IRS Notice 2011-72 addresses the treatment of employer-provided cell phones as an Mobile Device Provisions excludible fringe benefit. It provides for when an employer supplies an employee with a cell phone primarily for noncompensatory business reasons, the business and personal use of the cell phone is generally nontaxable to the employee. The notice further clarifies there must be substantial reasons relating to the business employer’s for providing the cell phone. A September 14, 2011, (not a Notice or Regulation) memorandum to field auditors on Reimbursement of Employee Personal Cell Phone entitled “Interim Guidance Usage in light of Notice 2011-72” the following regarding employer states remuneration to cover an cost of a personal cell phone used for business employee’s purposes: Specifically, in cases where employers have substantial business reasons, other than providing compensation to the employees, for requiring the use of employees’ personal cell phones in connection with the trade or business and employer’s reimbursing them for their use, examiners should not necessarily assert that the of expenses incurred by employees after December 31, employer’s reimbursement 2009, results in additional income or wages to the employee. The Commonwealth has determined a monthly stipend/reimbursement not to exceed $45 for a smart phone as defined by VITA policy (i.e., voice and data capable, not voice-only device) and authorized pursuant to Enterprise VITA’s will be Architecture Standard, Mobile Communication Use Technical Topic deemed nontaxable. The VITA policy applies to all non-higher education Executive Branch agencies. Any mobile device allowance paid by higher education or Branch agencies pursuant to documented agency policies beyond the allowance established by the VITA policy is taxable income to the employee. (Special Pay 034 has been established for the non-taxable portion. Contact DOA if a taxable special pay is needed by your agency for this purpose.) Agencies are prohibited from providing a stipend/ reimbursement to an employee or authorized user who has been assigned an employer provided cell phone. Prior to establishing a mobile device stipend for an employee the VITA Mobile Mobile Device Allowance Communication Technical Topic must be reviewed and a COV Mobile Device Agreement Allowance Agreement must be completed and signed by the employee, the supervisor and the Agency Head (or designee). The agreement form is employee’s located as follows: . Continued on next page Fringe Benefits, Continued
Mobile Device Provisions IRS Notice 2011-72 addresses the treatment of employer-provided cell phones as an excludible fringe benefit. It provides for when an employer supplies an employee with a cell phone primarily for noncompensatory business reasons, the business and personal use of the cell phone is generally nontaxable to the employee. The notice further clarifies there must be substantial reasons relating to the employer’s business for providing the cell phone. A September 14, 2011, memorandum to field auditors (not a Notice or Regulation) entitled “Interim Guidance on Reimbursement of Employee Personal Cell Phone Usage in light of Notice 2011-72” states the following regarding employer remuneration to cover an employee’s cost of a personal cell phone used for business purposes: Specifically, in cases where employers have substantial business reasons, other than providing compensation to the employees, for requiring the employees’ use of personal cell phones in connection with the employer’s trade or business and reimbursing them for their use, examiners should not necessarily assert that the employer’s reimbursement of expenses incurred by employees after December 31, 2009, results in additional income or wages to the employee. The Commonwealth has determined a monthly stipend/reimbursement not to exceed $45 for a smart phone as defined by VITA policy (i.e., voice and data capable, not voice-only device) and authorized pursuant to VITA’s Enterprise Architecture Standard, Mobile Communication Use Technical Topic will be deemed nontaxable. The VITA policy applies to all non-higher education Executive Branch agencies. Any mobile device allowance paid by higher education or Branch agencies pursuant to documented agency policies beyond the allowance established by the VITA policy is taxable income to the employee. (Special Pay 034 has been established for the non-taxable portion. Contact DOA if a taxable special pay is needed by your agency for this purpose.) Agencies are prohibited from providing a stipend/ reimbursement to an employee or authorized user who has been assigned an employer provided cell phone. Mobile Device Allowance Agreement Prior to establishing a mobile device stipend for an employee the VITA Mobile Communication Technical Topic must be reviewed and a COV Mobile Device Allowance Agreement must be completed and signed by the employee, the employee’s supervisor and the Agency Head (or designee). The agreement form is located as follows: . Continued on next page Fringe Benefits, Continued
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