Menu
Trashin'the talkin': Crackdown by IRS leads officials to consider doing away with phones
The IRS is cracking down on employers who provide cell phones for the use of their employees. IRS rules require that employees keep a detailed log of all calls made listing each call and whether it was business related or personal.
If such a log isn't maintained the rules require the employer to tack the entire cost of the phone on to the employee's W2 as a taxable perquisite. If one is maintained the cost of the phone must be pro-rated between what is business expense and what is taxable employee compensation.
The rules have been in place since 1989 but many employers were unaware of them or if they knew, ignored them. Now many are scrambling to put rules in place governing how the phones are used and Vernon County is no exception.
The Vernon County Commissioners met with representatives from several county departments, Ron Sloan, Road and Bridge, David Heumader, Circuit Court, Tammi Beach, Vernon County Clerk, and Deputy Steve Schlup, Vernon County Sheriff's Office.
Vernon County Prosecuting Attorney Lynn Ewing III wasn't there but Beach brought along a letter from him outlining his opinion of the policy.
"Regarding cell phones paid for by the county and possessed by county employees for their use, the employee must keep records to substantiate between business and personal use, and provide those records to the county," the letter said. "Personal calls and a pro-rata share of the regular monthly service charges related to the personal calls are income to the employee and must be included in his wages. Failure to keep records makes all the charges taxable income to the employee."
Currently the county maintains 15 cell phones that cost approximately $1,000 per month. Beach said that costs almost as much as all the phone lines the county has, $1,300.
Beach said she was concerned because the rule would require significantly more paperwork for both the employee and county staff. In addition she was concerned with how the income would be reported on the W2.
The discussion was back and forth for awhile with commissioners seeking to find how the phones are used and if they are necessary for the jobs being done.
"How are they being used?" Bonnie McCord, presiding commissioner, said. "Do people make a lot of personal calls?"
Complicating the situation were the employees who had their own phones because they often took work calls on them.
"I don't think it's fair that half of the employees have phones provided and half don't," Sloan said.
Sloan said that the vast majority of calls being made were business, however he had made some personal calls.
"Most of the time if I'm out somewhere and I see I'm going to be late I'll call my wife and say, "I'll be home at six today instead of five," or something like that," Sloan said. "Other than that though it's business calls, or wrong numbers. I get a couple of wrong numbers a day, and I've even dialed a few and pushed send before I noticed."
Several people attending the meeting said it would just be easier to get rid of the county cell phones and have employees provide their own. If they conduct county business on the phones they could document the use and get a portion back by filing an expense report.
"I'm in favor of turning in the county phones, even if we don't get restitution," Sloan said. "This has some of the guys so paranoid they're carrying two phones just so they don't have to worry."
Tammi Beach agreed, "I think the easiest way is to just do away with all county cell phones."
The departments have different plans with different dates for renewal so Beach will look into whether it would pay to stop the contracts early and pay a cancellation fee or simply let the contracts run out.
The meeting broke up with nothing set in concrete but with the idea that the phones would be phased out in the most economical manner.