SECTION 79: Mobile Communications Used for Both Business and Personal Purposes: Expense Procedure Guidelines

NOTE: This Policy is for all mobile communications equipment and service that are regularly used for both business and personal purposes (mixed-use). Mixed-use equipment and service contracts are to be employee-owned. This policy allows the University to efficiently meet Internal Revenue Service (IRS) regulations regarding business versus personal use of mobile communications. Specifically, the IRS takes the position that personal use of employer-paid mobile communications should be taxed to the employee as compensation.

Equipment and service regularly used exclusively for business purposes (and therefore University department owned/leased) are excluded from this policy. See Section 78 for expense guidelines related to business-use only mobile communications.

In the course of carrying out job responsibilities, employees may have a need for business-related mobile communications on an employee-owned device. If such a situation exists, expenses for mixed-use, employee-owned mobile communications service and/or equipment are permitted. Simple convenience is not a criterion for such expenses. Expenses may be authorized if at least one of the following criteria is met:

The appropriate Unit Administrator (Chairperson/Director or delegate) or Dean/Assistant Vice President, may authorize expenditures for mixed-use mobile communications service and/or equipment. As verification of business purpose and authorization, a Mixed-Use Mobile Communications Allowance Agreement must be approved by the Unit Administrator (or higher) and maintained on file in the department.

Executive Officers, Vice/Associate Provosts, Assistant Vice Presidents, Non-Academic Directors, and Deans, by virtue of their positions, are deemed to be automatically authorized for such expenditures. An agreement form need not be on file for these employees. However, all terms of this policy must be followed.

With appropriate business need and departmental approval (see section III above), expenses for mobile communications service may be paid via an additional pay allowance or a reimbursement voucher as follows:

The employee is generally responsible for the purchase of mobile communications equipment (most basic cell phone service plans provide free phones). Costs for cosmetic or technical mobile communications extras that have no business purpose are the responsibility of the employee.

In those circumstances where advanced mobile communications features such as email, internet, calendar integration, or push-to-talk capabilities are required for business purposes, approval by the Unit Administrator (or higher) may be obtained to provide all or part of the funding for this advanced equipment.

Payment for mobile communications equipment that is required for business purposes MUST be handled in the following manner:

Additional Pay Allowance – a non-recurring taxable allowance for mobile communications equipment to employees whose duties and responsibilities require them to carry such devices. This (taxable) method allows the University to most efficiently meet IRS regulations regarding business versus personal use of equipment in that it is not necessary to maintain detailed departmental records to support both business and non-business usage. In this case, the equipment is personally owned by the employee and may therefore be used for both personal and business purposes.

Determination of equipment allowance amount: The dollar amount of the mobile communications equipment allowance must be supported with department-retained receipt(s) documenting proof of amount paid by the employee. The amount of the allowance may be any amount the department wishes to pay, up to a maximum of the total amount paid for the equipment. As this allowance is taxable, the department need not turn in receipts when processing the allowance.

An equipment allowance may be authorized and processed through Payroll in the same manner in which a service allowance is processed (see section IV, item A above).

This is the only allowable method to pay for employee-owned equipment. A University Purchasing Card may not be used.

A copy of the completed Mixed-Use Mobile Communications Allowance Agreement must at all times be kept on file in the employee's department.

The employee's supervisor is responsible for an annual review of the business need for a mobile communications allowance to determine if allowances should be changed or discontinued. The supervisor is to initial and date the bottom of the agreement form as evidence of this annual review. If an employee is terminated, resigns, transfers, or is no longer eligible for an allowance, the employee's supervisor is responsible for notifying the appropriate unit administrator to discontinue processing future allowances.

All mobile communications service contracts are to be between the employee and the service provider. As such, if prior to the end of a service contract, the employee for any reason needs to change or end the service contract, the employee will bear the cost of any associated contract termination fees.

Mobile communications vendor relationships are reviewed periodically by the MSU Purchasing Department. Please consult their Prime Vendors. Scroll down to "Cellular Phones" and select a vendor. These vendor links may also be useful in the event MSU contracts need to be converted to personal (employee owned) accounts.