The Mailbag.

• Author: Delogu, Nancy

Our payroll software automatically deducts for lunch breaks: Can this be a problem?

Q Our payroll system automatically deducts 30 minutes per day from drivers for lunch since they are on the road and away from a computer. I have concerns about liability. Should we make this deduction?--Kary, Maryland

A A decision to set up your payroll software to automatically deduct meal breaks can backfire if the employee doesn't actually take the meal break on a given day--or claims to not have taken the break. Changing the software setup is one option, although that may create a burden on the employee to get to a place to input the lunch break daily.

Another option: Continue to use the current software, but require each driver to review and correct actual time worked before certifying the record as correct. This will help you defend a claim that the automatic software resulted in underpayments. Keep those records that show the driver certified the record as correct.

What are the rules for reimbursing employees for their cellphone usage?

Q When it comes to reimbursing employees or providing a monthly stipend for the use of their personal cellphones for business purposes, is this a nontaxable fringe benefit?--Maren, Virginia

A Yes, provided that your reimbursement is reasonably calculated to actually reimburse the employees for the actual costs of maintaining the phone.

Employers can deduct as a business expense the costs of providing phone services to its employees. For this reason, the IRS has concluded that the value of cellphone services provided by an employer will not be taxable to the employee if there are substantial reasons relating to the employer's business and the reimbursement is not simply a way to provide tax-free compensation to the employee. I.R.S. Notice 2011-72.

If you want to reimburse workers for this cost, be able to show a business connection to the reimbursement and make sure the employee notifies you of the expenses in a timely manner.

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