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IRS mulling taxing employee cellphone usage

updated 04:15 pm EDT, Fri June 12, 2009

IRS to tax worker cell use

The Internal Revenue Service (IRS) announced this week it has proposed a rule that would deem 25 percent of an employee's annual company-issued cell phone expenses a taxable benefit, according to a Friday WSJ report. Employees could avoid the tax liability if they showed proof that they used their own cellphones for nonbusiness calls during work hours. The IRS would also set a minimum number of phone minutes dedicated to personal use that would be untaxed.

What the IRS is calling a "fringe benefit" could also be taxed based on an employer's statistical sampling that would determine what percentage is personal and what is work-related, with employees taxed on the difference. The actual tax would depend on the annual cost of the wireless service and an employee's tax bracket. A research firm says US companies allow about 40 percent of work phone use for incidental personal use.

A 1989 law is already in place that classifies an employer-provided cell phone as a taxable benefit rather than a work tool. Workers are supposed to keep track of the value of their personal calls and pay federal income taxes accordingly. Because of the widespread non-compliance to this requirement, the IRS is proposing the new measures.

The proposal is seeing strong opposition from the industry, as wireless providers are worried businesses would cancel their contracts rather than have to comply with the complicated IRS law. They may instead reimburse employees for their personal cellphones.

There is also the argument that the 1989 law is outdated, at the start of the cellphone industry and long before wireless plans offered free night and weekend calling.

"We don't think it's really relevant in today's economy," said Sprint spokesman John Taylor.

The IRS is collecting data on its proposal until September before it takes any further steps into making its proposal into law.

by MacNN Staff



  1. Former Rube

    Joined: Dec 1969



    Obama's socialist/fascist agenda has the IRS out there looking for more money to pay for it. Yeah, I know, Bush did it ...and he was wrong, too. He didn't go here, though. We need Ronald Reagan again to get/keep gov't out of our lives and keep it away from the Internet and technology. The gov't continues to become more and more predatory, looking to find ways to tax technology. This is another example, along with taxing employee insurance. It's trickle up poverty, folks. How's that hope and change working for everyone now?

  1. climacs

    Joined: Dec 1969



    did you read the article?

    A 1989 law is already in place that classifies an employer-provided cell phone as a taxable benefit rather than a work tool.

    and who was president in 1989, folks?

    GHW Bush.

  1. LenE

    Joined: Dec 1969


    I itemize

    but I don't keep track of all of the work phone calls I make and receive on my personal cell phone. It would be too much of a PITA to do. If I could be taxed on a ratio of employer-provided cell phone usage, then why can't I have a tax credit for the inverse ratio, if I use my own personal cell phone for work? Oh, that's right, because it would lower my personal tax payment, rather than increasing it. It's not enough that there are already state and federal taxes on the cell phone service, they want more!-- Len

  1. macnews

    Joined: Dec 1969


    already there

    The IRS already pushed many higher ed institutions into doing this. I went from a paid cell phone to partially re-imbursed phone.

  1. DiabloConQueso

    Joined: Dec 1969


    I hate taxes

    Yeah, like, I hate taxes, too.

    Why can't the government just run itself without money?

  1. lamewing

    Joined: Dec 1969


    Makes sense

    If your employer is giving you a phone and you use it for personal calls, yep, you should be taxed on it. Now, if it is for business only, then no taxes should apply.

    Simple solution, get your own damn mobile phone and pull yourself away from your company's teat.

  1. jarod

    Joined: Dec 1969


    Simple Facts

    High Taxes = Inefficient Gov't.
    Want proof? Check out Canada

  1. testudo

    Joined: Dec 1969


    Re: Confiscatory

    Right. It's all Obama's fault. The economy, the bailouts, the wars. It's all part of that - gasp - socialist agenda that nobody understands but it has the word 'socialist' in it, so it must be bad.

    Oh, and if Obama hadn't taken all of our guns away, the IRS would never get away with this!

  1. dimmer

    Joined: Dec 1969



    "get/keep gov't out of our lives and keep it away from the Internet and technology."

    Err, you do know who made the internet, right? ARPAnet? Government and Big Education hand in hand. Works just fine.

    Could a private company have pulled it off? Not a hope in h***.

  1. LordJohnWhorfin

    Joined: Dec 1969


    I'm all for taxes...

    But given the ridiculously low cost of cell phone communications these days, this looks like more money is going to be spent accounting for the minute details and collecting paperwork than is going to be brought in. This would have made sense in the '80s and '90s, but in 2009 it's just idiotic. Make cell phones a non-taxable work perk and move on. Taxing business class travel perks seems like a much more juicy nugget to chase after.

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