IRS wants to tax employee "Cell Phone" benefit.

[AladainAF]

TaxProf Blog: IRS Not Backing Down From Push to Tax Employee Cell Phone Use

This is pretty annoying to me. With the complexity that businesses can use cell phone plans, I don't see how one can be taxed, without causing a massive administration headache sorting out phone records to each phone, and determining "your level of benefit" from this.

[Tortfeasor]

I also am irked that the IRS is inefficient and insists on multiple levels of bureaucracy to sqeeze out more revenue from taxpayers.

[GrobbeeTrull2.0]

So don't use the company phone for personal communication. Then you're fine.

[rangoth]

Originally Posted by GrobbeeTrull2.0

So don't use the company phone for personal communication. Then you're fine.

Agree with this...however carrying two cell phones suck ass. The way my company does it now is that you pay a % of the bill based on the % of the calls that were personal. For me it works out to like 10$ a month so it's fucking win.

I carried two cell phones for awhile, that's just lame.

[FulorianC]

Originally Posted by GrobbeeTrull2.0

So don't use the company phone for personal communication. Then you're fine.

So don't use loan money for personal schooling. Then you're fine.

[Phelps McManus]

Originally Posted by AladainAF

This is pretty annoying to me. With the complexity that businesses can use cell phone plans, I don't see how one can be taxed, without causing a massive administration headache sorting out phone records to each phone, and determining "your level of benefit" from this.

Right, that is why they are "simplifying" this 1989 law so that they just tax you on 25% of the value of the cell phone plan. The original system of taxing only minutes that were flagged as "personal use" was so cumbersome that companies just didn't (couldn't?) do it and weren't expected to. Now they just assume 25% of the plan is for personal use unless you, the employee, can prove otherwise.

[AladainAF]

And thats the problem. How would I prove otherwise? In my company (A fortune 500 software company) we do not receive our cell phone bills, we pull from a pool of minutes, and are told that we're welcome to use the cell for personal calls within reason.

I'd imagine that my company isn't the only one that does this. Most companies have enterprise plans that deal with pooled minutes from one plan based upon a master phone number. It would be a large administrative nightmare for the company and productivity loss by the employee to have to start sending cell phone bills out to people, and have the individuals itemize each one.

Plus, if I have to "prove" that I'm not making personal calls on my phone, how is the IRS going to "prove" that I am?

[Snugglebear]

Wait, what? I just heard on the radio that they were getting rid of the cell phone benefits thing. Obama was going to get rid of it. Nobody ever kept records of that bullshit anyway, I thought it was too confusing.

[Sunder]

Originally Posted by AladainAF

Plus, if I have to "prove" that I'm not making personal calls on my phone, how is the IRS going to "prove" that I am?

If the IRS gets their way, they will create a "legal presumption" that 25% of the company cell phone use is for personal use. That means they don't have to prove jack shit if they actually get the presumption into law.

Edit: and this is bullshit by the IRS. Greedy fucking bastards.

[Cad]

Oh noes my taxes might go up by $200.

This is in fact pretty stupid though, why not just raise the income tax brackets x% to generate the required revenue? I'd even argue that this is a fairly regressive tax because a shitload of relatively low-paid employees carry company phones as well.

[ToeMissile]

Originally Posted by FulorianC

So don't use loan money for personal schooling. Then you're fine.

I give you analogy attempt a C-

[AladainAF]

Cad, its not about the tax amount going up. Its the general principal. $200 here, $200 there. All for stupid shit. As was mentioned in the link, whats next? Are we going to start taxing google employees because they get free food (Which IMO amounts to more than what this cell phone deal is going to do).

Its the principal of the matter, not the monetary impact of it.

[Elerion]

Here in Norway you get a flat sum added to your gross income for the benefit of having a work cell phone.

As 99% of people use the work cell phone for personal use, you are saving money by having one. It makes sense that it should be taxed as a fringe benefit. If not, company/worker combinations that did not use work cell phone plans for whatever reason would pay more tax overall than those who did. An absence of tax would be an indirect subsidy program for work cell phones.

The logical solution is to assign either a flat % of costs, or just a flat cost to the worker's gross income. If you're bitching about overall tax burden increasing, I guess they could lower general income tax level by 0.01% to be fair, but the idea of taxing company cell phones in general is sound.

[Phelps McManus]

Originally Posted by Elerion

If you're bitching about overall tax burden increasing, I guess they could lower general income tax level by 0.01% to be fair, but the idea of taxing company cell phones in general is sound.

Yes, lowering the general income tax level by 0.01% on my $2mil/yr salary would offset my $200 tax increase from having a cell phone. Even a more practical example of $70/mo plan * 12 months * 25% personal use * 28% tax bracket = ~$60, so my $600k/yr salary at 0.01%.

But the point is that they aren't going to offset the burden. So many political agendas from "creating or saving" jobs (hiring more IRS agents) to carbon cap and trade to a sugary drink tax are all tainted by the desire to increase the tax burden, and the size of the government, all under the guise of "not raising taxes on the middle class".

Sometimes I wish we didn't have an income withholding system, and people got every penny they earned every week. Have your employer throw in their contributions (6.2% of gross compensation in FICA), too. Then, on April 15th you actually write the check for the taxes you pay.

[GrobbeeTrull2.0]

Originally Posted by FulorianC

So don't use loan money for personal schooling. Then you're fine.

Wat? Student Loans are made for personal schooling? K, cool, glad we cleared that up.

Cad, its not about the tax amount going up. Its the general principal. $200 here, $200 there. All for stupid shit. As was mentioned in the link, whats next? Are we going to start taxing google employees because they get free food (Which IMO amounts to more than what this cell phone deal is going to do).

Its the principal of the matter, not the monetary impact of it.

Actually, the principle of the matter is that you're using a company phone for personal use, and thus, it is a fringe benefit, as you do not personally pay to have access to that phone. The company allows you to take personal calls on it. Other benefits are taxed (company car, etc) so why not this?

Oh you mean, you're angry because it affects you in a minuscule way and wanted to rage against the government?? Alright, fair enough.