IRS asks to drop work cellphone personal usage tax; Calls it obsolete

The IRS asked Congress to repeal a 20-year-old law designed to tax personal use on an employer provided cellphone as a fringe benefit.For the IRS, the move is an about face.

The IRS asked Congress to repeal a 20-year-old law designed to tax personal use on an employer provided cellphone as a fringe benefit.

For the IRS, the move is an about face. Earlier this month, the IRS aimed to make it easier to comply with the work cellphone tax.

After some hubbub, IRS Commissioner Doug Shulman acknowledged that the cellphone tax was obsolete in the modern workplace. Shulman's statement:

This month, the Internal Revenue Service asked for comments on ways to simplify compliance with rules related to employer-provided cellular telephones. The current law, which has been on the books for many years, is burdensome, poorly understood by taxpayers, and difficult for the IRS to administer consistently. Some have incorrectly implied that the IRS is "cracking down" on employee use of employer-provided cell phones. To the contrary, the IRS is attempting to simplify the rules and eliminate uncertainty for businesses and individuals.

Although some of the proposed changes would add clarity, the current law will inevitably leave widespread confusion among employees and businesses. Therefore, Secretary Geithner and I ask that Congress act to make clear that there will be no tax consequence to employers or employees for personal use of work-related devices such as cell phones provided by employers. The passage of time, advances in technology, and the nature of communication in the modern workplace have rendered this law obsolete.

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