Last year, the Internal Revenue Service issued Notice 2009-45, with a call for comments regarding its proposals to simplify documentation rules for tax employee use of employer-paid cell phones.

 

The paper “What You Need to Know & Three Actions to Take Taxes on Personal Use of Employer-Paid Mobile Devices” outlines the Telecom Expense Management Industry Association’s position on actions that its members and enterprises should take and why the law should be abolished.

 

Citing the reasons for abolishing it, TEMIA (News - Alert) in the paper said that personal use of mobile services should be classified as a “de minimis fringe” benefit similar to personal use of: fixed landline desktop phones, use of office printers, fax machines and Internet use. 

The association said that the tax is inconsistent with untaxed reimbursements for home office phone and Internet service.

 

Moreover, mobile devices already have unreasonably high taxes with local, city, state, and federal taxes that add from 10 percent to 40 percent to monthly service fees.

 

The association noted that separating business and personal use of calls is outdated since work and private life is now co-mingled.

 

“The federal government has not defined how to classify personal calls and business calls. Many calls are made because the employee is away from home or delayed at work. Certain jobs require employees to be on call all the time. It seems reasonable that employees should be able to use mobile services for personal calls without being taxed as a fringe benefit,” the paper said.

 

The policy which states “the employer’s cost to provide the cell phone is not determinative of the fair market value of the benefit received by the employee” is unreasonable.

 

TEMIA in the paper claims that increases in tax revenue will be outweighed by compliance costs, creating a net loss in tax revenue and besides this the tax obstructs economic growth, compliance, and security of corporate networks.

 

The organization recommends three actions that its members, customers and the general public should take regarding taxing employee use of employer paid devices.

First of all, TEMIA said that they should support legislation to abolish this tax; submit comments to the IRS and Treasury Department, which support the establishment of a “minimal personal use allowance of phone minutes” that would not be taxed and establish a corporate liable plan, control expenses and manage security.