Mobile Phones May Be Taxed as 'Fringe Benefit'
The Internal Revenue Service, in a notice posted this week, is proposing that employers assign 25 percent of their employees’ yearly phone expenses as a taxable benefit.
Crunching the numbers, the Wall Street Journal (sub. req.) estimates that an individual in the 28 percent tax bracket with a wireless device that costs the company $1,500 a year could have to pony up another $105 to federal tax coffers.
Employees could avoid tax liability if they can prove they use personal cell phones for nonbusiness calls during work hours.
The WSJ notes that the IRS move is meant to more strictly enforce a current rule that classifies cellphones as a taxable benefit rather than a 24-hour-a-day work tool.
This isn’t a new idea, but may give the IRS a means of enforcement. A 1989 law, that remains widely ignored, requires employees to calculate the value of making personal calls on company-provided phones and pay income taxes on it.
Neither employers nor their employees are happy with the idea of the imposition of a tax.
“Your job gives you a phone to be in 24-hour contact. It’s only natural that you’re going to use it personally,” Anthony Cecchini, an analyst at investment bank Oppenheimer & Co., told the WSJ. “If I need to get a personal email or call, it shouldn’t be a big deal.”
The IRS is taking comments on its proposal through Sept. 4.
Also see:
mocoNews.net: “Got A Company-Paid Cellphone? The IRS Wants To Tax Your Personal Calls”
Internal Revenue Service: “Notice 2009-46, Substantiating Business Use of Employer-Provided Cell Phones”
