needs change.  All requests for a change in allowance must be made by the supervisor in writing using the “Cellular Phone / PDA Allowance Request Form” with a signed original copy of the form sent to the Controller’s Office.  When contracting for services, the employee should inquire as to the availability of any discounts that may be available to Vassar employees.  A list of such discounts is also maintained by the Purchasing Office at http://purchasing.vassar.edu/services/vendors.html.

Cellular/PDA Equipment Allowance

The College also provides employees with a taxable equipment allowance towards the initial purchase of a new cellular phone or PDA, and for the replacement of a cellular phone or PDA (where the replacement may occur no more frequently than once every 2 years).  In order to receive an equipment allowance the employee must submit proof in the form of an original paid receipt showing the purchase of the new cellular phone or PDA and with its cost clearly indicated.  For cellular phones the amount of the equipment allowance will be the lesser of the actual cost of the new cellular phone or $50.  For PDAs the amount of the equipment allowance will be the lesser of the actual cost of the new PDA or $200.  Equipment allowances must be requested using the “Cellular Equipment Request Form” with the original form submitted to the Telecommunications Office.  Approved equipment allowances will then be sent to the Controller’s Office for processing of the taxable amount through Payroll.

Because the phone or PDA is owned by the employee, and the allowance is taxable, the phone or PDA may be used by the employee for both personal and business related calls.  The employee may also use the allowance as they see fit in order to obtain cellular service and may freely use it to purchase an individual cellular plan or a so-called “family” plan.

All contracts for service must be taken out in the name of the employee receiving the allowance and may not be taken out in the name of Vassar College.

Support for celluar phones and PDAs

All support for cellular phones and PDAs is provided by the cellular service company chosen by the employee.  Computing and Information Services (including Telecommunications) cannot offer any support for individually owned cellular phones or PDAs.  However, Computing and Information Services will provide support for College provided software that is used on those devices to synchronize them with College email accounts, calendars or other College systems and services.

Changes to cellular contracts

The College reserves the right to change or terminate this policy regarding allowances for cell phone or PDA service and equipment.  Individuals eligible for receipt of an allowance should understand that they are personally liable for monthly charges or termination fees, regardless of employment status or any change in this reimbursement policy.

Special Procedures for College owned cellular phones and PDAs

In some situations, it may be necessary or advantageous for the College to own and pay the monthly service charges for cellular telephones and PDAs.  The purchase and use of such devices must be approved in advance by the appropriate supervisor, Senior Officer, and the Vice President for Computing and Information Services.  In those cases where the College directly pays for the cellular voice or PDA contract, the cellular phone or PDA may not be used for personal purposes.

Questions

Questions about the policy or the procedures should be directed to the Controller’s Office.

Or click here for a list of frequently asked questions.

See http://www.taxalmanac.org/index.php/Sec._280F

See http://www.taxalmanac.org/index.php/Sec._274