The new financial policy titled Cellular Phones and Other Electronic Access/Devices should be reviewed to determine relevant implementation conditions and restrictions before following these procedures to reimburse employees for cell phone plans and equipment. http://www.indiana.edu/~vpcfo/policies/accounting/i-480.html

Procedures

A. Initiation of reimbursement:

1. Employees whose cellular phone and other electronic access and access devices fall under the provisions of the IU Cellular Phones and Other Electronic Access/Devices policy are to be reimbursed through the Additional Pay Edocs (either Create Additional Pay or Maintain Additional Pay).


2. The Additional Pay Edocs are found in Onestart https://onestart.iu.edu/ under the HRMS Production tab. Instructions for the Additional Pay Edocs can be found in the SOS – System Online Support for the HRMS (Human Resource Management System) at http://www.indiana.edu/~hrsis/HRMS/c_online_help.shtml Other assistance with these Additional Pay Edocs may be obtained from your campus Human Resources office.


3. The initiator of the Create Additional Pay Edoc begins by choosing the appropriate earn code and reason combination. For payments under the Cellular Phones and Other Electronic Access/Devices policy, Allowance (ALW) – Digital Communications should be chosen. After selecting an effective date (see NOTE* below), the initiator must enter the Earnings End Date and the Total Amount of the additional pay for the period covered by the Edoc. Departments are responsible for determining this amount themselves, within the policy guidelines for the allowances.


4. The Edoc, once completed, will route for approval through the appropriate channels. Once it has all approvals and has been saved to the HRMS system, this pay will appear on the employee's payroll voucher as a non-changeable field. In order for the reimbursement to be included in an employee's pay, all human resources Edoc and payroll deadlines must be met.

*NOTE: If the effective date of the Edoc is retroactive to the current pay period, the departmental payroll office must prepare adjustment voucher(s) as needed to ensure that the employee's retroactive additional pay is processed and paid. Any retroactive pay will not appear on the current payroll voucher unless an adjustment voucher is processed for the current pay period.

B. Reimbursement payments:

1. In general, the policy allows payment to an employee for cell phones and other electronic access plans and access devices. The payment may be in the range of $15 - $150 per month, and may be set up to cover a specific period of time (such as several months, one year, etc.). Since additional pay is taxed at the employee's usual rate, the total amount paid may include an additional amount to compensate the employee for the taxes taken out of the pay, as long as the gross amount does not exceed the policy's range limit. The department has the choice whether to reimburse its employees for the taxes on this additional pay, and will have to determine what this amount will be and communicate that to the employee.


2. Here are some examples that may help departments determine an appropriate reimbursement amount:

a) Allow the employee to provide his or her tax bracket to use in the calculation:

i. One of your employees gets a 12 month cell phone plan that costs $50 per month. That employee states that he/she is in the 25% federal tax bracket. To yield a net reimbursement of $50 per month, the department would first calculate the grossed up amount [$50 divided by (1.00 - .25)], giving a gross monthly reimbursement of $66.67. Next that would be multiplied by the number of months that the plan covers (in this case, 12) to get the total gross reimbursement of $800.04. That is the amount that will be entered on the Additional Pay Edoc.

ii. Remember that the total additional pay will be divided according to the period (dates) on the Edoc and how frequently the employee is paid. If the Edoc period is for a full year, a monthly-paid employee would receive 12 equal reimbursements, and a biweekly-paid employee will receive approximately 26 equal reimbursements, to total the gross reimbursement.

• iii. NOTE: The department can decide what taxes it will reimburse the employee for. In addition to federal tax reimbursement, It could also reimburse for state, local (county) and/or FICA taxes. The calculation to increase the pay would be the same; just all the percentages for the other taxes would need to be added together before subtracting from 1.00, and then dividing the actual cost by that fraction. The Indiana State tax rate is 3.4%. The employee FICA rate is 7.65%. The county/local tax rate will vary depending on the employee. So, in the above example, if the person was in a county with a 1% tax rate, and the department chose to reimburse all employees for all their tax withholdings, the calculation would be $50 divided by (1.00 - .25 - .034 - .0765 - .01), giving the increased reimbursement of $79.43.

b)  The department decides to add the same percent to all employees' reimbursement:

i. The department does not have to ask the employee what tax bracket he/she is in; it may decide upon a specific percent by which to increase the payment for all employees being reimbursed under this policy. For example, a department may decide to use 30% as the figure to increase of the total amount any employee being reimbursed under this policy, regardless of the actual tax bracket of specific employees. The formula for the increased payment would be the same as in the previous example: the amount divided by (1.00 minus the percent).

c)  Please note: Whatever process the department chooses to use, it needs to be consistent in using that method for all employees for which reimbursement is made under the Cellular Phones and Other Electronic Access/Devices policy.