However, it is important that the payment be made by the employer for «substantial non-compensatory operational reasons». The idea should not be that the employer provides additional money to employees, but that there is a strong business reason for the employer to require employees to maintain and use their personal mobile phones for business purposes. Once the company decides to reimburse employees for business expenses, it should decide whether to follow the responsible plan or the non-responsible plan. Most companies offer cell phone scholarships on a monthly basis, but you can work quarterly or annually – which is best for your situation and your team. Then determine how much. Then you decide to simply make an option for cell phone refunds or create a larger and more comprehensive program for work-related expenses. The latter is considered a more advantageous program and would include things like hardware, internet bills at home (especially good for those who are remote), software, and anything else that helps them improve their skills and work experiences. According to a survey by Oxford Economics, nearly 80% of companies said their employees couldn`t do their jobs effectively without mobile phones. Does your team use their phone for work email, Slack, social apps, and texting on their phone? Then you need a cell phone repayment plan.

Once the company has established the plan, the next step would be to choose the cell phone policy. Here are the guidelines you can implement: It`s important to note that the IRS has applied the same rules to employees who use their own phones for business. This allows you to reimburse employees for their reasoned monthly base fees for phone and data plans (i.e., employees must provide you with their bills), and employees don`t have to charge you the percentage of their work usage. Do you have to pay taxes on the money you receive from your employer to compensate you for the professional use of your personal mobile phone? If you`re thinking of buying the phones and plans and distributing them to your team, this is COPE. BYOD is your preferred plan when you pay off all or part of your employees` cellular plan. After mobile phones, tablets, etc. Removed from the listed asset class, the IRS issued guidelines that waived the requirements of the accountability plan rules for employer-provided equipment. Employees don`t need to keep an eye on their professional usage. Their personal use is considered a tax-exempt de minimis ancillary benefit.

Caution. A mobile phone provided to promote the morality or goodwill of an employee, to attract a potential employee, or to provide additional compensation to an employee is not provided primarily for non-compensatory business purposes. In this case, the value of the mobile phone must be included in the employee`s income as a taxable ancillary benefit. For more information, see Sections VII («De minimis social benefits»), XXIII.B («What is a marginal working condition?») and XXIII.D («Mobile Phones») of the EBIA Benefits Manual. This changed after the Small Business Employment Act of 2010, when mobile phones or mobile devices were no longer a registered property for the tax year beginning December 31, 2009. The value of the mobile phone should always be included in the employee`s salary as a taxable ancillary benefit. In an audit guide for its auditors, the IRS found that if employers give money to employees as a refund for the business use of a personal cell phone, that money is not taxable. For example, an employer could deduct the cost of providing telephone services to its employees as an operating expense. For this reason, the IRS concluded that the value of cellular services provided by an employer is not taxable to the employee if there are significant reasons related to the employer`s business, and that the refund is not simply a means of providing tax-free compensation to the employee. The IRS cites as examples of legitimate non-compensatory business reasons to require employees to maintain personal cell phones (and reimburse employees for doing so) if the employer must be able to contact the employee at any time for work-related emergencies, or if the employer requires the employee to be able to contact the employee at any time for work-related emergencies, or is available at times outside of the employee`s normal work schedule (i.e.

Customers are located in different time zones). The IRS pointed out that the reimbursement of employees` expenses for their personal cell phones is analyzed in the same way. Refunds should not be considered additional income or wages if – However, according to IRS Communication 2011-72, a mobile phone provided by the company for commercial purposes is treated as a benefit incidental to the condition of work. Employers exclude the value of the apparatus from the employee`s salary. Any personal use of the mobile phone is considered a de minimis ancillary service, which is also excluded from the salary. This would not apply if the mobile phone is provided to boost morale or attract employees. The employer must have substantial business reasons that go beyond the employees` remuneration because he or she requested the use of personal mobile phones by the employees in the course of the employer`s business or business and reimbursed them for their use. The employee must maintain the type of mobile phone coverage that is reasonably related to the employer`s business needs and the reimbursement must be reasonably calculated so as not to exceed the costs actually incurred by the employee for the maintenance of the mobile phone. In addition, reimbursement for the professional use of the employee`s personal mobile phone must not be a substitute for a portion of the employee`s regular salary. Agreements that replace a portion of an employee`s previous salary with reimbursement for the professional use of the employee`s personal cell phone, and agreements that allow for the reimbursement of unusual or excessive expenses, are under close scrutiny by IRS auditors.

Payroll Partners strives to help its clients keep abreast of current payroll, tax and human resources news, developments and events. This article is intended to provide readers with general information on these topics. The article does not constitute professional advice regarding the application of a particular practice and should not be treated as such. Every effort has been made to ensure the accuracy of the information. Payroll Partners assumes no responsibility for anyone relying on the information contained in the article. Readers should independently review all information before applying it to a particular factual situation and should independently determine the impact of a particular practice. If you are looking for payroll, tax and/or personnel advice, you should contact a payroll, tax and/or human resources professional. In 2018, the Oxford Economics survey conducted a survey that found that 89% of companies provide a full or partial scholarship to compensate Bring Your Own Device (BYOD) employees for their mobile phone costs. The guidelines, IRS Notice 2011-72, refer to a provision in the Small Business Jobs Act of 2010 that removed mobile phones from the registered ownership definition, a category of tax law that typically requires additional documentation from taxpayers. Creating a cell phone strategy is not an easy task. You need to make sure it`s consistent and sticks to your existing spending policies.

In this guide, we will discuss both types of scholarships. MOBILE PHONE Due to the pandemic, mobile phones are becoming more and more important for daily operation and work, so the issue of compensation for use is right. That is, there was no clarity on how to handle the reimbursement of mobile phones by employee-owned mobile phones. As a result, the IRS issued a memorandum on how to manage the reimbursement of employee-owned cell phones to employees. If employees receive a refund via mobile phone, this may be excluded from the employee`s salary. provided the company follows the IRS`s responsible plan. With constant updates and advances in cell phone technology, it makes sense for you to create a cell phone policy that can adapt to changes. When most people think about covering their team members` business expenses, many stop with cell phones. To choose between the two, you need to determine what is most important to your business.

If security is a big concern or is able to track the location of your employees, then COPE is probably the right path for you. Be careful, however, because it`s important to realize that with the COPE approach, you`ll be managing cell phones, plans, bills, and anything else that comes with owning a cell phone (or hundreds of them), which can take a lot of work. Prior to 2010, when a company provided the employee with a cell phone (or communication device), the IRS considered it a registered property and treated it as an ancillary benefit. The employer includes the value of the equipment in the salary, unless it is a minor benefit for working conditions. Many of today`s culture-focused companies are going beyond the traditional mobile phone reimbursement model and considering other ways to support their employees at work through a work equipment scholarship. COMPUTER Sensitive company hardware and customer information should not be stored on employees` PCs. .