Luzerne County Government

July 14, 2010

County cell-phone use might be taxed

IRS says government phones used for personal business must be reported as income.

By Jennifer Learn-Andes jandes@timesleader.com
Luzerne County Reporter
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Cell phones owned by Luzerne County government will be reported as taxable income for the roughly 200 employees assigned to carry them, according to a new policy that might be adopted by commissioners.

The policy stems from county Controller Walter Griffith’s warning in April that the Internal Revenue Service requires government phones used for personal business to be reported as income on W-2 forms.

To exclude cell phones from an employee’s taxable income, commissioners must institute a policy stating that the phones are for business use only and routinely audit billings to confirm that personal calls were not made.

Griffith had urged commissioners to comply with the mandate by passing a policy banning all personal calls on county phones.

Instead, the policy under consideration by commissioners would calculate a monthly compensation value of the phone and add that amount to the employee’s taxable income. This value, which was not specified in the draft policy, will incorporate the cost of the device and monthly service charge.

The policy advises employees to consult a professional tax consultant about their ability to deduct business uses of the phone on their individual tax returns.

“If they want to go through monthly statements and pull out county-related calls to write off as a work expense, they have that option,” Petrilla said Tuesday.

The policy says the phones are issued for “business use only.”

“Certain abbreviated personal calls for emergencies, notification of change or extension of work schedules, and similar categories are permissible provided such calls are kept to a minimum,” the policy says.

Griffith said he’s concerned that personal usage of the phones will increase once the phones are added to employee’s income.

Petrilla said she does not expect abuse.

Employees with cell phones are expected to be available for inquiries about county business 24-7, Petrilla said.

The county spent $154,175 on cell phones in 2007, compared to $113,975 in 2008 and $59,000 in 2009. Monthly access charges typically range from $29.99 to $49.99, according to county records. The proposed policy says the county chief clerk/manager will authorize all requests for cell phones based on “appropriateness and funding availability.” A record will be kept on the employees who have cell phones.

Jennifer Learn-Andes, a Times Leader staff writer, may be reached at 831-7333.

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