IRS Could Soon Tax Your Company Wireless Device

by William Teach | June 12, 2009 9:53 am

Yet another case where Obama’s promise not to raise taxes on people making less then $250k, or whatever the level that Joe Biden gaffe’d on is, could soon be broken? Sort of (more on that later)

The use of company-issued mobile phones[1] could trigger new federal income taxes on millions of Americans as a “fringe benefit.”

The Internal Revenue Service proposed employers assign 25% of an employee’s annual phone expenses as a taxable benefit. Under that scenario, a worker in the 28% tax bracket, whose wireless device costs the company $1,500 a year, could see $105 in additional federal income tax.

Of course, the Usual Obamazombies will say “hey, it’s just $105, no big deal.” But, pennies add up to dollars, and, what with all the other rising costs and taxes, here already and coming, pretty soon the middle and lower classes will have little money to spend. Personally, my company provided service adds up to at least $665 a month, probably more with all sorts of little other stuff. I can see dropping some of the extra lines in a heartbeat.

The IRS, in a notice issued this week, said employees could avoid tax liability if they showed proof they used personal cellphones for nonbusiness calls during work hours. The agency also could decide on a set number of phone minutes as “minimal personal use” that would be untaxed.

Good luck with keeping up with those records.

In a third option proposed by the IRS, employers could use a statistical sampling to determine what portion of workers’ cellphone use is personal and how much is work-related. Workers would be taxed on the difference.

Just another way to increase bloated beauracracies.

Under a 1989 law, workers who use company-provided mobile phones for personal calls are supposed to count the value of those calls as income and pay federal income taxes accordingly.

But businesses and workers have long ignored the requirement, prompting the IRS to consider steps the agency said would make it easier for businesses and workers to comply.

So, the law isn’t really Obama’s fault, the IRS is just considering full enforcement during a time of deep recession. Most people tend to think of company provided wireless devices as part of their employment, like a coffee pot at the office, a corner office, a water cooler, a desk. Just a standard perk.

It isn’t just private companies who will be affected, but government, as well. People who work directly in agencies, people who work for schools, all will be nailed. And, expect many companies to cut back on their wireless usage if the IRS rules in September to go after these taxes, further putting yet another hit on the economy.

  1. use of company-issued mobile phones:

Source URL: