Cell Phone and Voice / Data Service Policies and Procedures
Effective Date: October 1, 2008, retroactive to January 1, 2008
A. Background
Beginning October 2008 Colby will implement new cell phone procedures in order to achieve
compliance with prevailing tax laws. Moreover, in an effort to maximize available minutes and savings,
the College will transition from several smaller plans to one of three administered centrally through
Media Resources. Cell phone users will see a simplified internal plan structure that assigns accounts
into three minute-based levels determined by business need. Options such as texting and data/smart
phones remain available as an add-on (see Section C below). One key change that cell phone users
need to be aware of is that in order to meet IRS standards Colby must compute the tax liability for each
person relative to the value of the plan received. This will be reflected at year-end in each employee’s
W-2 form.
B. Tax Implications
In 1989 the Internal Revenue Service (IRS) adopted a regulation concerning cell phones and similar
devices. Under the Internal Revenue Code, cell phones are deemed “listed property” because
employees may use them for business as well as personal use. The IRS, in recent investigations, has
closely scrutinized the treatment of personal use of employer-provided equipment and services, such
as cell phones. Bills have been introduced in Congress to update the tax treatment of employerprovided cell phones and similar devices; however, until that happens we must comply with the laws
and regulations as they currently stand.
What is Listed Property?
“Listed property” includes items obtained for use in a business but designated by the Internal Revenue
Code as those devices lending themselves easily to personal use. This includes cell phones. With listed
property the IRS requires either (a) detailed record keeping of each call (similar to a travel log); or (b)
the value of the service and equipment received be used to calculate additional withholding from the
employee’s paycheck to recognize this excess benefit.
Colby Cell Phone Policy – September 11, 2008
Page 1
Why Should You Care?
For most employees, detailed record keeping is both time consuming and impractical. As an
alternative, calculating the appropriate tax amount based on an internal plan represents the most
effective way for Colby to comply with the IRS and to provide equitable service to employees. In brief,
if the cell phone use is not documented properly, or if the value of the personal use is not added to an
employee's W-2, then the penalties for non-compliance can be severe.
C. New Policy:
Cell phones will continue to be managed centrally through Media Resources and departments will
continue to be charged monthly for individual accounts. However, in order to simplify the financial
administration and to provide the best benefits for departments, the following internal fee allocation
schedule has been developed:
Comparable Minutes for the Same
Rate:
(as of 9/4/08):
Categories
Monthly Charge
Standard
High End
Super User
$
$
$
Monthly
Minutes
40.00
60.00
100.00
Texting:
Data/Smart Phone:
500
1000
2200
450
900
2000
450
900
2000
add $10.00 per month
add $40.00 per month
All Colby Plans come with the following features: local Waterville telephone numbers, no long distance
or roaming charges within the continental U.S., voice mail, unlimited night (after 9pm) and weekend
minutes, unlimited incoming call minutes, unlimited incoming text messages, and no activation fee.
Under this plan, each eligible employee will receive a plan designation and equipment commensurate
with their business needs.
D. Monthly Charges and Payroll Taxes
Each month the value of the cell phone service will be charged to the employee’s department. In
addition, in order to ensure compliance with IRS guidelines, a like amount must be used to compute
applicable payroll taxes for each employee. This figure will appear in their W-2.
There are two caveats to the payroll tax stipulation:
Colby Cell Phone Policy – September 11, 2008
Page 2
(1) During the Transition Period only, the employee will see an adjustment to their paycheck
recognizing the value of the service received; however, Colby will compensate each employee for the
increased tax liability so the net effect will be zero (for the January through December 2008 period).
Beginning January 1, 2009, Colby will discontinue “grossing up” pay for employees and each person
must be responsible for any additional tax liability (see “Transition Period”, below).
(2) If Congress should act to remove cell phones from “listed property” then Colby will respond
accordingly. Until such time we must conform to the law.
Determination of Plan Assignment for Employees
Employees who currently have cell phones retain de facto approval and will be placed into plans
comparable to their existing service. Department managers may consult with the employee on the
assignment but the final determination should be based on actual business need. Requests for
additional services (e.g. smart phones), higher plan minute levels or services for new employees are
not automatic and must be approved by the supervising Vice President / Dean and the Vice President
for Administration. New services, plans or equipment must receive the appropriate approvals in order
prior to any changes taking effect. Changes must be made using the designated approval form. Email
or verbal notification is no longer sufficient.
Support for Cell Phone or Device
Media Resources will continue to provide support for all plans and approved equipment. For those
employees with a data plan, the Palm Treo remains the exclusive device that interfaces with the Oracle
Calendar program used by Colby. All other data devices (Blackberry, iPhone, etc.) are not supported by
Media Resources. Contact Ken Gagnon at x4239 if you have questions.
Payroll Processing
The Payroll office must receive a signed, completed approval form in order to add the allowance to
that individual’s payroll check. Reminder: following the Transition Period, appropriate payroll taxes on
the allowance amount will be withheld from the paycheck, and the amount of the allowance will be
included on the individual’s year-end W-2.
Overages
Media Resources will monitor cell phone usage on a monthly basis. Due to the combined plans, Media
Resources will maintain buffer or reserve minutes for the whole College. Cell phone usage by an
employee above the prescribed plan minutes, if the situation occurs, will be handled in one of several
ways. In general, if an overage appears to be a one-time or infrequent event, then in all likelihood no
action will be taken. However, if an individual routinely exceeds his or her plan minutes then the
College reserves the right to pursue remedies (e.g. moving the employee to a higher plan or reviewing
the situation with the supervisor).
Secondary or “Add On” Accounts for Family Members
Secondary or “add on” accounts for personal or family member use can no longer be permitted under
this plan due to the taxability issues and restrictions on business use. If you have such a plan now, you
will need to consult with Media Resources on termination of service.
Colby Cell Phone Policy – September 11, 2008
Page 3
Loaner Phones
In some circumstances a department may make a phone available for multiple individuals to use. If a
phone is not assigned to a specific individual (”non-assigned phones” or “loaner” phones) and no
personal calls are made on these phones, the phones can be used by individuals without using the
taxable allowance approach described above. Personal calls should not be made on these “nonassigned phones.” Supervisors must ensure that these policies are being followed by adopting check
in/check-out procedures and by routinely checking call records.
Reimbursements
For those employees not assigned a cell phone through this program, calls for business-related
purposes on a personal cell phone or other equipment may still be reimbursed through the standard
expense reimbursement process. The effective rate until further notice is $0.10 per minute. To
qualify, the employee must provide the date, time, duration, person contacted and specific business
purpose of each call.
Transition Period
The Transition Period shall last from the effective date of this policy until December 31, 2008. Media
Resources and the Office of Financial Services will coordinate the necessary administrative
arrangements for implementation and inform departments and employees about the policy. During
the Transition Period employees will see a change in their pay stubs to reflect the value of the cell
phone service; however, there will be NO change in the actual amount received due to the tax
liability because Colby will make appropriate adjustments to salaries or wages for calendar year
2008. At the end of the Transition Period and with the start of the new calendar year on January 1,
2009, these adjustments by Colby will be discontinued.
Questions / Contacts
A complete description of the new program can be found at:
http://www.colby.edu/administration_cs/its/resources/media/cellpol3.cfm
For additional information, please contact:
Scott Jones
Ruben Rivera
Mark Crosby
Ray Phillips
Assistant VP for Finance
Controller, Office of Financial Services
Director of Human Resources
Director of IT Services
x5522
x4127
x5500
x4209
[email protected]
[email protected]
[email protected]
[email protected]
Colby Cell Phone Policy – September 11, 2008
Page 4
Cell Phone Request Form
Date: ________________________________________________________
Employee Name: ________________________________________________
Department / Area: ______________________________________________
Accounting Code (Fund /Center / Object / Project):
___________________________________________________
Monthly Charges:
Base Monthly Amount: _______________________
Add: Text Service:
_______________________
Add: Data Service: _______________________ = Total Monthly Charge:
______________________
Starting Pay Date for Allowance:
____________________________________
I certify that I have read, understood, and intend to comply with Colby's Cell Phone Policy. I
understand that appropriate payroll taxes on the allowance amount will be withheld from my
paycheck, and the amount of the allowance will be included on the year-end W-2. The allowance does
not constitute an increase to my base pay, and will not be included in the calculation of percentage
increases to base pay due to annual raises, job upgrades, special adjustments, or benefits based on a
percentage of salary. The cell phone allowance will start at the next scheduled monthly pay date.
Employee Signature and Date:
___________________________________________________________________
I certify that the requested cell phone allowance is needed for this employee and I have read,
understood, and intend to comply with Colby's Cell Phone Policy. I understand that all cell phone
allowance payments are departmental responsibility and have been considered carefully in light of
overall budget priorities.
Colby Cell Phone Policy – September 11, 2008
Page 5
Supervisor Signature and Date:
__________________________________________________________________
Vice President for Administration Signature and Date:
_______________________________________________
Colby Cell Phone Policy – September 11, 2008
Page 6