Irs Wants To Tax You For Your Work Cell Phone

[UNTflyer]

WASHINGTON -- The IRS is weighing a proposal to deem one-quarter of employees' use of work cellphones as personal use and therefore subject to tax as a fringe benefit.

The proposal is one of several options the IRS put forward this week on the tax treatment of employer-provided cellphones. Current law already requires that the value of those cellphone services be included in a worker's gross income, unless the employee keeps detailed records showing that the cellphone is used for work only.

But as a practical matter, many companies don't enforce the record-keeping requirements. The IRS proposals from this week aim to simplify the requirements and aid enforcement of the law.

The IRS notice might re-energize an effort by cellphone companies such as Verizon Communications Inc. and Sprint Nextel Corp. to repeal the 20-year-old law that classifies work cellphones as a fringe benefit subject to personal income tax.

The IRS in the past couple of years has begun to question employer deductions for cellphone services during tax audits, said Jot Carpenter, vice president of government affairs for CTIA-The Wireless Association, a trade group of cellphone equipment manufacturers and service providers.

Mr. Carpenter has been pressing lawmakers to repeal the requirement, arguing that the current widespread use of cellphones for work wasn't contemplated by the 1989 law, which targeted "CEOs and rich people."

"The idea that you should keep a log saying, 'I made a call saying I will be late for dinner again,' that's a totally cumbersome and burdensome requirement that most employers and employees are not going to comply with," said Mr. Carpenter.

The IRS, in a Monday notice, proposed options intended to simplify the requirement for employers. One proposal is a "safe harbor" that would deem 75% of work cellphone usage to be for work, and 25% to be personal. Under that scenario, employer deductions would be limited accordingly and employees would be taxed on the value of the personal use.

As an alternative approach, employees could satisfy the requirement by showing proof that they maintain a personal cellphone for use during work hours. Or, IRS could set a certain number of minutes that would be considered "minimal personal use" and thus disregarded for tax purposes.

In a third option, employers could use statistical sampling to determine what portion of their workers' use of cellphones is personal and how much work-related.

The IRS will accept comments from the public regarding the proposals until Sept. 4

[Bryan316]

F this S. My employer-provided Blackberry isn't even used for work, much less personal use. I probably average zero calls a month, both incoming and outgoing. And after forwarding calls and putting my work email on my iPhone, it pretty much stays in a drawer at the office so it can access the server. F that if they want to tax me a percentage on a phone I don't even want. I hope they take that "alternative approach" and let me show that I already have a personal phone and don't deserve to get taxed on something my employer gave me that they claim I use for purposes that I really don't.

[UNTFan23]

To avoid paying the tax, I see a lot of people that only have work provided cell phones getting a personal cell phone.

I see those with mobile offices (real estate agents come to mind) being impacted the most by this proposal.

Are we seeing the start of us getting nickel and dimed to help pay for a bigger government?

[keith]

Are we seeing the start of us getting nickel and dimed to help pay for a bigger government?

Yes, these are the creative "revenue" generating ideas govenment is famous for. What about personal calls made or received on the office phone or using the Internet for, ummm...a little gomeangreen.com action when no one is looking, or that trip to the bathroom for, you know, *personal* business. Are these all soon to be taxable fringe benefits?

Keith