IRS moves to collect taxes on your work-provided cellphone


Another potshot aimed at the working man, friends. The IRS is looking to collecting more taxes on your work-provided cellphone, something the wireless industry—think CTIA, Verizon Wireless, Sprint, etc.—will fight tooth and nail. The industry thinks that if companies and/or employees have to pay more for their phones, they may cancel the service altogether.

But let’s go into a little detail first, figure out what’s going on. The IRS, naturally, wants to collect more tax revenue. There’s a law on the books, from 1989, that says you’re supposed to pay income tax on any personal minutes you use on a work-provided cellphone. That is, if you work for Big Company, and Big Company gives you a BlackBerry to use during the day for your work but you also use said BlackBerry to call your wife to ask what type of cereal the kids want from the store—Cinnamon Toast Crunch, please—those minutes are, technically, taxable income.

Now, the idea that businesses and employees should keep a detailed log of the minutes they use, tallying work-related minutes versus personal-related minutes, is patently absurd; it’s entirely too much of an effort. But the IRS knows this, too.

So, if you cannot be expected to keep a log of your work versus personal minutes used, and thus how much taxable income to pay, what happens? The IRS could set a limit on untaxed personal minutes; use more minutes, and those minutes are taxed (but you’d someone have to keep track of minutes used). The IRS could also use statistics to figure out, on average, how many personal, taxable minutes are used on work-provided cellphones, then tax you from there. Or, simply, the IRS could “waive tax liability” if employees show they use their work-provided cellphones for personal use during business hours.

It’s all terribly confusing, yes.

In any event, should you find yourself in the 28% income tax bracket (which is more than Cristiano Ronaldo will pay in Spain now, mind you), and your company pays $1,500 per year on cellphone service, you could find yourself owing the tax man an additional $105 per year. Is that a huge deal? No, probably not, but it’s still pretty annoying, I’ll grant that.

And here’s where the wireless industry gets mad. Their assumption is that, if companies and employees now have to keep track of minutes, companies may decide it’s not even worth giving employees a cellphone. They may calculate that, the amount of resources needed to keep tabs on everyone’s minutes outweighs the benefits of giving employees cellphones in the first place. And then they’d cancel their cellphone contracts!

My guess is that this won’t be too popular with the working man, no sir.