IRS Commissioner Doug Shulman and Treasury Secretary Timothy Geithner want Congress to pass legislation ending the tax on personal use of employer-provided cell phones.
Last week, the IRS asked for comments on the best ways to simplify compliance with rules related to employer-provider cell phones (see IRS Considers Changing Cell Phone Requirements). Among the options the IRS was considering were one that would allow a specified amount of minimal personal use of cell phones that would be disregarded by the IRS, or a safe harbor that would treat a certain percentage of each employees use of an employer-provided cell phone as business usage. Another proposal would allow employers to use statistical sampling techniques to determine their employees personal use of cell phones.
But Shulman and Geithner now acknowledge that the easiest solution would be for Congress to do away with any tax on an employees use of a cell phone provided by their company.
The current law, which has been on the books for many years, is burdensome, poorly understood by taxpayers, and difficult for the IRS to administer consistently, said Shulman in a statement. Some have incorrectly implied that the IRS is cracking down on employee use of employer-provided cell phones. To the contrary, the IRS is attempting to simplify the rules and eliminate uncertainty for businesses and individuals. Although some of the proposed changes would add clarity, the current law will inevitably leave widespread confusion among employees and businesses. Therefore, Secretary Geithner and I ask that Congress act to make clear that there will be no tax consequence to employers or employees for personal use of work-related devices such as cell phones provided by employers. The passage of time, advances in technology, and the nature of communication in the modern workplace have rendered this law obsolete.
At least one member of Congress is eager to pass such legislation. Rep. Sam Johnson, R-Texas, introduced a bill, the Mobile Cell Phone Act, or H.R. 690, with Rep. Earl Pomeroy, D-N.D., to update the treatment of cell phones and BlackBerries used for business and repeal the requirement that employers and employees maintain detailed logs of cell phone use. The bill was approved by the House during the last Congress.
He had introduced the bill in response to a constituent, a lawyer from North Texas, who contacted Johnson on behalf of a client. The IRS wanted the client to keep records on cell phone and BlackBerry use, or forfeit his tax deduction.
"It is days like this when I am reminded that constituent concerns turned into legilsation are what make serving in Congress truly worthwhile," said Johnson. "I'm glad that the IRS has called on Congress to pass the Mobile Cell Phone Act. I hope that the Speaker doesn't waste any time and she schedules a vote immediately. Time and technology have marched on."
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