UC will add, then offset, tax on university-owned cell phones

Starting this summer, UC Davis employees who use university-owned cell phones will pay additional state and federal taxes on the phones. But the campus will repay employees for the cost.

The change starts on June 24 for employees with biweekly pay dates, and on July 1 for employees who are paid monthly.

The University of California Office of the President wrote the new cell-phone policy to meet Internal Revenue Service rules regarding cell-phone use for business purposes. The policy treats university-provided cell-phone service and equipment as a taxable fringe benefit.

The university is paying the offset because, according to the directive on May 4 announcing the change, the tax is based "on outdated rules that do not reflect the widespread business use of cell-phone technology today. IRS regulations require elaborate record-keeping and monitoring for every call on every university-owned cell phone. UCOP has determined that the cost of reimbursing employees for the tax is lower than the ongoing effort that would be required to maintain IRS compliance."

The charge applies to cell phones assigned exclusively to one person. For example, if an on-call cell phone is shared within a workgroup, this change will not apply.

A Web site includes the directive from Information and Educational Technology and the Office of Administration announcing the policy, an extensive FAQ, plus a list of sessions with individual carriers. At those sessions, people from Accounting and Financial Services, and the Communications Resources unit of IET, will tell department cell-phone managers what they need to know to implement the policy changes for their departments' cell-phone accounts.