Cellp Phone Reimbursement Policy / Practice

6385378

We are attempting to create a policy to cover the amount of reimbursment the company will pay for cell phone useage.  I had no idea it would be so difficult to find something on this topic.  There is much to read regarding the acceptable use while driving, etc., but so far nothing on reimbursement unless all companies are picking up total cost????

SFbay

My spouse's employer reimburses up to $80 per month for wireless phone service and email service on a Blackberry or other smart phone device. Are you also looking for IRS rules on reimbursement? If the employee owns the cell phone, "any amounts the employer reimburses the employee for business use of
the employee’s own phone may be excludable from wages if the employee
accounts for the expense under the accountable plan rules. See Publication 15, Employer’s Tax Guide (Circular E), for more information about the accountable plan rules."

A relevant portion of Publication 15

 

To be an accountable plan, your reimbursement or allowance aarrangement must require your employees to meet all three of the following rules.

They must have paid or incurred deductible expenses while performing services as your employees. A reimbursement or advance may not be paid instead of a wage payment.
They must adequately account to you for these expenses within a reasonable period of time.
They must return any amounts in excess of expenses within a reasonable period of time.

 

Amounts paid under an accountable plan are not wages and are
not subject to the withholding and payment income, social security, Medicare,
and federal unemployment (FUTA) taxes.

 
If the expenses covered by this arrangement are not taxes
and income tax withholding (or amounts in excess of substantiated are not
returned within a reasonable period of time), the amount paid under the
arrangement in excess of the substantiated expenses is treated as paid under a nonaccountable
plan. This amount is subject to the withholding and payment of income, social
security, Medicare, and FUTA taxes for the first payroll period following the
wages.
 
A reasonable period of time depends on the facts and other
compensation. Generally, it is considered reasonable if your employees receive
their advance within 30 days of the time that they incur the expenses,
adequately account for the expenses within 60 days after the expenses were paid
or incurred, and return any amounts in excess of expenses within 120 days after
the expenses were paid or
incurred. Also, it is considered reasonable if you give your
employees a periodic statement (at least quarterly) that asks them to either
return or adequately account for outstanding amounts and they do so within 120
days.

 

 

cb499

Our company has two reimbursement levels based on amount of use and manager approval...$50 or $100 per month. There is no tracking on the usage. This could allow reimbursement over the actual cost, so your baselines will be according to your tolerance level for lack of control.