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Company Paid Cell Phone

We have an employee that we added his personal phone to our company cell phone plan however, he is no longer required to use the phone for business purposes. If we keep him on the company plan, do we need to charge the employee and pay payroll taxes for this benefit? I am new to the company and have never had a company add personal cell phones to the company plan instead of opening new lines for business use only, is this something others do?

Answers

Anonymous
(Consulting CFO and Business Operations Advisor) |

Anon,

If your policy says: only if you are required to have it...then keep him on the plan and require him to reimburse, or tax him, or kick him off.
If your policy says: if you use it, we will reimburse you....then do allow it.

If you are reimbursing against your expense policy and not charging payroll tax, you could be creating a problem (small one, but you don't want the expense of the audit you trigger by fouling this up). Your policy should be measurable, reasonable, and have a business purpose. If you back yourself into saying "there is no business purpose here", then don't do it. My suggestion is to update your policy to meet the guidelines *and* the way you're doing business.

Cheers.

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