Five Ways to Spot a Phone Scam

Tax ScamsThe IRS continues to warn the public to be alert for telephone scams and offers five tell-tale warning signs to tip you off if you get such a call. These callers claim to be with the IRS. The scammers often demand money to pay taxes. Some may try to con you by saying that you’re due a refund. The refund is a fake lure so you’ll give them your banking or other private financial information. [Read more…]

Personal use of employer provided cell phones usually nontaxable

 Close to one year after cell phones were removed from the “listed property” category of Code Sec. 280F , IRS has explained the practical consequences of the change. In sum, where an employer provides employees with cell phones primarily for noncompensatory business reasons, neither the business nor personal use of the phone result in income to the employee, and no recordkeeping of usage is required. And, in most instances, an employer’s reimbursement to employees for their providing a cell phone for bona fide business use won’t be taxable. The guidance applies for all tax years after Dec. 31, 2009.

Background. Under Code Sec. 280F , there’s no deduction for listed property unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement: the amount of the expense or other item; the use of the property; the business purpose of the expense or other item; and the business relationship to the taxpayer of persons using the property.

Cell phones used to be listed property, but for tax years beginning after Dec. 31, 2009, the Small Business Jobs Act of 2010 (the Act, P.L. 111-240 ), removed cell phones and other similar telecommunications equipment from the “listed property” category under Code Sec. 280F . The problem was that the Act didn’t deal with the consequences of personal use of an employer-provided cell phone, or an employer’s reimbursement of an employee-provided cell phone for business use.

The relevant statutory rules are as follows:

… Ordinary and necessary business expenses are deductible under Code Sec. 162 . However, under Code Sec. 262(a) , no deduction is allowed for personal, living, or family expenses, unless otherwise provided.

… An employee generally must include in gross income the amount by which the fair market value of a fringe benefit exceeds the sum of (a) the amount, if any, paid for the benefit by or on behalf of the employee, and (b) the amount, if any, specifically excluded from gross income by some other section of the Code. But gross income does not include a working condition fringe benefit (WCFB), which is defined as any property or services provided to an employee of the employer to the extent that, if the employee paid for such property or services, the amount paid would be allowable as a deduction under Code Sec. 162 or Code Sec. 167 .

… If, under Code Sec. 274 or another Code section, certain substantiation requirements must be met in order for a deduction under Code Sec. 162 or Code Sec. 167 to be allowable, then those substantiation requirements apply in determining whether a property or service is excludable as a WCFB. The Code Sec. 274 substantiation requirements are satisfied by adequate records or sufficient evidence corroborating the employee’s own statement. As a result, such records or evidence provided by the employee, and relied upon by the employer to the extent permitted by the Code Sec. 274(d) regs, are enough to substantiate a WCFB.

Code Sec. 132(a)(4) provides a specific exclusion from gross income for de minimis fringe benefits. A de minimis fringe benefit is any property or service whose value is so small that accounting for it is unreasonable or administratively impracticable, taking into account the frequency with which similar fringe benefits are provided by the employer to its employees.

According to the Committee Report to the Act, the post-2009 “delisting” of cell phones didn’t affect IRS’s authority to determine the appropriate characterization of cell phones as a WCFB under Code Sec. 132(d) , and didn’t affect IRS’s authority to determine that the personal use of cell phones that are provided primarily for business purposes may qualify as a de minimis fringe benefit.

After the Act’s passage, we observed that IRS may well declare an employee’s personal use of an employer-provided cell phone to be a tax-free de minimis fringe benefit, and that’s just what IRS has now done.

New guidance for employer-provided cell phones. Notice 2011-72 , provides that an employer is treated as having provided an employee with a cell phone primarily for noncompensatory business purposes if there are substantial reasons relating to the employer’s business, other than providing compensation to the employee, for providing the phone. Examples include contacting the employee at all times for work-related emergencies, or the employee’s availability to speak with clients when he’s away from the office or call clients in other time zones after his normal workday is over. However, a cell phone provided to promote employee morale or goodwill, to attract prospective employees, or to provide additional compensation to employees is not provided primarily for noncompensatory business purposes.

When an employee is provided with a cell phone primarily for noncompensatory business reasons, IRS will treat his use of the cell phone for reasons related to the employer’s trade or business as an excludable WCFB. Also, solely for determining whether the WCFB rule in Code Sec. 132(d) applies, the substantiation requirements that the employee would have to meet in order to claim a deduction under Code Sec. 132 are deemed to be met. An employee’s personal use of a cell phone provided by the employer primarily for noncompensatory business purposes is excludable as a de minimis fringe benefit.

IRS stresses that the application of the WCFB and de minimis fringe benefit exclusions under Notice 2011-72 , apply solely to employer-provided cell phones and should not be interpreted as applying to other fringe benefits.

Employer reimbursement of employee-provided phone. A Sept. 14, 2011, memo (“Interim Guidance on Reimbursement of Employee Personal Cell Phone Usage in light of Notice 2011-72”) for all field exam operations addresses the situation of employers that have substantial, noncompensatory business reasons for requiring employee use of personal cell phones in connection with their businesses, and reimburse them for their use. Here, examiners are told that they “should not necessarily assert that the employer’s reimbursement of expenses incurred by employees after December 31, 2009, results in additional income or wages to the employee.”

However, the employee must maintain the type of cell phone coverage that is reasonably related to the needs of the employer’s business, and the reimbursement must be reasonably calculated so as not to exceed expenses the employee actually incurred in maintaining the cell phone. Additionally, the reimbursement for business use of the employee’s personal cell phone must not be a substitute for a portion of the employee’s regular wages. Examiners are told that arrangements replacing part of an employee’s previous wages with a reimbursement for business use of the employee’s personal cell phone and arrangements that allow for the reimbursement of unusual or excessive expenses “should be examined more closely.”

Observation: IR 2011-92 , is more to the point. It says that employers that require employees, primarily for noncompensatory business reasons, to use personal cell phones for business calls may treat reimbursements of employee expenses for reasonable cell phone coverage as nontaxable. It cautions, however, that this result won’t apply to reimbursements of unusual or excessive expenses or to reimbursements made as a substitute for a portion of the employee’s regular wages.

Smartphone Apps – Staff Picks for August

Top Smartphone Apps for August – According to Loggins Staff Members

By now you have problably realized that a cellphone is not just a phone anymore; it is a “device”.  A device that is both fun and beneficial due the wide (and increasingly growing) variety of “apps” available.  I asked the staff here at Loggins to share their favorite apps.  Since there is no end in sight for the introduction fo new apps, be on the lookout for next month’s top picks!

Apps are to the smartphone what software is to the computer.  They can be for fun, business, productivity, news and almost anything.  There are apps that are free.  There are also paid apps that range anywhere from 99¢ to $5, $10 and up.   If you want the most expensive app, you need to shell out $12,500 so your smartphone can connect to your on-board communications system of your private jet.  As a general rule, the free apps (generally referred to as “lite”) have either limited functions or advertisement banners.  The paid version (also known as “pro”) include additional features without the ads.

Apps can save you time, money and provide you with hours of entertainment.  Everyone has their favorites, and that list is ever-changing as newer and better apps are introduced everyday.  Here are this month’s picks from our staff:

Ask Dave Ramsey – If you’re looking for financial advice, this app tells you “what would Dave do” with advice from real-life calls from Dave’s radio show.  The app is free for both iPhone and Droid.

 

Runtastic – GPS outdoor and indoor tracking app for fitness (running, biking, strength training, etc).  It’s like your all-in-one exercise assistant.  Available for Blackberry, iPhone, Android & Windows Phone.  Lite version allows you to track distance, time, speed; display your route, and share your sports activities on social media sites such as Facebook.  The Pro version retails at $5.99 and gives you voice feedback, heart rate monitoring and other cool features.

GasBuddy – Find the cheapest gas on the go – for free!  This app gives you the option to find gas stations near you then sort by distance or price.  You can also report gas prices for stations you see and earn points to register a free gas give-away each week.  Available for all smartphones.

Bookworm – Word game app that features a library-bound worm named “Lex” who munches up connected letter tiles to form words.  Sounds easy except for the addition of red burning tiles that must be used before they reach the bottom of the screen which ends the game.  This free app is available for all smartphones.

Poynt – Free app for all smartphones!  Easy-to-use, all-in-one tool to connect you with local businesses, retailers, and events while you’re on the go.  You can search for restaurants, gas stations, movies, etc.  Then you can call them, email them, watch the trailer for the movie, get the best gas prices, and map out directions.

Key Ring – Free app that brings all those little cards (loyalty, club, membership) from your key ring and wallet into one convenient place.  It electronically stores all information and allows you to share with all smartphones in your family.  The store just scans the image on your phone instead of the card.    Available for all smartphone platforms.

Evernote – Free app that works with all smartphones and Windows PC.  You can capture, organize and share information between all electronic devices via your computer, phone and web.  You can add a note, web page, photo, screenshot.  Evernote will index everything and make it searchable so you can find anything fast.