Commentary: Taxing employer-provided cell phones

The Internal Revenue Service's recently released Notice 2009-46, "Substantiating Business Use of Employer-Provided Cell Phones," concerns the taxation of employer-provided cell phones and includes proposals for documenting employees' business use of employer-provided cell phones....

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Bibliographic Details
Published inDaily record (Morristown, N.J. : 1971)
Main Author Green, William G
Format Newspaper Article
LanguageEnglish
Published Rochester, NY BridgeTower Media Holding Company 17.07.2009
Subjects
Cellular telephones
Employees
Employers
Taxation
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Summary:The Internal Revenue Service's recently released Notice 2009-46, "Substantiating Business Use of Employer-Provided Cell Phones," concerns the taxation of employer-provided cell phones and includes proposals for documenting employees' business use of employer-provided cell phones. "Listed property" includes cell phones. The value of the business use of an employee's employer-provided cell phone may be excluded from an employee's income when the employer pays for it, since it is classified as a working condition fringe benefit; however, the fair market value of any personal use of such a benefit may be included in the employee's taxable income. Although no formal guidance has been issued, the IRS has enforced the provisions of section 274(d)(4) in its examination of employers. That examination activity has resulted in large assessments against employers that failed to comply with the documentation rules. If an employer fails to comply with those rules, it is subject to the assessment of additional employment taxes, income taxes that should have been withheld, interest and potential penalties. Notice 2009-46, and a subsequent statement by IRS Commissioner Douglas Shulman, indicate a potential change in the IRS's approach on the issue, however.