IRS: Company cell phone + personal calls = more taxes for you

Fri Jun 12, 2009 12:25PM EDT

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Make any personal calls on that company cell phone? That's a "fringe benefit" of your job, according to a 20-year-old law, and the IRS is looking to collect.

The Wall Street Journal reports that the IRS wants to step up enforcement of the 1989 law, which holds that employees who make personal calls on a company cell phone are getting a "fringe benefit" from their employers—a benefit that should count as taxable income.

The law has been "long ignored" by employees and employers alike, according to the Journal, namely because most companies don't have the time or the inclination to tabulate exactly how many minutes you're on the phone with clients versus how often you're gabbing with friends and family.

But now, the IRS is floating a couple of proposals to make compliance easier—for employers, anyway. One would be to simply treat 25 percent of your company cell phone bill as a "fringe"—and therefore taxable—benefit, the Journal reports. Or, an employer could use "statistical sampling" to guesstimate how many of your cell minutes are work-related and which aren't.

OK, but what if you swear on a stack of bibles that you rarely, if ever, use your company phone for personal calls? That's fine, the IRS says—but you'll have to produce separate work and personal cell phone bills to prove it.

Think it's a crazy idea? Apparently the IRS is thinking it over and will make a decision by September, the Journal reports.

Meanwhile, guess who's on your side against the IRS? The big cell phone carriers, who (according to the WSJ story) are worried that companies will drop employee cell phone contracts if the IRS goes ahead with its proposal. (Instead, employers might simply reimburse you for business calls made on your personal phone.)

So, quick show of hands: How many of you have a company-issued cell phone, and if so, do you use it for personal calls? And should personal calls count as a "fringe," taxable benefit? Or should the IRS allow for (at the very least) "minimal personal use" of company phones, especially given that bosses often expect cell-toting employees to be in contact at all times?

Related:
Tax Man's Target: The Mobile Phone [The Wall Street Journal]

Comments on IRS: Company cell phone + personal calls = more taxes for you

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  • 6 Posted by collarncuffsboy on Fri Jun 12, 2009 4:23PM EDT Report Abuse

    "OK, but what if you swear on a stack of bibles that you rarely, if ever, use your company phone for personal calls? That's fine, the IRS says—but you'll have to produce separate work and personal cell phone bills to prove it." Welcome to Guilty until you prove yourself innocent.

  • 7 Posted by gschweizer on Fri Jun 12, 2009 5:53PM EDT Report Abuse

    what about data? My company provides an iPhone and i only use it for email and surfing...

  • 8 Posted by jason_leavitt on Fri Jun 12, 2009 5:56PM EDT Report Abuse

    So if I use a company computer to check my personal email, is that a taxable fringe benefit too?

  • 9 Posted by shadjcloud on Fri Jun 12, 2009 5:56PM EDT Report Abuse

    We have a flat rate plan so its the same no matter how many minutes we use for business or personal. If they are going to tax cell phone personal calls then I guess they will also need to tax personal call made from a business land line phone. Fair is fair. Figure that one out.

  • 11 Posted by tcox43 on Fri Jun 12, 2009 5:56PM EDT Report Abuse

    Simple: If employer mandates cellphone required.....up to 25% of personal usage should be non-taxable.

  • 12 Posted by jacook16 on Fri Jun 12, 2009 5:57PM EDT Report Abuse

    here's some more of those taxes Obama wasn't going to raise. I think anyone who voted for him should have all their taxes doubled.

  • 13 Posted by rlhoman on Fri Jun 12, 2009 5:57PM EDT Report Abuse

    I am in favor of anything that will reduce the loud mouthed, obnoxious cell phone users who conduct their business deals at the top of their lungs in airports, restaurants, or trains.

  • 14 Posted by vavoom007 on Fri Jun 12, 2009 5:58PM EDT Report Abuse

    If this is the "positive" change I voted for, I want to rescind my vote.

  • 15 Posted by garg_art2002 on Fri Jun 12, 2009 6:00PM EDT Report Abuse

    Hmmm.... What about use of land line phone to make personal call? And then use of office internet to send an email or two. Photocopy of driver's license at office that can easily be done at the neighborhood Staples or Kinkos copy center.

  • 16 Posted by valerie_41281 on Fri Jun 12, 2009 6:00PM EDT Report Abuse

    I have 2 cells, one personal & one company. I do use my company cell for personal calls, but they are only to the people with the same cell phone provider which makes those calls FREE....they don't use up any actual minutes on my plan. But I guess I don't have to worry about this b/c I can always produce my personal cell phone bill to get out of paying the tax. :) This is a stupid suggestion though!

  • 17 Posted by rciancia on Fri Jun 12, 2009 6:01PM EDT Report Abuse

    I Barack Obama will not raise taxes, but I will raise everything else. You all wanted it.. now you have it!

  • 18 Posted by aweaver65 on Fri Jun 12, 2009 6:01PM EDT Report Abuse

    The IRS and Obama will get your money sooner or later. I say a bolish the IRS completely and institute a flat or fair tax once and for all. How is it that the CEO's of the Big 3 auto makers, in charge of BILLIONS of dollars can get REAMED and RIPPED in public for flying their own jets to a meeting with Congress, and Obama's little daughter (10 - 12 years old) can fly in a ONE HUNDRED MILLION DOLLAR presidential helicopter AT OUR EXPENSE to visit her friends back home in Chicago weeks later without a peep???!!!! If you believe there is any balance or fairness left in the IRS or the government, you think they will be there to save you when the next Katrina hits, you are foolish.

  • 19 Posted by rwalsh1973 on Fri Jun 12, 2009 6:01PM EDT Report Abuse

    I guess if you a get personal call at work, (lets see, your child just got hit by a car) fringe benefit....hmm better pay the IRS....hmm or do we just start paying part of the employers buinsess phone bill? As a Nation, we pay more tax than any other developed Country...the difference here.....you get less!

  • 20 Posted by rciancia on Fri Jun 12, 2009 6:01PM EDT Report Abuse

    Thats one way to pay for the Airforce Photo OP, over the Statue of Liberty, or the little lunchtime pizza part Obama had that cost the taxpayers over $100,000.00

  • 21 Posted by glwarn on Fri Jun 12, 2009 6:02PM EDT Report Abuse

    I carry my own personal phone and use it for business. F--k the IRS! Go after the tax cheats in congress or re-tired members of America's Kings and Queens!

  • 22 Posted by kenmallory@sbcglobal.net on Fri Jun 12, 2009 6:02PM EDT Report Abuse

    The IRS is nothing more than the Gastapo. They are stealing from the American people and don't care. They will say in the end anything free is income. People we have got to get rid of these people in government that are looking for anything to get our money. Its time for me & my family to leave this country for good if this happens, what next the internet will cost us even though we pay for it already. If we could try, convict & exacute a few of these SOB's in a court of law maybe they would stop. Time to go.

  • 23 Posted by eriggs_psu on Fri Jun 12, 2009 6:02PM EDT Report Abuse

    jocowger ... to which federal employees are you refering to? Many people seem to think that federal employees are exempt from income taxes, and in some cases that may be true (overseas service, which is no different than an oversea contractor), but most federal employees pay their taxes as required by the law. That is, the same law that covers your sorry butt.

  • 24 Posted by azvoss on Fri Jun 12, 2009 6:02PM EDT Report Abuse

    Our family business provides cell phones and most of the family is on that plan. As long as we do not exceed our minutes or texts, we allow our employees to make their personal calls. Most of them are to other family members! How can you tax that? Weekends and nights are free anyway, so why not? Obama and the IRS need to leave this alone. If your employer is allowing you to make those calls, then it is their decision to make. Let it be.

  • 25 Posted by gl_rawlins on Fri Jun 12, 2009 6:02PM EDT Report Abuse

    Welcome to Hope and Change. By the way, the Change is any we have left in our pockets after Mr. Hope and Change is done with us

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