TAX TREATMENT OF EMPLOYEE CELL PHONES - ARE YOU COMPLYING?

Posted in Law ::: June 11, 2009 2:05 PM

In the ever increasing category of "Laws That Cannot Keep Up With Technology", the IRS is struggling to find ways to account for employer provided cell phones for employees.  They have some new proposals out that they are seeking comments for.  One such proposal would simply label one fourth of an employees' use of a work cell phone as personal and treat the value of that as a fringe benefit.  Employers could deduct accordingly on their end of things. 

There are other proposals as well, this article sums it all up nicely:  http://online.wsj.com/article/SB124473141538306335.html

Currently, the law on the books requires that the value of the cell phone be included in the employee's gross income unless the employee keeps detailed records showing that it is for work only.  Yet, most, and that's an understatement, are not complying with this requirement and most employers and employees alike say that this creates an unreasonable administrative burden.  The new proposal is designed to make it a bit simpler.  The one quarter/three quarters rule would definitely be a bit easier to oversee than the current state of affairs.  Have a thought?  Let the IRS know. 

 

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