WASHINGTON -- The IRS is weighing a proposal to deem one-quarter of employees' use of work cell phones as personal use and therefore subject to tax as a fringe benefit.
The proposal is one of several options the IRS put forward this week on the tax treatment of employer-provided cell phones. Current law already requires that the value of those cell phone services be included in a worker's gross income, unless the employee keeps detailed records showing that the cell phone is used for work only -- an idea cell phone trade groups are objecting to.
"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.
The IRS, in a Monday notice, proposed options intended to simplify the requirement for employers. One proposal is a "safe harbor" that would deem 75 percent of work cell phone usage to be for work, and 25 percent to be personal. Under that scenario, employer deductions would be limited accordingly and employees would be taxed on the value of the personal use.