Get access to the exclusive HR Resources you need to succeed in 2018.
Sign up for free email newsletters and get more SHRM content delivered to your inbox.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 14 cities across the U.S. this fall.
Gain the skills you need to rise to the next level in your career. Jon us at SHRM's Leadership Development Forum, October 2-3 in Boston.
Agency provides recordkeeping relief for small business
Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.
The U.S. Internal Revenue Service issued guidance on Sept. 14, 2011, to clarify the tax treatment of employer-provided cell phones.
The guidance, IRS Notice 2011-72, relates to a provision in the 2010 Small Business Jobs Act that removed cell phones from the definition of listed property, a category under tax law that normally requires additional recordkeeping by taxpayers.
Notice 2011-72 provides guidance on the treatment of employer-provided cell phones as an excludible benefit. The notice provides that when an employer provides an employee with a cell phone primarily for noncompensatory business reasons, generally the business and personal use of the cell phone is nontaxable to the employee. The IRS will not require recordkeeping of business use in order to receive this tax-free treatment.
Simultaneously with Notice 2011-72, the IRS announced in a memo to its examiners a similar administrative approach that applies with respect to arrangements common to small businesses that provide cash allowances and reimbursements for work-related use of personally owned cell phones. Under this approach, employers that require employees, primarily for noncompensatory business reasons, to use their personal cell phones for business purposes may treat reimbursements of the employees' expenses for reasonable cell phone coverage as nontaxable. This treatment does not apply to reimbursements of unusual or excessive expenses or to reimbursements made as a substitute for a portion of the employee's regular wages.
Under the guidance, where employers provide cell phones to their employees or where employers reimburse employees for business use of their personal cell phones, tax-free treatment is available without burdensome recordkeeping requirements. The guidance does not apply to the provision of cell phones or reimbursement for cell phone use that is not primarily business related, as such arrangements are generally taxable.
"In light of these changes, employers should consider reviewing their cell phone policies," commented William Weissman, an attorney at Littler Mendelson P.C., in Walnut Creek, Calif. "Many policies have prohibited any personal use of employer-provided cell phones. Companies may want to reconsider those policies in light of the IRS’ new guidance," he noted, adding, "Employers should also ensure that any employer-provided cell phone or reimbursement is for a noncompensatory business purpose and is not merely to promote morale, attract employees or to add to an employee’s compensation.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
SHRM Member Discounts Program
SHRM’s HR Vendor Directory contains over 10,000 companies