IRS wants to tax personal usage of company cell phones

Has your company issued you a BlackBerry or other cell phone for work purposes? If so, chances are you also use it as your personal device. Not that there’s anything wrong with that, as long as the employer knows. Many employers allow their workers to double up on the cell phone usage, so long as it doesn’t get out of hand. Unfortunately, that practice will be restricted in the future if the IRS has anything to say about it. The big bad tax agency wants to tax personal usage of company cell phones, just as it would tax your personal cell phone line. This actually stems back to a 1989 rule, but has yet to be strictly enforced. The IRS would like to boost tax income by finally putting the screws to individuals and businesses on this front. How will the IRS go about enforcing this on a case-by-case basis? If they have their way, they won’t. The main proposal is to impose a flat 25 percent personal usage rate and tax on that. From the mocoNews article: “or a worker in the 28 percent bracket, an annual phone bill of $1500 footed by a company, could add another $105 in federal tax.” No, that’s not a bank-breaking number, but it’s surely an additional burden. The alternative is for companies to run a statistical sampling of how their employees use calls. Since that would take time and money, the 25 percent scale would probably be the preferred method. The only way to escape this tax, it seems, would be to prove that you have an additional cellular line strictly for personal use. That obviously wouldn’t save money in the long run, since a personal cell phone for a year would cost well more than the estimated $105 from the 25 percent scheme. It’s a shame, really, that this would affect all corporate cell phone users. After all, some companies use their devices to maintain contact with employees at all hours. Sometimes a worker only uses the phone to make quick calls home to check in. Do they really deserve to be taxed on 25 percent of their usage? The IRS continues to defend the proposal, focusing on corporate compliance rather than the individual usage. Something tells me this will not be going away anytime soon.

About the Author

Joe Pawlikowski is the Senior Editor at MobileMoo.com and has been covering the mobile industry full time since 2007. When he's not writing about the tech scene, he can be found discussing his personal love - baseball (and more specifically the New York Yankees) as well as writing on his personal blog.