Is reimbursement right for your business? This helps convert an otherwise long and tedious task into something that just takes a few minutes to report and manage. This places responsibility on the employee.Â. Employees do not have to report the reimbursement as taxable income. In general, cell phones should not be used when they could pose a security or safety risk, or when they distract from work tasks: Never use a cell phone while driving. Without a stipend in place, staff members can sue their employers for associated costs. Offering cell phone reimbursement isn't just about being a kind-hearted boss. Why not lump cell phone use under the umbrella of expense accounts? The caveat is that, in California, regardless of whether the employer approves personal cell phone use for employees, if expenses are incurred, they have to pay. Additionally, we also discuss how an Expense Reimbursement Software can make cell phone reimbursements effortless for your company.Â. They may be a great asset if used correctly (for productivity apps, calendars, business calls etc.) They also address security measures that keep both the employee and the company information safe and confidential. These laws protect both employees and employers. From checking emails and sending text messages to hosting video conferences, many professionals rely on cell phones as their mobile office. There's also no guarantee that employees will treat the issued phones with care. Some are going as far as banning cell phones in the workplace, to avoid the risk and complications associated with creating policies and stipends. Thank you! The employee must show that the cell phone and the accompanying service plan was used for a business purpose.Â. When not convincing people to automate their expense management, she loves to read, travel, and explore the world with her pup. From the tax-saving point of view, stipends are the least tax-effective option. If your company needs to adapt, change, modify or amend your cell phone policy at work, those changes need to be clearly and consistently communicated to all employees, even those who might not appear to be affected by the change. We recognize that cell phones (and smartphones especially) have become an integral part of everyday life. At the option of the employee and with appointing authority approval, providing appropriate funds have been budgeted, employee may opt to receive a monthly cell phone allowance of seventy dollars ($70.00) for use of a privately owned cell phone to conduct County business. If the employee has unlimited minutes or data, the employer is still required to pay "a reasonable percentage of the employee's cell phone bill.". SUGGESTED READ: Balancing expense policy compliance and happy employees. Something went wrong while submitting the form. It's no surprise that cell phone reimbursement has become a hot topic. In today's fast-paced world, everybody has their noses in their phones for the majority of the day. Companies run the risk of employees damaging, losing, or having company phones stolen – this adds replacement costs to the equation. Our employee cell phone policyoutlines our guidelines for using cell phones at work. Instead of resigning yourself to being "damned if you do and damned if you don't", let's examine different ways to approach the cell phone reimbursement debate. “Cell phone allowances or the use of employer-provided cell phones may constitute taxable fringe benefits which are included in the employee’s taxable income and form part of the remuneration for purposes of employees’ withholding tax. Under newly enacted section 9.5 of the Illinois Wage Payment and Collection Act (“Act”) (effective January 1, 2019), employers are obligated to reimburse employees for all necessary expenses incurred within the scope of their employment. The proof is in the pudding, and many employers want to see exactly what their employees are claiming as work-related expenses. BYOD, or bring your own device, policies are becoming more common in work environments. Using a company cell phone is mostly a trust bond between an employer and an employee, which should be respected deeply. Ne… Security is important, so it’s vital to … On the flip-side, employees may be liable for compromising secure company information. An Accountable plan lets you reimburse employees by following IRS regulations on business expenses. Introduction The objective of this policy is to facilitate the Employees in their jobs by increasing communication within the organization and especially with the customers and to prevent them from the hassle of purchasing Sim Cards / Hand Sets. Employers can mix and match two or three of these options to see what works best for them. As you could imagine, this approach gets quite tedious and time-consuming. Creating a cell phone policy is no easy feat. If the employee chooses to use their personal mobile device, that's on them! Oops! If you're a business owner running a successful company, chances are you have multiple employees using their mobile devices for work.Â. No matter what accounting plan or cell phone policy you choose, automation can help both employees and finance teams. Despite being an integral part of daily work, many companies still do not have an effective cell phone reimbursement policy in place. The following are the policies you can implement: That said, it is not a one-size-fits-all scenario. Some companies prefer not to play the nickel and dime game, and instead, just pay the entire amount. Which of these options makes the most financial sense for your company? This means employees are paid for their exact amount of work-related personal cell phone use — to the penny. With constant updates and advancements in cell phone technology, it only makes sense that you create a cell phone policy that can adapt to  change. The biggest downside to this form of cell phone reimbursement is the grey area that exists between the fixed amount and what the employees feel they're entitled to. The value of the cell phone was still to be included in the employee’s wages as a taxable fringe benefit. Cochran v. Schwan's Home Serv., Inc., 228 Cal. The tax regulations of cell phone reimbursement boil down to three questions the company must answer: 1. 1. Employers include stipend as additional wages in W-2 and it is subjected to income tax and employment tax withholding requirements. The employee must return the excess amount to the employer.Â, No matter how complicated your approval workflow is, Fyle can manage it with ease with its. However, after IRS Notice 2011-72, a company-provided cell phone for business purposes is treated as a working condition fringe benefit. In this situation, companies create a policy that requires staff to prove any work-related cell phone usage and expenses. For those companies looking at cutting down on administrative costs, simply paying employees a fixed amount is a viable option. In this article, we discuss the guidelines one must keep in mind while devising a cell phone reimbursement policy. Eligible e mployees (below) may receive a cell phone stipend from the U niversity for business - related costs incurred when using their personal cell phones. 1.1. By providing cell phones, employers can choose a carrier, hardware, and an operating system that best fits the company's needs. To answer the question "are cell phone allowances taxable?" Most common mistakes in corporate expense management, Challenges finance teams face with travel & expense management, BYOD, or bring your own device, policies are becoming more common in work environments. App. Even this can take precious time and energy better spent elsewhere. On the other hand, employers are now tasked with making sure employees aren't using the company phone for personal use.Â. There's no one-size-fits-all approach to cell phone reimbursement for employees. The use of a cell phone’s recording or photographic capability on company premises is prohibited. this policy. According to the non accountable plan, employees receive a monthly allowance for expenses that wouldn’t need any documents for proof. Here are a few things to keep in mind when considering what type of cell phone reimbursement policy is best for your business: As with most things in life, it comes down to money. Employers also rest easy knowing their employees have the necessary tools to complete the job. Your policy depends on factors like acquisition costs, data security, ease of access, etc. A solution is to calculate the average time spent on work-related projects and then pay that portion of the employee's total cell phone bill. I have attached Sample Cell Phone Reimbursement Policy. Fyle is a new-age expense management software that can solve all your expense management woes! These payments may be excluded from taxable income only … This question makes it difficult for employers to decide on what type of cell phone reimbursement to create and how to protect themselves against legal ramifications. Depending on the size of the company and the number of employees, paying multiple cell phone bills could get quite costly. Whatever expense reimbursement policy you craft, make sure the guidelines are abundantly clear.Â, Five ways to make expense reporting easier for employees, Balancing expense policy compliance and happy employees. The defense is that the company is passing it's operating expenses onto the employee. Excessive use of a cell phone for personal reasons while at work is not allowed. If an employee needs to use the cell phone for personal use or for the emergency call, it is good to inform the company with relevant reasoning. Or do you want to provide company phones? Do you need help managing your company's expenses and drafting clear policies? The cell phone policy of a company is merely a list of rules and guidelines that explain the dos and don’ts of using a cell phone in a work environment and during working hours. During this milestone case, the California Court of Appeals filed a class-action lawsuit on behalf of 1,500 customer service managers. However, the cell phone must be issued primarily for noncompensatory business reasons. These changes came on the heels of a controversial court case: Cochran vs. Schwan's Home Services. Carrier fees 2. The allowance shall be paid to the employee after documentation has been submitted to the county auditor that a personal cell plan is in effect and a cost has been incurred or obligated. The Notice provides that, for tax years after December 31, 2009, the IRS will treat the employees use of employer-provided cell phones for reasons related to the employers trade or business as a working condition fringe benefit, the value of which is excludable from the employees income. Objective This policy has been introduced to: […] If you have the manpower, the most accurate way to, If you choose to provide company cell phones, be prepared to. Personal cell phones don't allow you to monitor your employees' calls. 4th 1137 (2014). When employers require employees to use their personal cell phones for business use and then reimburse them for the cell phone expense, IRS examiners should analyze the reimbursement in much the same way as they would analyze the cost of a cell phone provided by the employer, based on the guidance provided in Notice 2011-72. While this is an unpopular solution for many employers, for some, it's more about peace of mind. Cell Phone Allowance. Notice 2011-72 addresses the tax treatment of employer-provided cell phones for noncompensatory purposes. How much should you reimburse each employee? And how do you measure these factors? Employers consider several factorswhendrafting these policies and determining stipend amounts.Here are just a few: 1. Notification Technology keeps changing and so should a good company cell phone policy at work. If you decide to reimburse employees for their cell phone use, should you do so under an accountable or non-accountable plan? The downside is that this could potentially impact employee productivity and company morale. intend to comply with the University’s Cell Phone Policy. Once the company decides the plan, the next step would be to choose the cell phone policy. The biggest benefit of this approach is that the cost is relatively stable. Such phones should be Scope: The cell phone usage policy applies to all employees, managers and supervisors. If employees feel entitled to more than the fixed amount, many companies require them to submit proof. But changes cannot occur in a void. This allowance is considered taxable income and should appear in the employee’s W-2 form.‍. We promise to send across some good stuff. How to create an IRS-compliant expense reimbursement policy. These payments are referred to as mobile stipends. You need to ensure that it is homogenous and complies with your existing expense policy stipulations. Mobile management overhead 3. As a result, the IRS released a memorandum on how to manage reimbursement to employees of employee-owned cell phones.  If employees receive cell phone reimbursement, it can be excluded from the employee's wages; provided the company follows the accountable plan by the IRS. The good news is, the employer has access to all cell phone records and can control the associated plans. With so many different laws and unclear expectations, how can companies create a compliant, reasonable cell phone reimbursement policy? While these laws vary from state to state, California is leading the way in this growing trend. Companies might decide they want to go with Apple's iOS, Google's Android, or some other option. Never use a cell phone while operating equipment. 1. The employee must produce an expense report, along with the receipts. According to the IRS regulations: By opting for the accountable plan, the company takes the responsibility of collating and submitting the documents to the IRS. We promise to send across some good stuff. E.g., One employee whose job depends on the phone, may be reimbursed 100%; in office staff, on the other hand, with less frequent use could get a stipend of $25 (or $50 or $100) or a lower percentage than others (e.g., 10%). Expense accounts are commonplace in larger corporations that require employees to travel and network as part of their job description. This figure varies depending on the company and the agreed-upon policy.Â. For purpose… What personal cell phone use is considered "work-related"? Here are just a few: But these BYOD policies cover much more than only cell phone bills. On the rare occasion when a department may make a cell phone available for multiple individuals to use and a cell phone is not assigned to a specific individual and no personal calls are made on these phones, the phone may be used by employees without using the taxable allowance program. Providing employees with a company cell phone means the expenses are already calculated. Show that the cost is relatively stable employees were not reimbursed for incurred expenses work-related! Can take precious time and energy better spent elsewhere remains, how can companies create a policy that requires to! 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