UC Provided Cell Phone Policy UC Provided Cell Phone Policy Training SessionTraining Session

June 2009June 2009

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AgendaAgenda

Welcome Welcome

Review of Business & Finance Bulletin GReview of Business & Finance Bulletin G--46 46

Tax Implications of New Policy Tax Implications of New Policy

How to calculate the cash allowanceHow to calculate the cash allowance

Payroll ProcessingPayroll Processing

Implementation Steps Implementation Steps

Questions & AnswersQuestions & Answers

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Business & Finance Bulletin GBusiness & Finance Bulletin G--46, 46, Guidelines for the Purchase and Use of Cellular Phones Guidelines for the Purchase and Use of Cellular Phones

and Other Portable Electronic Resourcesand Other Portable Electronic Resources

Revised to fulfill obligation under an IRS audit Revised to fulfill obligation under an IRS audit settlement settlement

Under new policy:Under new policy:The value of a UniversityThe value of a University--provided cell phone, a provided cell phone, a

personal digital assistant (PDA) which is voice personal digital assistant (PDA) which is voice enabled, or similar device provided to an employee enabled, or similar device provided to an employee will be treated as a taxable fringe benefit subject to will be treated as a taxable fringe benefit subject to withholding for payroll taxes.withholding for payroll taxes.

In order to be exempt from the policy, the PDA must be In order to be exempt from the policy, the PDA must be voice restricted or not cell phone enabled.voice restricted or not cell phone enabled.

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Impact on EmployeesImpact on Employees

No disruption to current service levelsNo disruption to current service levels

Incidental personal use will be allowed as Incidental personal use will be allowed as long as plan minutes are not exceededlong as plan minutes are not exceeded

Not required to comply with IRS Not required to comply with IRS substantiation rulessubstantiation rules

Minimal impact to net pay/taxable incomeMinimal impact to net pay/taxable income

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Components of New PolicyComponents of New Policy

Approval of Purchases Approval of Purchases

Exceptions to PolicyExceptions to Policy

Criteria for PurchasingCriteria for Purchasing

Department Responsibilities Department Responsibilities

Documentation & Data SecurityDocumentation & Data Security

Imputed Income/Cash Allowance ApproachImputed Income/Cash Allowance Approach

Incidental Personal UseIncidental Personal Use

Reimbursement of NonReimbursement of Non--incidental Personal Useincidental Personal Use

Reimbursement of Business UseReimbursement of Business Use

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Approval of PurchasesApproval of Purchases

The dept head (or designee) has the The dept head (or designee) has the authority to approve the purchase of authority to approve the purchase of University provided cellular phones or cell University provided cellular phones or cell phone enabled devices.phone enabled devices.

Should only authorize the University Should only authorize the University purchase of electronic resources when the purchase of electronic resources when the primaryprimary use of the resources will be for use of the resources will be for University business. University business.

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Criteria for PurchasingCriteria for PurchasingOnly for those employees whose jobs entail the Only for those employees whose jobs entail the

following responsibilities:following responsibilities:

TravelTravel –– Employees who frequently travel or are out of Employees who frequently travel or are out of the office and need to be in contact, including contact by the office and need to be in contact, including contact by ee--mail with staff, clients, managers, or other University mail with staff, clients, managers, or other University business associates.business associates.

Work LocationWork Location –– Employees who typically work in the Employees who typically work in the field or at job sites where access to electronic field or at job sites where access to electronic communications devices is not readily available. communications devices is not readily available.

Emergency ResponseEmergency Response –– Employees who need to be Employees who need to be contacted and/or to respond in the event of an contacted and/or to respond in the event of an emergency or are required to be available during nonemergency or are required to be available during non-- business hours. business hours.

Other Other –– Employees who are required by their department Employees who are required by their department to be accessible at all times by electronic means.to be accessible at all times by electronic means.

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Exception to PolicyException to Policy

Approving authority for exceptions is more restricted Approving authority for exceptions is more restricted

ExcExceptions will be rareeptions will be rare

Examples include Examples include ––

Voice restricted Voice restricted PDAsPDAs. With voice restricted . With voice restricted PDAsPDAs no substantiation no substantiation required if phone calls are not made.required if phone calls are not made.

Shared Cell Phones Shared Cell Phones –– However with these phones. The employee However with these phones. The employee must annotate the cell phone bill indicating the person called amust annotate the cell phone bill indicating the person called and nd the business purpose of each call.the business purpose of each call. Charges related to any personal Charges related to any personal calls must be timely reimbursed by the employee. calls must be timely reimbursed by the employee.

AVC must approve all exceptionsAVC must approve all exceptions

Request for exception to policy must document the business need Request for exception to policy must document the business need or or circumstances justifying the exceptioncircumstances justifying the exception

If an exception to the imputed income/cash allowance requirementIf an exception to the imputed income/cash allowance requirement is approved, the employee, in general, must comply with IRS is approved, the employee, in general, must comply with IRS substantiation rulessubstantiation rules

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Documentation & Data SecurityDocumentation & Data Security

An employee provided with a cell phone or An employee provided with a cell phone or cell phone enabled device and/or services cell phone enabled device and/or services must prior to receipt of such resources sign must prior to receipt of such resources sign The Employee Agreement Concerning the The Employee Agreement Concerning the Use of Electronic Communications Use of Electronic Communications Resources in GResources in G--46 Appendix.46 Appendix.

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Responsibilities of DepartmentResponsibilities of Department

Charging each employee provided with a cellular Charging each employee provided with a cellular phone or a cell phonephone or a cell phone--enabled PDA the appropriate enabled PDA the appropriate amount of imputed income and paying the amount of imputed income and paying the employee a cash allowance* employee a cash allowance*

Monitoring the personal and businessMonitoring the personal and business--related use related use of such cellular phones and PDAs to ensure that its of such cellular phones and PDAs to ensure that its employees are utilizing the most appropriate plan employees are utilizing the most appropriate plan and for obtaining reimbursement for any personal and for obtaining reimbursement for any personal use that burdens the University with noticeable use that burdens the University with noticeable incremental costs.incremental costs.

**unless as exception has been approved in accordance with this Buunless as exception has been approved in accordance with this Bulletin.lletin.

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Responsibilities of Department Responsibilities of Department (cont.)(cont.)

Complete the Imputed Income/Cash Complete the Imputed Income/Cash Allowance Form for each employee with a Allowance Form for each employee with a University cell phone or cell phoneUniversity cell phone or cell phone--enabled enabled PDAPDA

Fund cost of phone, phone plan, and cash Fund cost of phone, phone plan, and cash allowanceallowance

Monitor monthly cell phone bills for excess Monitor monthly cell phone bills for excess minutesminutes

Monitor changes in cell phone plans and Monitor changes in cell phone plans and adjust Imputed Income/Cash Allowancesadjust Imputed Income/Cash Allowances

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Incidental Personal UseIncidental Personal Use

Incidental personal use of a University Incidental personal use of a University PDA/Cell phone is allowed provided that PDA/Cell phone is allowed provided that such use does not cause the user to such use does not cause the user to exceed the plan minutes exceed the plan minutes

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Reimbursement of NonReimbursement of Non--incidental incidental Personal UsePersonal Use

Employees are required to reimburse the University Employees are required to reimburse the University for personal calls reported on statements billed to for personal calls reported on statements billed to the University when the employee exceeds the the University when the employee exceeds the package minutes under their cell phone contract. package minutes under their cell phone contract.

The rate of reimbursement for any personal calls The rate of reimbursement for any personal calls associated with the excess minutes is at the excessassociated with the excess minutes is at the excess-- minute rate. minute rate.

If the employee does not exceed the package If the employee does not exceed the package minutes, reimbursement is not required for any minutes, reimbursement is not required for any personal calls. personal calls.

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Reimbursement for Business Use Reimbursement for Business Use of Personal Phoneof Personal Phone

Reimbursement for the business use of a cellular phone Reimbursement for the business use of a cellular phone or PDA purchased with the employeeor PDA purchased with the employee’’s own funds is s own funds is allowable only if an employee exceeds the calling plan allowable only if an employee exceeds the calling plan minutes for the month. minutes for the month.

The reimbursement will be calculated at the excess The reimbursement will be calculated at the excess minute rate up to the number of minutes exceeding the minute rate up to the number of minutes exceeding the plan limit for the month. plan limit for the month.

An employee must provide a copy of his or her cell An employee must provide a copy of his or her cell phone bill identifying the business calls and noting the phone bill identifying the business calls and noting the person called and the purpose of each call in order to be person called and the purpose of each call in order to be reimbursedreimbursed

Employees may not be reimbursed for the entire cost of Employees may not be reimbursed for the entire cost of a personallya personally--owned cell phone or PDA owned cell phone or PDA

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Employees Without Pay StatusEmployees Without Pay Status

Employees without pay status/leave Employees without pay status/leave without paywithout pay

Performing testing to see if imputed income Performing testing to see if imputed income calculation will work for these individualscalculation will work for these individuals

Return phone, orReturn phone, or

Substantiate business use in accordance with Substantiate business use in accordance with IRS RequirementsIRS Requirements

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Federal FundsFederal Funds

Cell Phone charged to federal funds Cell Phone charged to federal funds allowed if:allowed if:

Cell phone is needed for the research, Cell phone is needed for the research,

Such use was articulated in the proposal Such use was articulated in the proposal budget, and budget, and

Such use is an allowable charge under the Such use is an allowable charge under the fund agreement. fund agreement.

Charges should be made to the primary fund Charges should be made to the primary fund source, but if necessary costs may be split source, but if necessary costs may be split over multiple over multiple FAUsFAUs

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Imputed Income/Cash Allowance Imputed Income/Cash Allowance ApproachApproach

1.1. The cost of an employeeThe cost of an employee’’s cell phone plan s cell phone plan and device will be added to the employee's and device will be added to the employee's taxable earnings as taxable earnings as ““imputedimputed”” income income subject to withholding. subject to withholding.

2.2. A taxable cash allowanceA taxable cash allowance will be given to the will be given to the employee to reimburse for the tax on the employee to reimburse for the tax on the imputed income. Since the allowance itself imputed income. Since the allowance itself is taxable, it will be increased using the IRS is taxable, it will be increased using the IRS grossgross--up formula to reimburse the employee up formula to reimburse the employee for the taxes associated with the paymentfor the taxes associated with the payment..

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What should be included as income?What should be included as income?

Cost of the monthly service plan Cost of the monthly service plan

Cost of the EquipmentCost of the Equipment

Included in monthly planIncluded in monthly plan

Not included in monthly plan Not included in monthly plan

Purchased after June 1, 2009 Purchased after June 1, 2009 –– value must be imputed as a value must be imputed as a one time transactionone time transaction

Cost of one time purchasesCost of one time purchases

Accessories (batteries, charger, etc.) *Accessories (batteries, charger, etc.) *

Expenses for RepairsExpenses for Repairs

Cost of replacing a lost or stolen deviceCost of replacing a lost or stolen device

Equipment upgradesEquipment upgrades

* * As policy allowsAs policy allows

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Sample Cell Phone BillSample Cell Phone Bill

xxx-xxxx

This bill has expenses that are

Fixed

Variable

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How to Calculate Value of How to Calculate Value of Service PlanService Plan

Total monthly bills for the last year.Total monthly bills for the last year.

Divide the amount by twelve to calculate Divide the amount by twelve to calculate the imputed income amount for a monthly the imputed income amount for a monthly employee.employee.

For a biweekly employee, take the For a biweekly employee, take the average monthly amount, multiply by average monthly amount, multiply by twelve and then divide by 26.twelve and then divide by 26.

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Example of CalculationExample of Calculation

67.19

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Determining the ValueDetermining the Value

For Monthly Paid EmployeesFor Monthly Paid EmployeesValue = amount of the monthly planValue = amount of the monthly plan

For Biweekly Paid EmployeesFor Biweekly Paid EmployeesValue = amount of the monthly plan times 12 and divided by 26Value = amount of the monthly plan times 12 and divided by 26

EXAMPLE of a $60 monthly phone billEXAMPLE of a $60 monthly phone bill

Pay SchedulePay Schedule Value of imputed incomeValue of imputed income

MOMO $60$60

BWBW $60 x 12 / 26 = $27.69$60 x 12 / 26 = $27.69

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Elements of the New Policy (cont.)Elements of the New Policy (cont.)New FormNew FormCell Phone Imputed Income/Cash Allowance FormCell Phone Imputed Income/Cash Allowance Form

WebWeb--based fillbased fill--in formin form

Used to automatically calculate the cash Used to automatically calculate the cash allowanceallowance

Completed by departmentCompleted by department

For commencement of cell phone planFor commencement of cell phone plan

For any changes or addition to planFor any changes or addition to plan

For any changes to employee exemptionsFor any changes to employee exemptions

http://www.ucop.edu/ucophome/cao/paycoord/http://www.ucop.edu/ucophome/cao/paycoord/

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Elements of the New PolicyElements of the New Policy

Two New Description of Service CodesTwo New Description of Service Codes

CELCEL

Records imputed income on employeeRecords imputed income on employee’’s earning s earning record in order to facilitate tax withholdingrecord in order to facilitate tax withholding

Appears on PPP5302 Appears on PPP5302 ““Distribution of Payroll ExpenseDistribution of Payroll Expense

Is not charged to the General Ledger Is not charged to the General Ledger

CE2 CE2

Cash allowance to reimburse employee for the tax Cash allowance to reimburse employee for the tax effect of the imputed incomeeffect of the imputed income

Appears on PPP5302 Appears on PPP5302 ““Distribution of Payroll ExpenseDistribution of Payroll Expense

Expense is charged to the General LedgerExpense is charged to the General Ledger

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Effect onEffect on……....EmployeeEmployee

Value of the service plan Value of the service plan (CEL) is added to the (CEL) is added to the taxable income. It does not taxable income. It does not increase net pay. It increase net pay. It increases tax withholdingincreases tax withholding

The cash allowance (CE2) The cash allowance (CE2) increases pay and offsets increases pay and offsets the tax withholdingthe tax withholding

The addition of income and The addition of income and corresponding taxes will be corresponding taxes will be included on their Wincluded on their W--22

DepartmentDepartment

Continue to pay for phone Continue to pay for phone service planservice plan

Not charged for CEL Not charged for CEL

Charged for CE2Charged for CE2

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Appt & Dist DataAppt & Dist Data

EDB Preparers should use the ADDL bundle to EDB Preparers should use the ADDL bundle to add the new additional appointment and add the new additional appointment and distribution data.distribution data.

Going into EAPP only is acceptable.Going into EAPP only is acceptable.

The EDB Preparer will set up one appointment The EDB Preparer will set up one appointment with two associated distributions to the with two associated distributions to the employeeemployee’’s record. s record.

The information for the two distributions comes The information for the two distributions comes directly from the Cell Phone Form.directly from the Cell Phone Form.

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Part III: Payroll InformationThe information in Part III is the Distribution data!

Distribution line 1 data.

Distribution line 2 data.

1

2

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FieldField Data InformationData Information

TypTyp Enter Appointment Type Enter Appointment Type ““33”” for Staff titles (for Staff titles (PgmPgm = all codes = all codes except except AA))Enter Appointment Type Enter Appointment Type ““55”” for Academic titles (for Academic titles (PgmPgm code = code = AA))

Appt Begin & Appt Begin & Appt EndAppt End

Enter in the begin and the end dates of the service agreement Enter in the begin and the end dates of the service agreement (see Part 1 of the Cell Phone Form or refer to the original serv(see Part 1 of the Cell Phone Form or refer to the original service ice contract).contract).

Title CodeTitle Code Enter in the employeeEnter in the employee’’s existing title code.s existing title code.

DurDur a.a. If the service agreement has a definite end date, leave this If the service agreement has a definite end date, leave this field blank.field blank.

b.b. If the service agreement is month to month, enter in If the service agreement is month to month, enter in ““II”” for for staff titles, or staff titles, or ““TT”” for academic titlesfor academic titles

%Full%Full Leave this field blank.Leave this field blank.

F/VF/V Enter in Enter in ““FF””. This is a fixed payment.. This is a fixed payment.

Appointment Data

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FieldField Data InformationData Information

RtRt Enter in the byEnter in the by--agreement rate code of agreement rate code of ““BB””. . This will ensure that the payment is a flat dollar paymentThis will ensure that the payment is a flat dollar payment

SchSch Enter in the employeeEnter in the employee’’s normal pay schedule (MO or BW).s normal pay schedule (MO or BW).

TimeTime Enter in Enter in ““RR”” for Exception.for Exception.Please Note: This is an exception to policy. All Cell Please Note: This is an exception to policy. All Cell Phone Appointments must have the Time code of Phone Appointments must have the Time code of ““RR””!!

LvLv Enter in Enter in ““NN””. . Leave cannot be earned on byLeave cannot be earned on by--agreement payments.agreement payments.

Appointment Data Cont’d

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FieldField Data InformationData Information

LACFPSLACFPS a.a. Enter in the FAU that the Cell Phone should be charged to.Enter in the FAU that the Cell Phone should be charged to.b.b. Enter 2, 5, or 7 for the sub. Do not enter sub 0 or 1.Enter 2, 5, or 7 for the sub. Do not enter sub 0 or 1.

Dis %Dis % Leave this field blankLeave this field blank

Pay Begin and Pay Begin and Pay EndPay End

Enter in the begin and the end dates of the service agreement; Enter in the begin and the end dates of the service agreement; if the service agreement is month to month, enter 999999. if the service agreement is month to month, enter 999999.

Rate/AmountRate/Amount Enter in the rate found in the Enter in the rate found in the ““CEL DOS CodeCEL DOS Code”” section of the section of the Cell Phone form.Cell Phone form.

DOSDOS Enter Enter ““CELCEL””. This dos code is found on the Cell Phone Form. This dos code is found on the Cell Phone Form

PRQPRQ Enter Enter ““CELCEL””. This dos code is found on the Cell Phone Form.. This dos code is found on the Cell Phone Form.

Distribution Data - Line 1

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FieldField Data InformationData Information

LACFPSLACFPS a.a. Enter in the FAU that the Cell Phone should be charged to.Enter in the FAU that the Cell Phone should be charged to.b.b. Enter 2, 5, or 7 for the sub. Do not enter sub 0 or 1.Enter 2, 5, or 7 for the sub. Do not enter sub 0 or 1.

Dis %Dis % Leave this field blankLeave this field blank

Pay Begin and Pay Begin and Pay EndPay End

Enter in the begin and the end dates of the service agreement; Enter in the begin and the end dates of the service agreement; if the service agreement is month to month, enter 999999. if the service agreement is month to month, enter 999999.

Rate/AmountRate/Amount Enter in the rate found on the Enter in the rate found on the ““CE2 DOS CodeCE2 DOS Code”” section of the section of the Cell Phone form.Cell Phone form.

DOSDOS Enter Enter ““CE2CE2””. This dos code is found on the Cell Phone Form. This dos code is found on the Cell Phone Form

PRQPRQ Leave this field blank.Leave this field blank.

Distribution Data - Line 2

MONTHLY EXAMPLE MONTHLY EXAMPLE –– Staff TitleStaff Title

Please pay close attention to these fields!

MONTHLY EXAMPLE MONTHLY EXAMPLE –– Academic TitleAcademic Title

Please pay close attention to these fields!

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BIWEEKLY EXAMPLEBIWEEKLY EXAMPLE

Please pay close attention to these fields!

27.69

19.72

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One Time PaymentsOne Time Payments

One time payments are not setOne time payments are not set--up in the up in the Appointment and Distribution (EAPP) for the Appointment and Distribution (EAPP) for the employee.employee.

The payments are made in EDAT on the One The payments are made in EDAT on the One Time Payment (EDFT) screen in PTR.Time Payment (EDFT) screen in PTR.

The payment should be scheduled to appear The payment should be scheduled to appear on the employeeon the employee’’s next regular payday. s next regular payday.

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One Time Payments ContOne Time Payments Cont’’ddThe PTR Preparer must process two EDFT lines:The PTR Preparer must process two EDFT lines:

The TYP code is The TYP code is ““33”” for staff title codes and for staff title codes and ““55”” for for academic title codes.academic title codes.

The imputed income payment. Use the DOS Code The imputed income payment. Use the DOS Code ““CELCEL”” and the amount of the payment. This information is from and the amount of the payment. This information is from the the ““CEL DOS Code (Imputed Income)CEL DOS Code (Imputed Income)”” section of the Cell section of the Cell Phone Form.Phone Form.

The cash allowance reimbursement. Use the DOS code The cash allowance reimbursement. Use the DOS code ““CE2CE2”” and the amount of the payments. This information is and the amount of the payments. This information is from the from the ““CE2 DOS Code (Cash Allowance)CE2 DOS Code (Cash Allowance)”” section of section of the Cell Phone Form.the Cell Phone Form.

The Per End date should be the next Pay Period End date The Per End date should be the next Pay Period End date for the employeefor the employee’’s regular pay schedule per the PPS s regular pay schedule per the PPS Schedule.Schedule.

For example, a new phone was purchased on 06/16/09, for a biFor example, a new phone was purchased on 06/16/09, for a bi--weekly weekly employee. The biweekly pay period is 06/14/09 employee. The biweekly pay period is 06/14/09 –– 06/27/09. Therefore 06/27/09. Therefore

the Per End date in EDFT is 06/27/09.the Per End date in EDFT is 06/27/09.

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One Time Payments ContOne Time Payments Cont’’ddLeave Of Absence (LOA) Without Pay:Leave Of Absence (LOA) Without Pay:

If an employee goes on a LOA without Pay (Status = N); If an employee goes on a LOA without Pay (Status = N); and the employee does not return the cell phone or and the employee does not return the cell phone or choose to substantiate the usage*, the employee must choose to substantiate the usage*, the employee must incur imputed income during this period.incur imputed income during this period.

In order to process the imputed income a one time In order to process the imputed income a one time payment (EDFT) transaction must be processed for each payment (EDFT) transaction must be processed for each pay day (pay period) that the employee is out on LOA pay day (pay period) that the employee is out on LOA without pay.without pay.

* in accordance with IRS Requirements * in accordance with IRS Requirements

Please insure that any suspended deductions are resolved prior to processing these transactions so that the transactions will not Flush.

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One Time Payment (EDFT) One Time Payment (EDFT) ExampleExample

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Effective Date of PolicyEffective Date of Policy

The new policy is effective with June earnings paid The new policy is effective with June earnings paid as follows:as follows:

Pay datePay dateLast date Last date to enter to enter into EDBinto EDB

Biweekly paid employeesBiweekly paid employees 6/24/096/24/09 6/16/096/16/09

Monthly paid employeesMonthly paid employees 7/1/097/1/09 6/22/20096/22/2009

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Implementation StepsImplementation Steps

1.1. Determine which employees have current Determine which employees have current University provided cell phone. University provided cell phone.

2.2. Determine if the cell phones is still Determine if the cell phones is still needed to perform their job dutiesneeded to perform their job duties

3.3. Review existing service plans to insure Review existing service plans to insure correct level of expected businesscorrect level of expected business-- related use. related use.

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Implementation Steps ContImplementation Steps Cont’’dd

4.4. Determine the value of the imputed Determine the value of the imputed income based on information on the income based on information on the monthly cell phone billmonthly cell phone bill

5.5. Complete the Complete the Imputed Income/Cash Imputed Income/Cash Allowance Form Allowance Form to determine amount of cash to determine amount of cash allowanceallowance

6.6. Enter the appropriate appointments and Enter the appropriate appointments and corresponding distributions on EDBcorresponding distributions on EDB

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ResourcesResources

Training PresentationTraining Presentation

Available Available on the Training page on the Training page www.payroll.ucla.eduwww.payroll.ucla.edu

Updated Business & Finance Bulletin GUpdated Business & Finance Bulletin G--46 46 Guidelines for the Purchase and Use of Cellular Phones and OtherGuidelines for the Purchase and Use of Cellular Phones and Other

Portable Electronic ResourcesPortable Electronic Resources

Web FormWeb Form

http://www.ucop.edu/ucophome/cao/paycoordhttp://www.ucop.edu/ucophome/cao/paycoord or on the Forms or on the Forms pagepage at at www. www. payroll.ucla.edupayroll.ucla.edu

Tax Services ContactTax Services Contact

Scott Monatlik (310) 794Scott Monatlik (310) 794--6724 6724

Payroll Services contact:Payroll Services contact:

Lucy Eugenio (310) 794Lucy Eugenio (310) 794--87268726