CTIA Pushes for Repeal of Enterprise Cell Phone Tax

Wireless carrier association CTIA wants the IRS to drop the rule requiring employees using company-owned cell phones to account for and pay federal income taxes on personal calls made from company mobile phones.

CTIA, the major lobbying association of wireless carriers, urged the IRS Sept. 1 to repeal a law that taxes personal use of employer-provided cell phones, joining a growing movement in Congress to repeal the 20-year-old law. Even IRS Commissioner Doug Shulman has recommended that the law be done away with.
Originally passed in 1989, the law requires employees using company-owned cell phones to account for and pay federal income taxes on personal calls made from the company mobile phone.
"When cell phones were added to the listed property rule, mobile phone use was uncommon and cell phones were considered luxury items," the CTIA said in a statement accompanying a filing with the IRS. "Despite the near ubiquity of mobile devices today, employees are still required to maintain logs detailing their business use on a personal device."

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The IRS has acknowledged the difficultly of enforcing the tax provision and is seeking comments on revising the reporting rule. In June, Shulman said, "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."
Shulman added that Treasury Secretary Timothy Geithner should "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."
In its Sept. 1 filing with the IRS, CTIA agreed with Shulman, stating that instead of revising the rule for better clarity, the trade group was supporting legislation introduced in Congress to remove mobile devices from the listed property rule. CTIA also asked that the IRS consider suspending all audit activity on the taxation of the personal use of employer-provided cell phones until the matter is resolved.
"Today, rather than a luxury, cell phones are more like pencils and paper," the CTIA said in its filing. "Costs have come down drastically since the law added cell phones to the listed property rules in 1989, so that including them in a rule that requires increased business substantiation for automobiles and corporate aircraft now seems ludicrous."