jvelliquette
Junior Member
What is the name of your state? Illinois
My tax exempt company has adopted new policies based on their interpretation of the IRS tax laws that govern cell phone, PDA and Laptop computer usage. These devices will be considered as income and we will be taxed a flat rate of 25% of the cost (monthly for cell phones) of these devices. This 25% is considered to be the amount that the devices will be used for personal use. However, I do not use any of the devices for personal use at all. Below is an e-mail sent by my supervisor and our new policy. It is my opinion that they are misinterpreting the law. I don't feel that I should have to pay taxes on the devices that my employer issued to me in order to perform my job duties. Please read the e-mail and accompanying policy below and let me know what you think.
Cell phones/blackberries/pda's will be based with IRS guidelines. First we will talk about equipment provided to the employee. One, is that a DETAIL log needs to be kept for any usage for these devices. For example, the number called, why they were called and the business purpose it served. This has to be done for each call being made. There has to be a definition as to why and who talked to. With a potential of many thousands of individuals to have to provide such a detail log and have it accurate, it was determined that it would not be feasible. The second option is to charge the employee a certain % for some personal use of this equipment as a benefit and then a log is not required for any of the calls. The standard % defined by the IRS is 25%. One of our standard packages for the monthly cost of the equipment is around $100.00 (actually $82 but will round to make it easier), so on a monthly basis $25.00 would be added to your base salary as a benefit, or $300.00 annually. If you are in the 15% tax bracket, that would come to an actual out of pocket cost of $45.00 for the use of this equipment. To be realistic, this is the only logical way for this to be maintained with so many individuals with this type of equipment. So this is the avenue that we will be taking for all employees who have company cell phones, blackberries, pda's, etc starting in 2007. Now the IRS doesn't look to see that we are using these for support purposes and in most cases, if not all, this 25% is way to much. But it's their guideline and the only option we have from that standpoint. I know I have heard of many complaints about this and not wanting the device anymore because of this. I can tell you, our customers and I'm sure our other employees are still expecting the same service and communication today and tomorrow whether or not you have a blackberry or not and in this basic case, $45 for the personal usage (which I'm sure we all make a few personal phones on the blackberries in a years time) is probably not that far out of alignment.
If you have a personal cell phone and use it to make calls on our behalf, you can choose to be reimbursed for that. Again, we have two options. One, is that a DETAIL log needs to be kept for any usage for these type of devices. This has to be done for each call being reimbursed. Same exact process as above which is not feasible. The second option is that we would pay you $50.00 per month for us to use your personal cell phone and yes this is taxable income. In this case there is $600.00 in income for the year. At that same 15% tax bracket, that comes to $90 in actually taxes or a net of $510.00 to you. With this option we do not need to keep track of any log for each call. But you can not claim any calls you make for Provena if this plan is chosen. This is also an option that can be done for individuals that do not have a company supplied cell phone device.
Laptops are is this same scenario but the formal process has not been finalized as to how. In our discussions, we may not have to do this part of it. We will be working with finance to give them this information so they can make a final determination if it meets the IRS exception.
No matter how we look at it, the IRS is cracking down on many of these "benefits" as this is their base income to get taxes from. Not only here, but every company that is out there and Provena will be abiding by these rules to the best of our abilities. So many of our current polices are being revised to meet these laws. With that comes some pain as we adjust what we are currently doing to what has to be done. In some cases, it just more procedural (expense form processing). Others, have different impacts (cell phone/blackberry) and in those cases some might see an improvement, others might not. So none of these changes were made to make our jobs harder or trying to not let us get the tools to do our job, its to comply with the ever changing laws and to be sure we are in compliance and enforcing our polices to meet these laws.
SYSTEM POLICY
Section: Management of Human Resources Number: 4.13
Corporate Responsibility
Subject: Cellular Telephones/Blackberry/PDAs & Page: 1 of 2
Personal Computers
CLC/SLC Approval: N/A
CEO Approval: NA
Effective Date: 8/4/06
Supersedes: None
Last Review Date: 8/4/06
POLICY
We a legal and ethical responsibility to strictly adhere to the Internal Revenue Code and Regulations. Under IRS regulations, certain fringe benefits (personal use of cell phones, Blackberries, PDAs and PCs) when expensed must be included as taxable compensation. A portion of these items must be allocated to employees’ annual W-2.
This policy upholds our commitment to compliance with all laws and regulations and further supports our Value of Integrity.
PURPOSE
To set forth a procedure to identify and declare as personal income, the personal usage by our leadership of cellular telephones, Blackberries, PDAs and Personal Computers provided by the Corporation and the reimbursement of personal cellular telephones.
Federal income tax law and regulations require that personal usage by employees of employer owned or employer-expensed property, including cellular telephones, Blackberries and Personal Computers, be reported to employees on annual W-2s and the Internal Revenue Service (IRS) as taxable income.
Employees that request reimbursement for business use of a personal cellular telephone must provide documentation in the form of a log of telephone call and indicate the business purpose of the telephone call; or
The local ministry may elect to pay a differential through the payroll system for the business usage of a personal cellular telephone in the amount of $50.00 per month. In this instance no documentation or logs would need to be provided or maintained.
The local ministry can determine the justification to issue a cellular telephone, Blackberry, or Personal Computer or pay the cellular telephone differential based on the definition of business purposes.
SPECIAL INSTRUCTIONS/FORMS TO BE USED
Election form to be reimbursed a cellular telephone differential. (Attachment 1)
DEFINITION
Business Purposes — Activities in the furtherance of the leaders’ job description or responsibilities.
Cellular Telephones, Blackberry, PDAs — Purchased by us for the use by a leader and monthly service charges that are paid for or reimbursed by the Corporation.
Provena Health Leader — An employee of the Corporation who possesses and uses a cellular telephone, Blackberry, PDA or Personal Computer for business purposes.
Personal Purposes — Activities not in the furtherance of the leader’s job description or responsibilities.
Personal Use Percentage — The percentage of calls placed, emails sent or received on the leaders’ cellular telephone, Blackberry, PDA or Personal Computer for personal purposes and not business purposes.
PROCEDURE
I. Leaders shall use cellular telephones, Blackberries, PDAs and Personal Computers primarily for business purposes. No more than twenty-five percent (25%) of calls placed or received by a Leader on his/her cellular telephone, Blackberry, PDA or Personal Computer shall be for personal purposes.
II. We shall report to the IRS and the Provena Health leader cellular telephone, Blackberry, PDA and Personal Computer usage in excess of 25% for personal purposes as taxable income.
III. Each leader shall inform (on leader’s monthly expense report) of his/her personal use percentage based on the leader’s general sense of the time and number of calls or emails allocated for personal purposes.
IV. Each leader has a duty to monitor his/her monthly cellular telephone, Blackberry, PDA and Personal Computer usage to ensure personal calls and emails do not exceed twenty-five percent (25%).
V. We shall declare to the IRS and the leader that portion of the total monthly cost of cellular telephone, Blackberry, PDA and Personal Computer usage that corresponds to leader’s reported personal use percentage as taxable income.
ELECTION FORM
Cellular Telephone Reimbursement
I have reviewed the System Policy: Cellular Telephones/BlackBerry/PDAs & Personal Computers.
By my signature below, I voluntarily elect to receive reimbursement for my telephone usage. I understand that I can change this election at any time and if I choose to do so I can contact Human Resources at 708-478-6333.
_______________________________
Printed Name
_______________________________ _________________
Signature DateWhat is the name of your state?
My tax exempt company has adopted new policies based on their interpretation of the IRS tax laws that govern cell phone, PDA and Laptop computer usage. These devices will be considered as income and we will be taxed a flat rate of 25% of the cost (monthly for cell phones) of these devices. This 25% is considered to be the amount that the devices will be used for personal use. However, I do not use any of the devices for personal use at all. Below is an e-mail sent by my supervisor and our new policy. It is my opinion that they are misinterpreting the law. I don't feel that I should have to pay taxes on the devices that my employer issued to me in order to perform my job duties. Please read the e-mail and accompanying policy below and let me know what you think.
Cell phones/blackberries/pda's will be based with IRS guidelines. First we will talk about equipment provided to the employee. One, is that a DETAIL log needs to be kept for any usage for these devices. For example, the number called, why they were called and the business purpose it served. This has to be done for each call being made. There has to be a definition as to why and who talked to. With a potential of many thousands of individuals to have to provide such a detail log and have it accurate, it was determined that it would not be feasible. The second option is to charge the employee a certain % for some personal use of this equipment as a benefit and then a log is not required for any of the calls. The standard % defined by the IRS is 25%. One of our standard packages for the monthly cost of the equipment is around $100.00 (actually $82 but will round to make it easier), so on a monthly basis $25.00 would be added to your base salary as a benefit, or $300.00 annually. If you are in the 15% tax bracket, that would come to an actual out of pocket cost of $45.00 for the use of this equipment. To be realistic, this is the only logical way for this to be maintained with so many individuals with this type of equipment. So this is the avenue that we will be taking for all employees who have company cell phones, blackberries, pda's, etc starting in 2007. Now the IRS doesn't look to see that we are using these for support purposes and in most cases, if not all, this 25% is way to much. But it's their guideline and the only option we have from that standpoint. I know I have heard of many complaints about this and not wanting the device anymore because of this. I can tell you, our customers and I'm sure our other employees are still expecting the same service and communication today and tomorrow whether or not you have a blackberry or not and in this basic case, $45 for the personal usage (which I'm sure we all make a few personal phones on the blackberries in a years time) is probably not that far out of alignment.
If you have a personal cell phone and use it to make calls on our behalf, you can choose to be reimbursed for that. Again, we have two options. One, is that a DETAIL log needs to be kept for any usage for these type of devices. This has to be done for each call being reimbursed. Same exact process as above which is not feasible. The second option is that we would pay you $50.00 per month for us to use your personal cell phone and yes this is taxable income. In this case there is $600.00 in income for the year. At that same 15% tax bracket, that comes to $90 in actually taxes or a net of $510.00 to you. With this option we do not need to keep track of any log for each call. But you can not claim any calls you make for Provena if this plan is chosen. This is also an option that can be done for individuals that do not have a company supplied cell phone device.
Laptops are is this same scenario but the formal process has not been finalized as to how. In our discussions, we may not have to do this part of it. We will be working with finance to give them this information so they can make a final determination if it meets the IRS exception.
No matter how we look at it, the IRS is cracking down on many of these "benefits" as this is their base income to get taxes from. Not only here, but every company that is out there and Provena will be abiding by these rules to the best of our abilities. So many of our current polices are being revised to meet these laws. With that comes some pain as we adjust what we are currently doing to what has to be done. In some cases, it just more procedural (expense form processing). Others, have different impacts (cell phone/blackberry) and in those cases some might see an improvement, others might not. So none of these changes were made to make our jobs harder or trying to not let us get the tools to do our job, its to comply with the ever changing laws and to be sure we are in compliance and enforcing our polices to meet these laws.
SYSTEM POLICY
Section: Management of Human Resources Number: 4.13
Corporate Responsibility
Subject: Cellular Telephones/Blackberry/PDAs & Page: 1 of 2
Personal Computers
CLC/SLC Approval: N/A
CEO Approval: NA
Effective Date: 8/4/06
Supersedes: None
Last Review Date: 8/4/06
POLICY
We a legal and ethical responsibility to strictly adhere to the Internal Revenue Code and Regulations. Under IRS regulations, certain fringe benefits (personal use of cell phones, Blackberries, PDAs and PCs) when expensed must be included as taxable compensation. A portion of these items must be allocated to employees’ annual W-2.
This policy upholds our commitment to compliance with all laws and regulations and further supports our Value of Integrity.
PURPOSE
To set forth a procedure to identify and declare as personal income, the personal usage by our leadership of cellular telephones, Blackberries, PDAs and Personal Computers provided by the Corporation and the reimbursement of personal cellular telephones.
Federal income tax law and regulations require that personal usage by employees of employer owned or employer-expensed property, including cellular telephones, Blackberries and Personal Computers, be reported to employees on annual W-2s and the Internal Revenue Service (IRS) as taxable income.
Employees that request reimbursement for business use of a personal cellular telephone must provide documentation in the form of a log of telephone call and indicate the business purpose of the telephone call; or
The local ministry may elect to pay a differential through the payroll system for the business usage of a personal cellular telephone in the amount of $50.00 per month. In this instance no documentation or logs would need to be provided or maintained.
The local ministry can determine the justification to issue a cellular telephone, Blackberry, or Personal Computer or pay the cellular telephone differential based on the definition of business purposes.
SPECIAL INSTRUCTIONS/FORMS TO BE USED
Election form to be reimbursed a cellular telephone differential. (Attachment 1)
DEFINITION
Business Purposes — Activities in the furtherance of the leaders’ job description or responsibilities.
Cellular Telephones, Blackberry, PDAs — Purchased by us for the use by a leader and monthly service charges that are paid for or reimbursed by the Corporation.
Provena Health Leader — An employee of the Corporation who possesses and uses a cellular telephone, Blackberry, PDA or Personal Computer for business purposes.
Personal Purposes — Activities not in the furtherance of the leader’s job description or responsibilities.
Personal Use Percentage — The percentage of calls placed, emails sent or received on the leaders’ cellular telephone, Blackberry, PDA or Personal Computer for personal purposes and not business purposes.
PROCEDURE
I. Leaders shall use cellular telephones, Blackberries, PDAs and Personal Computers primarily for business purposes. No more than twenty-five percent (25%) of calls placed or received by a Leader on his/her cellular telephone, Blackberry, PDA or Personal Computer shall be for personal purposes.
II. We shall report to the IRS and the Provena Health leader cellular telephone, Blackberry, PDA and Personal Computer usage in excess of 25% for personal purposes as taxable income.
III. Each leader shall inform (on leader’s monthly expense report) of his/her personal use percentage based on the leader’s general sense of the time and number of calls or emails allocated for personal purposes.
IV. Each leader has a duty to monitor his/her monthly cellular telephone, Blackberry, PDA and Personal Computer usage to ensure personal calls and emails do not exceed twenty-five percent (25%).
V. We shall declare to the IRS and the leader that portion of the total monthly cost of cellular telephone, Blackberry, PDA and Personal Computer usage that corresponds to leader’s reported personal use percentage as taxable income.
ELECTION FORM
Cellular Telephone Reimbursement
I have reviewed the System Policy: Cellular Telephones/BlackBerry/PDAs & Personal Computers.
By my signature below, I voluntarily elect to receive reimbursement for my telephone usage. I understand that I can change this election at any time and if I choose to do so I can contact Human Resources at 708-478-6333.
_______________________________
Printed Name
_______________________________ _________________
Signature DateWhat is the name of your state?
