IRS Wants to Tax Use of Company Mobile Phones

Where there's a need, a DIRE NEED (such as a gigantic budget deficit and equally gigantic spending plans), they will find a way, ANY WAY.

The Internal Revenue Service wants to tax your cellphone that you get as part of your company benefit.

Tax Man's Target: The Mobile Phone (6/12/09 Wall Street Journal):

"The use of company-issued mobile phones could trigger new federal income taxes on millions of Americans as a "fringe benefit," spurring efforts by the wireless industry and others to kill the idea.

"The Internal Revenue Service proposed employers assign 25% of an employee's annual phone expenses as a taxable benefit. Under that scenario, a worker in the 28% tax bracket, whose wireless device costs the company $1,500 a year, could see $105 in additional federal income tax.

"The IRS, in a notice issued Monday, said employees could avoid tax liability if they showed proof they used personal cellphones for nonbusiness calls during work hours. The agency also could decide on a set number of phone minutes as "minimal personal use" that would be untaxed."

Or the employers could use a statistical sampling to determine the percentage of typical personal use of a corporate cell phone.

Bud the IRS is only enforcing the existing law, mind you.

"Under a 1989 law, workers who use company-provided mobile phones for personal calls are supposed to count the value of those calls as income and pay federal income taxes accordingly."

But,

""The idea that you should keep a log saying, 'I made a call saying I will be late for dinner again,' that's a totally cumbersome and burdensome requirement that most employers and employees are not going to comply with," said Jot Carpenter, vice president of government affairs for CTIA-The Wireless Association, a trade group of cellphone-equipment manufacturers and service providers."

"Wireless companies also argue the IRS rule is outdated. Rates have declined so dramatically in the past decade -- with night and weekend calls free under many plans -- that it makes little sense for the IRS to assess employee benefits by nickels and dimes."

"John Harper, the mayor of Rowlett, Texas, said his town wrestled with whether to declare as worker income a portion of the 100 cellphones provided to city employees, but decided it was too much work.

""I'm all for collecting taxes for the government," he said, "but let's not end up costing us more to do it than the tax you ultimately collect.""

Mr. Harper, I totally agree with you. But you're forgetting something. The IRS would rather have the tax money that they currently do not have at all, even if that means possible decreased usage of corporate cell phones that will lead to possible decreased revenues at cell phone companies which will result in less corporate tax revenues for the IRS. A government agency is not known for thinking about a rippling effect of its action. Besides, all the trouble of collecting the usage data and preparing the paperwork, that's taxpayers' problem, not the IRS's problem.

So another tiny step for the United States to be more like those sophisticated (read "rigid", if you like) European countries. Another leeway (the government sees it as "loophole" for "cheaters") is being possibly closed.

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