1-5: Cellular devices and services

Effective: October 29, 2021
Revised: May 18, 2026
References: IRS Publication 15-B, IRS Notice 2011-72, The IRS Internal Revenue Manual: 4.23.5, DTS 5000-0003: Enterprise Mobile Device Policy, FI 45: Cellular agreement – Allowance, FI 47: Cellular agreement – State-owned devices

Purpose

This policy outlines how to provide employees with cellular devices and services. This policy is written to comply with IRS regulations and related sections of Administrative Code.

This policy does not cover proper usage, security, or state-provided laptops or allowances for the business use of an employee’s personal computer or laptop. See DTS’s Enterprise Mobile Device Policy 5000-0003.

Definitions

Agency – Any agency, board, bureau, commission, office, department, or other administrative subunit of the executive branch of state government.

Cellular device – A portable telephone that uses wireless cellular technology to send and receive phone signals, including but not limited to iPhones and smartphones. Tablet devices, such as iPads, are also considered cell phones for purposes of this policy.

Division director – The executive leader of a division within the agency.

GovOps – This refers to the Department of Government Operations.

Payroll – The GovOps Division of Finance payroll team.

Vantage Financial – The financial management system used by the state for accounting, budget control, and reporting.

Policy

A – Agencies have 2 options for providing cellular devices and services

1 – Agencies may provide employees with state-paid cellular devices and services.

2 – Agencies may pay employees taxable cellular allowances.

B – Cellular device and service agreements are required

1 – To receive a state-paid device or an allowance for personal cellular services, employees must complete the applicable form:

Form FI 45: Cellular agreement – Allowance; or
Form FI 47: Cellular agreement – State-paid devices.

2 – The agreement must be approved by the employee, their supervisor, and the division director (or agency equivalent) or designee.

3 – Agencies are responsible for ensuring that agreements are completed at least every 2 years or when business needs change to ensure that costs are proper.

4 – Agencies must keep the forms FI 47 to justify state-paid cellular devices and services and make them readily available for review or audit.

5 – State payroll must maintain the forms FI 45 in Vantage Payroll to ensure that allowances are documented.completed every two years or when business needs change or an employee’s plan changes.

C – Requirements for state-paid cellular devices and services

1 – Agencies may provide state-paid cellular devices and services if the primary purpose is for noncompensatory business reasons. For example:

the agency must be able to contact the employee at all times for work-related emergencies; or
the employee must be available to speak with customers while away from the office.

1a – Agencies must not provide state-paid cellular devices for compensatory reasons. If they’re providing cellular devices and services for compensatory reasons, they must pay using a taxable cellular allowance.

1b – Agencies may only pay for cellular coverage that is reasonably related to business needs. For example, agencies should pay for basic plans instead of international plans because most employees don’t need international service for work.

2 – Employees may use state-paid cellular devices and services for both business and personal use, as long as their agency provides the cellular devices and services primarily for noncompensatory business reasons.

2a – Employees don’t need to keep a record of business use.

3 – Agencies must use state-contracted vendors.

4 – Agencies must pay state-contracted vendors following the GovOps of Finance policy sections 5: Payments and 21: P-card policy.

4a – Agencies must code payments for cellular devices to object code 6189.

4b – Agencies must code payments for cellular services to object code 6126.

D – Requirements for paying taxable cellular allowances

1 – Agencies may pay employees a taxable cellular allowance for business use of their personal cellular device and services if there is a business need.

2 – Employees may be paid a taxable cellular allowance of up to $35 per pay period to cover the business use of personal cellular devices and services.

3 – Agencies must process allowances through payroll. To set up this recurring payment:

Agencies must submit an approved FI 45: Cellular Agreement – Allowance for each employee to the agency payroll coordinator.
The agency payroll coordinator must enter the information into the payroll system.
The state payroll supervisor or designee approves the allowance.

3a – Agencies must use Form FI 45 to pay cellular allowances and must not use outdated forms or agreements as documentation.

4 – Because allowances are taxable, employees don’t need to substantiate their costs.

4a – The only required documentation is the FI 45.

5 – If an employee leaves, transfers to another agency, or no longer has a business need for the allowance, the employee’s supervisor must immediately notify payroll to stop the recurring payments.