Employers are able to exclude the value of an employee's use of an employer-provided cell phone from the employee's gross income if the employee keeps careful records distinguishing business and personal calls, according to a recently released letter from an Internal Revenue Service official.

"If the employee uses the telephone exclusively for business, the value of all use is excluded from the employee's income (as a working condition fringe benefit)," wrote Lynne Camillo, a branch chief with the IRS, to Rep. Dennis Moore, D-Kan., in response to a constituent letter in June.

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