Paul L. Caron

Tuesday, June 16, 2009

IRS Bails on Proposal to Tax Employee Cell Phone Use

Following up on my prior posts (here, here, and here):  the IRS today issued a statement bailing on last week's issuance of Notice 2009-46, which proposed three alternative methods for taxing an employee's personal use of an  employer-provided cell phone:

This month, the IRS asked for comments on ways to simplify compliance with rules related to employer-provided cellular telephones. 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. 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.

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Tracked on Jun 16, 2009 3:01:11 PM


Such Congressional action is certainly a no brainer, and I imagine it will have bipartisan support. I also suspect very few taxpayers are complying with current law today anyway. The question is - how will JCT score the bill, and is there enough political will in Congress to pass it in this political environment...

Posted by: Tom | Jun 17, 2009 7:38:55 AM