1.7 Landline and cell phone usage policy as recommended by the NDUS Board Office

October 18, 2009

There are two existing laws -- one at the federal level and another at the state level -- that limit the use of state cell phones and other state phones for personal use and may create related individual employee tax or other consequences. There may be changes to one or both of these laws within the next 18 months; however, in the meantime, it is important for employees to be aware of the existing provisions.

North Dakota Century Code section 54-06-26 restricts use of state telephones (land line and cell phones) by employees to business use. It allows for "essential personal purposes to the extent that use does not interfere with the functions of the official's or employee's agency, department or institution." Section 54-06-26 does not define "essential personal purposes" but employees should apply common sense and reason. For example, calls from a spouse to inform an employee that the spouse has car trouble or that a child needs to be picked up, or calls to and from medical providers regarding scheduling of an appointment and similar calls using a state phone are reasonable and permitted. Section 54-06-26 explicitly permits one long distance call per day if an employee is away from home overnight on state business. Otherwise, use of a state phone to take care of family or other personal or private affairs generally should be limited.

Regarding federal law, the Internal Revenue Service currently considers business cell phones as "listed property" under the Internal Revenue Code. Business use of listed property is not considered a fringe benefit and, therefore, is not taxable; however, personal use is included in wages and is subject to tax. The IRS regulation permits minimal personal use without tax consequences. If such use is more than minimal, employers must require employees to keep records distinguishing between business and personal use. MSU has moved to reimburse employees through pay roll for business use of personal cell phones.