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Wednesday, June 17, 2009

Cell phone's and your taxes

WASHINGTON — Remember the last time you used a company cell phone for a quick personal call — or text or e-mail? Did you record the value of that call and pay taxes on it as income?

A widely ignored law from 1989 says you should have. But don’t worry, the IRS thinks it’s a stupid law, too.

The Obama administration asked Congress on Tuesday to repeal the tax on the personal use of company cell phones after sparking an outcry last week when it sought ideas for enforcing the law.

The law says that personal use of a company cell phone should be taxed like other fringe benefits, such as a company car. The cell phone tax, however, can be a pain for workers who increasingly use mobile devices for texting, e-mailing and browsing the Internet — sometimes for work, sometimes for personal use.

IRS Commissioner Doug Shulman called the tax burdensome, confusing and "poorly understood by taxpayers.” He acknowledged it was difficult to enforce consistently.

"The passage of time, advances in technology and the nature of communication in the modern workplace have rendered this law obsolete,” Shulman said in a statement.

Shulman said he and Treasury Secretary Timothy Geithner were asking Congress to repeal the tax, which has been widely criticized as outdated by the mobile industry and lawmakers.

"We just think that this law was put into effect in a bygone era,” said John Walls, vice president of public affairs for CTIA-The Wireless Association, a trade group.

"In 1989, cell phones were considered a luxury item that were actually referred to as car phones,” Walls said. "Now, we have unlimited calling on our cell phones. We have free nights and weekends. The company is not even paying for that. Why should I get taxed for that?”

The House passed a bill to repeal the tax last year, but it stalled in the Senate. This year, bipartisan bills have been introduced in both the House and Senate.



by the associated press

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