IRS, Treasury want cell phone tax repealed
WASHINGTON — Company-issued cell phones might feel like a tether to the office even in workers’ off-hours. The phones also are a taxable fringe benefit, and the Obama administration wants to change that.
The administration has asked Congress to repeal the widely ignored tax on the personal use of company cell phones, saying it is outdated and difficult to enforce. The request Tuesday came a week after the Internal Revenue Service caused an uproar when it sought ideas for how better to enforce the law.
A 1989 law says workers are supposed to count the value of personal calls on a company cell phone as taxable income. The cell phone tax, however, can be a pain for workers who increasingly use mobile devices for texting, e-mailing and browsing the Internet — sometimes for work, sometimes for personal use.
“There’s been very uneven enforcement, said Marianna Dyson, a former IRS lawyer who now is an employment tax and fringe benefits expert with Miller & Chevalier in Washington.
“I think most employers are reasonable. But do I see employers requiring employees to document every single business call?” Dyson said. “It’s administratively burdensome.”
IRS Commissioner Doug Shulman said the tax is “poorly understood by taxpayers,” and acknowledged it was difficult to enforce consistently.
“The passage of time, advances in technology and the nature of communication in the modern workplace have rendered this law obsolete,” Shulman said in a statement.
Shulman said he and Treasury Secretary Timothy Geithner were asking Congress to repeal the tax. The House passed a bill to repeal the tax last year, but it stalled in the Senate. This year, bipartisan bills have been introduced in both chambers.
“We need to modernize the laws to reflect the reality that cell phones, BlackBerrys and text messaging are an everyday extension of the workplace and are here to stay,” said Sen. John Kerry, D-Mass. “Cell phones are no longer executive perks or luxury items, and our tax code cannot treat them that way anymore.”
Just last week, the IRS issued a request for comments on ways to improve compliance with the law. One option suggested by the IRS would assume that personal use accounts for a quarter of the phone’s overall use. Another would require workers to document their personal use of company cell phones.
Shulman denied that the IRS had been trying to “crack down” on workers who don’t pay the tax. Instead, he said, the IRS was “attempting to simplify the rules and eliminate uncertainty for businesses and individuals.”
Some employers have faced big tax bills after failing to comply with the law.
In 2008, the IRS audited two University of California branches, in Los Angeles and San Diego. As part of a settlement, UCLA paid a tax assessment of $238,474 and UCSD paid $186,471.
Industry representatives said they were pleased that the IRS changed its position.
“We just think that this law was put into effect in a bygone era,” said John Walls, vice president of public affairs for CTIA-The Wireless Association, a trade group.
“In 1989, cell phones were considered a luxury item that were actually referred to as car phones,” Walls said. “Now, we have unlimited calling on our cell phones. We have free nights and weekends. The company is not even paying for that. Why should I get taxed for that?”
Related News
Federal safety board says its employees can't text or talk on cell phones while drivingSeptember 8th, 2009 NTSB restricts employee cell-phone useWASHINGTON — The federal safety agency that investigates transportation accidents is banning texting and talking on cell phones by its employees while driving on government business. National Transportation Safety Board Chairman Deborah Hersman said Tuesday she's adopting the policy because she wants her agency to follow the same safety practices it recommends for others.
Ohio transit agency says Cleveland bus driver was on cell at time of fatal accident in MarchAugust 7th, 2009 Agency: Ohio bus driver on phone when man killedCLEVELAND — An Ohio transit agency says a Cleveland bus driver was on her cell phone when her bus struck and killed a pedestrian in March. The disclosure came as 49-year-old Angela Williams of Cleveland was indicted Thursday on a felony charge of aggravated vehicular homicide.
Pelican at Idaho's Tautphaus Park Zoo swallows, regurgitates cell phoneAugust 5th, 2009 Pelican at Idaho zoo swallows cell phoneIDAHO FALLS, Idaho — Can you hear me now? A pelican at the Tautphaus Park Zoo took something other than food in his bill when a cell phone that had been dropped in a pool at the exhibit made its way down the hatch. The flock in the exhibit were playing with the phone Monday until one of the birds swallowed it.
Zoo pelican swallows, regurgitates cell phoneAugust 5th, 2009 Zoo pelican swallows cell phoneIDAHO FALLS, Idaho — Can you hear me now?
A pelican at the Tautphaus Park Zoo took something other than food in his bill when a cell phone that had been dropped in a pool at the exhibit made its way down the hatch. The flock in the exhibit were playing with the phone Monday until one of the birds swallowed it.
How the AP poll on Obama was conductedJuly 21st, 2009 How the Obama poll was conductedThe Associated Press-GfK Poll on President Barack Obama, politics and the economy was conducted by GfK Roper Public Affairs & Media from July 16-20. It is based on landline and cell phone telephone interviews with a nationally representative random sample of 1,006 adults.
Maryland, Texas officials to push for legislation allowing states to jam illegal cell phonesJuly 15th, 2009 State officials push for prison cell phone jammingWASHINGTON — Texas and Maryland officials are urging Congress to approve legislation allowing states to jam illegal cell phones used by prisoners. Texas State Sen.
State prison officials seek FCC permission to jam inmates' contraband cell phone callsJuly 13th, 2009 States ask FCC's OK to jam prison cell phonesCOLUMBIA, S.C. — A Southern prison official says correctional leaders from more than two dozen states have signed a petition asking permission to jam cell phone signals inside state penitentiaries and thwart inmates' forbidden phone calls.
Cell phone towers may help predict next big floodJuly 7th, 2009 WASHINGTON - Cell phone towers could be a novel and reliable way to help predict the intensity of the next big flood, according to a new study. A model developed by Tel Aviv University (TAU) researchers, which analyses cell phone signals, has added a critical component to weather forecasting.
Guards nab pigeon smuggling cell phone into Brazilian prisonJuly 3rd, 2009 Brazil prison guards nab pigeon with cell phoneSAO PAULO — Prison guards foiled a new attempt to smuggle a cell phone into a Brazilian prison by carrier pigeon — this one wearing a tiny backpack — and said Friday that the practice is becoming almost commonplace. An exhausted pigeon wearing a small makeshift backpack was intercepted just outside walls at the Danilo Pinheiro prison near the city of Sorocaba, said a spokesman for the Sao Paulo State Prison Affairs department.
Police officer's gifts of a cell phone and handgun save father's life in knife attackJune 18th, 2009 Gun, cell phone credited with saving clerk's lifeROSWELL, Ga. — A Georgia liquor store clerk credits his police officer son with giving him two life-saving gifts — a cell phone and a gun.
Ga. liquor store clerk shoots would-be robber after his cell phone defects knifeJune 16th, 2009 Clerk shoots man after cell phone deflects knifeROSWELL, Ga. — A liquor store clerk's cell phone may have saved his life.
Boston agency suspends 1st driver for carrying cell phone after post-crash banJune 9th, 2009 Boston agency suspends driver over cell phoneBOSTON — The Boston area's transportation agency has suspended its first driver for violating a new cell phone ban. Spokesman Joe Pesaturo (pes-AH'-tuhr-oh) says a 35-year-old driver was suspended last week.
Boston transit agency suspends first driver for carrying cell phone after post-crash banJune 9th, 2009 Boston motorman suspended for having cell phoneBOSTON — The Boston area's transportation agency has suspended its first driver for violating a new cell phone ban. Spokesman Joe Pesaturo (pes-AH'-tuhr-oh) says a 35-year-old driver was suspended last week.
Method for AP-GfK poll on Obama, politics, economyApril 23rd, 2009 Method for AP-GfK poll on Obama, politics, economyThe Associated Press-GfK Poll on President Barack Obama, politics and the economy was conducted by GfK Roper Public Affairs & Media from April 16-20. It is based on landline and cell phone telephone interviews with a nationally representative random sample of 1,000 adults.
Never allow kids to cross roads while using cell phonesJanuary 26th, 2009 WASHINGTON - Children, who tend to cross streets talking on cell phones, stand a higher risk of injury or even death, according to the latest study. 'Cell phones clearly offer convenience and safeguards to families, but they also may pose risks,' said University of Alabama-Birmingham (UAB) researchers, 'particularly when children attempt to multi-task while conversing on the cell phone....'
Researchers used a virtual reality software programme and three screens to display an actual Birmingham area crosswalk with simulated vehicles of different sizes travelling on the virtual street.
Loading ...