The IRS has recently authorized the University to return to its former (March 2007) cell phone policy. As a result, the imputed income and cash allowance requirements for employees with University-provided cell phones ended on September 30, 2009. The termination of HCM/payroll distributions associated with this requirement is being handled centrally, and employees will see these changes reflected on their paychecks beginning October 23 (semi-monthly paid employees) and October 30 (monthly paid employees).
WHAT DEPARTMENTS NEED TO DO
Please notify employees in your department who currently have University-provided cell phones about this change.
Departmental payroll administrators should stop entering cell phone transactions for positive paid employees beginning with October 2009 earnings.
More detailed information regarding these changes and additional required department actions will be sent to human resources and payroll administrators, and will be available on our website at http://controller.berkeley.edu/policies/cellphone.htm.
WHAT COMES NEXT
This most recent approval from the Internal Revenue Service (IRS) to suspend the cell phone imputed income/cash allowance requirements and allow us to return to our previous policy is based on the assumption that Congress will approve legislation to modernize the tax treatment of employer-provided cell phones. The timing of this legislation, and delays in exception approvals from the IRS, unfortunately resulted in increased work to keep the University in compliance with the current IRS regulations.
We acknowledge the tremendous efforts of department and central administrators who were involved in implementing the cell phone policy changes earlier this year. We sincerely hope that the legislation introduced this year will be approved by Congress. If it is not, the University will continue to work with the IRS to maintain the current policy until the legislation is passed.
If you have questions about the cell phone policy, please contact controller@berkeley.edu. Questions about the centrally produced HCM distribution changes should be addressed to hrmshelp@berkeley.edu. Questions about the related payroll procedures should be addressed to payhelp@berkeley.edu.
John Ellis
Associate Vice Chancellor-Finance and Controller
In response to recent payroll audits conducted by the Internal Revenue Service, the Office of the President has announced a new cell phone policy that will affect employees who have University-provided cell phones, cell phone-enabled personal digital assistants (PDA), or similar devices.
As part of the settlement of the audits, the University was required by the IRS to come into compliance with special substantiation rules governing the use of employer-provided cell phones and PDAs. These rules require detailed substantiation of every single business call, including the name of the person called and the business purpose of the call
Because compliance with the substantiation rules would not be practical, the University has decided to treat the provision of an employee cell phone or cell-phone enabled PDA as a taxable fringe benefit. If the law is eventually changed, the University will revert back to its current policy, which permits incidental personal use of a UC-provided cell phone without treatment as an employee fringe benefit.
WHAT WILL CHANGE
Under the new policy, effective with June 2009 earnings, the value of University-provided cell phone service and equipment will be treated as a taxable fringe benefit and added to the employee`s earnings each month as imputed income subject to withholding. Employees will pay tax on this imputed income. Employees will also receive a monthly taxable cash allowance, paid by their department, to offset the cost of this fringe benefit. Because the cash allowance itself is taxable, it will be increased using the IRS gross-up formula to reimburse the employee for the taxes associated with the cash allowance payment.
IMPACT ON EMPLOYEES AND DEPARTMENTS
Because the University will retain ownership of the cell phones and PDAs, employees will not experience any disruption in their current service or be required to take any action with their cell phone carrier. As provided under current policy, employees will be permitted to use their University cell phone or PDA for incidental personal calls as long as they do not exceed their plan minutes.
Employee earnings will reflect the imputed income and cash allowance each month beginning with June earnings.
Certain employees may be excluded from the imputed income/cash allowance procedures due to operational considerations. For example, such exceptions might include facilities personnel who share cell phone equipment while on duty, or researchers who use cell phones as data collection devices. Employees who use University-provided cell phones under an exception will be required to document each call in accordance with the IRS substantiation rules. Instructions for exception requests will be available on our website.
In April we informed your department managers about this coming change and encouraged them to begin identifying individuals who currently have University-provided cell phones, and to determine whether there will be a continuing business need.
We are working with UCOP to finalize the imputed income/cash allowance procedures, and we anticipate that detailed instructions for entering transactions will be available on our website in late May.
FOR MORE INFORMATION
Although we do not yet have all the guidelines that apply to this policy, which will be published shortly in Business and Finance Bulletin G-46, we have posted operational information and Frequently Asked Questions on our website at http://controller.berkeley.edu/policies/cellphone.htm. We will update the website with the latest information as it becomes available.
I understand that this is a significant change in policy; however, the University has no option but to comply with the IRS ruling. My staff are working hard to communicate with departmental managers about the operational details and procedures; if you or your managers have additional questions about this policy, please send email to my office at controller@berkeley.edu
John Ellis Associate Vice Chancellor-Finance and Controller
Cellular Devices and Services is moving to the first floor of Warren Hall, 2195 Hearst Ave. on November 24, 2008.
Pickup and drop off services will be closed on Friday, November 21, 2008 and Monday, November 24, 2008 to accommodate the move.
Drivers in the San Francisco Bay Area with GPS-enabled mobile phones can soon tap into new technology that promises to transform traffic monitoring. Moments before midnight on Monday, Nov. 10, researchers from the University of California, Berkeley, and Nokia Research Center, Palo Alto will publicly release pilot software that turns cellular devices into mobile traffic probes providing real-time information on traffic flow and travel times. For more information and to download the software, please visit the UC Berkeley news website at http://www.berkeley.edu/news/media/releases/2008/11/06_mobilemillenium.shtml.
WarnMe is UC Berkeley's alerting and warning service for students, staff, and faculty. It is activated to contact you when there is an immediate threat to safety or health affecting the campus community. WarnMe can alert you by phone, text message, or email — you choose the best ways to reach you. For more information and to sign up, please visit the WarnMe website at http://warnme.berkeley.edu.
The university now has new T-Mobile Employee discounts for new and existing T-Mobile users. Go to the "Employee Discounts" page and select "T-Mobile" for more information.
Effective July 1, 2008 motorists in California will be required to have a hands free way of talking on their cell phones. Motorists who do not, will be fined. For more information go to the California Department of Motor Vehicles site at http://www.dmv.ca.gov/cellularphonelaws.
Wireless headsets are available at The Scholar's Workstation at a discounted price for UC Berkeley students, staff, and faculty.
All departments with University purchased cell phones and similar devices need to know that changes are being proposed to the cell phone policy. For details and to view proposed cell phone policy, proposed table of cash allowances, and frequently asked questions please refer to http://wireless.berkeley.edu/policy.html.
