IRS to Congress: Repeal the cell phone tax, please

Wait a minute—didn't the IRS just propose a series new ways to collect taxes for the personal use of company cell phones? Well, yeah, but now the IRS and the Treasure Department want Congress to repeal the 20-year-old law that sparked the whole controversy. Confused yet?

The AP is reporting that IRS Commissioner Doug Shulman and Treasury Secretary Timothy Geithner are asking Congress to strike down a 1989 law that counts personal calls made on company cell phones as a "fringe"—and therefore taxable—benefit of your job.

Sound like an abrupt about-face on the IRS's part? It should.

Just last week, the IRS sent out some rather draconian proposals for enforcing the long-ignored law, including an across-the-board tax on 25 percent of your company cell phone expenses. (Exemptions would be allowed if you could prove that you didn't make any personal calls on your company cell.) Naturally, those proposals sparked a firestorm of protest.

But now, the IRS's Shulman admits that the 1989 law—written before the age of ubiquitous handsets, unlimited nights and weekends, and the like—is seriously outdated. "The passage of time, advances in technology, and the nature of communication in the modern workplace have rendered this law obsolete," Shulman said (according to the AP).

OK, so if the head of the IRS agrees that the old 1989 cell phone law is obsolete, what was with last week's crackdown proposals?

Well, as the L.A. Times notes, even if the IRS thinks that decades-old legislation is bogus, it's still—for the IRS, anyway—a law that needs enforcing. (Indeed, the Wall Street Journal reports that the IRS is still taking comments on its proposals.)

Here's an analogy for nerds like me: Remember that old "Star Trek" episode with the giant, cone-shaped "doomsday machine," programmed by a long-dead civilization to cruise around the galaxy and casually gobble up planets? Kinda the same thing here (minus all the death and destruction).

Of course, the issue won't be over until Congress does, in fact, take action—and that's never a sure thing.

A bill to strike down the tax passed in the House last year but got nowhere in the Senate, according to the AP, although new bills in both houses are already circulating on Capitol Hill.

Let's hope common sense prevails.

Related:
IRS, Treasury want cell phone tax repealed [Associated Press]