16 Responses to “Feds take aim at popular fringe benefit”

1. KW Says:
   June 18th, 2009 at 3:25 pm

   Does any emloyer actual put cell phones on employee’s w-2 as a taxable fringe benefit? My company has issued cell phones to almost all employees, but we do not list it as a fringe benefit. I wouldn’t know how to even account for it.

2. Martha Says:
   June 19th, 2009 at 7:17 am

   Most cell phone plans have a pool of minutes the company has to pay for whether the minutes are used or not. Therefore, it doesn’t make sense to call this a fringe benefit because it is not costing the company any more money unless someone abuses the “casual” use and exceeds the minutes making the company pay more. I would call this a “deminimus” fringe, such as casual photocopies, etc., and it should not be counted as taxable, If we had to count this as a “taxable” fringe it would be very difficult, if not impossible to account for each individual’s usage. I worked for a company in the past that did this and asked the employees to reimburse the company for their personal minutes and it was very difficult, not to mention time consuming to do this.

3. CB Says:
   June 22nd, 2009 at 9:04 am

   Tax emails and cell phones? Wow, the IRS is getting really cheap. We are in desperate times, next they will tax the battery use on the phone, the default ring tone, and the energy used to display an incoming phone number. They should go ahead and tax the hardware as well and make employees pick up the tax for when a phone is shipped to them and if there is excess tape on the box than the IRS should tax that as well. Oh I almost forgot, I guess if a person takes a picture of something with their phone, the amount of seconds it takes to take the picture should be taxed and to print the picture that should be taxed as well. Give me a break.

4. Stephany Sloneker Says:
   June 22nd, 2009 at 1:45 pm

   I personally do not have a work supplied cell phone but can see both sides of this issue. On one hand, for the employee that must be (or is required to be) available pretty much 24/7, then this should not be considered a fringe benefit. However, what about the employee that just uses it during the regular work day but also has the option of using it 24/7 for personal use. I know of a few people that no longer have a landline phone because they have a company paid cell phone. I lean toward Martha’s comment on calling this a “deminimus” fringe. Being connected to work 24/7 is not worth a free cell phone to me.

5. FEC Says:
   June 25th, 2009 at 1:41 pm

   I also agree with calling this a “deminimus” fringe benefit. Employers provide company cell phones for the benefit of the company to be able to get in touch with employees who are out in the field. Forcing employers to track individual calls places a record-keeping burden on the company which will reduce the net income for the company and subsequently lower taxes. So, on the one hand, they take additional tax from the individual, but less from the business. I am wondering how the cost for the IRS to enforce this kind of record keeping would compare to the additional revenue, if any, afforded to the government by this requirement. And how would they differentiate plans where employers instead reimburse employees that need to use personal communication devices in the field rather than the company suppying the phones. I think it’s high time that we insist the government stop wasting our tax dollars splitting hairs.

6. LND Says:
   June 25th, 2009 at 2:16 pm

   This is just another “Taxation without Justification” scheme to have all employers save the world and the economical woes the government has created. This is borderline insanity. As we all use this website to communicate business protocol and try to streamline our companies by learning from each other to boost production & profit, we will now be penalized for doing so. As I press the “SUBMIT COMMENT” for this stories response – I can’t help wondering how much it just cost me/us. This is totally ludicrous. Write your congressman every day and tell them how you feel about them wasting our money and cutting our throats to stay alive in these trying times BUT for God’s sake don’t use email to do it. $$$$$$

7. ME Says:
   June 25th, 2009 at 2:25 pm

   I agree with most of the statements above, specially, in regards to the time consumption it takes to enforce/comply with this, and how it should be a “deminimus” fringe benefit for most employers. However, I used to work in a place where company issued cell phones were used by employees for personal use as well, and for some employees this was the only phone they owned, so the personal use was, in some cases, as much or more than the business use. Yes, because of the plan it didn’t cost the employer any more. So I believe that in cases like these, this definitely be taxed as a fringe benefit.
   In contrast, I now work for a company that has very strict policies for the personal use of equipment by employees, so in this case the “deminimus” fringe would definitely be very fair and appropriate. However, since this is a not-for-profit organization, we are preparing to add the company used cell phones to the employees W-2s. Thus, every month, a copy of the statement is provided to the employee; who then figures out his/her personal use portion.
   The plan is to include this amount in their W-2 on a regular basis, since fringe benefits should be reported timely.
   Right now, and in view of the IRS’ position on this matter, we’ll be waiting for their final decision before we include anything to these employees W-2s.

8. JP Prichard Says:
   June 25th, 2009 at 2:47 pm

   Tremendous waste of taxpayer dollars. But if you want to be stupid, give it to them as a taxable benefit – but we should be able to offset it by deducting their wages for personal time spent on the phone during work hours.

   Whatever genius thought this up should be slapped.

9. FEC Says:
   June 25th, 2009 at 3:08 pm

   Comments on the IRS suggestions:

   1. Allowing employers to classify 75% of work cellphone use as work-related while paying taxes on the remaining 25 percent%. – This is ARBITRARY…why not just ask congress to raise tax rates?

   2. Requiring employees to provide proof that they have a personal cellphone to use during work hours, and not taxing the work-issued cell phone. – Are we also to track personal calls placed on office land-lines? I choose not to own a personal cell phone. Am I to be penalized for that? I also do not have a company-provided cell phone, but I do make local personal calls from the office.

   3. Letting employers use an IRS-generated statistical sampling to determine the average workers’ personal use of cellphones, and paying taxes on the average. – NO, any statistical sampling should be conducted by an independent “third party”, not the agency imposing the taxes. How would this service be paid for and would the increased revenues cover that cost?

10. Paula Says:
    June 25th, 2009 at 4:01 pm

    According to IRS Commissioner Doug Shulman: “This month, the IRS asked for comments on ways to simplify compliance with rules related to employer-provided cellular telephones. The current law, which has been on the books for may years, is burdensome, poorly understood by taxpayers, and difficult for the IRS to administer consistently. Some have incorrectly implied that the IRS is “cracking down” on employee use of employer-provided cell phones. To the contraryc the IRS is attempting to simplify the rules and eliminate uncertainty for businesses and individuals.”
    “Although some ot the proposed changes would add clarity, the current law will inevitable leave widespread confusion among employees and businesses. Therefore, Secretary Geithner and I ask that Congress act to make clear that there will be no tax consequence to employers or employees for personal use of work-related devices such as cell phones provided by employers. The passage of time, advances in technology, and the nature of communication in the modern workplace have rendered this law obsolete.” Last Reviewed or Updated: June 16, 2009
    Site: http://www.irs.gov/newsroom/article/0,id=2097595,00.hrml

11. DJ Says:
    June 26th, 2009 at 9:04 am

    Here is a different solution: Our elected people in Congress are provided numerous fringe benefits that cost significant amounts. These are buried in the expense allowance that each Congressperson can spend. The expense allowance covers many legitimate expenses (such as office salaries) but is easily abused. The expense allowance permits each congressperson to budget his/her own expenses in a way that he/she sees fit.

    Suggested solution: Make the rules for members of Congress exactly the same as the rules for the general public. If they pay for cell phones from that allowance, then they should be taxed on the same basis that we are as taxpayers. If they pay for something that would not be taxable to someone in business out of their expense allowance, then it should be fully taxable to them.

    I am the owner of a CPA firm and we provide cell phones to some individuals. I’ll gladly comply with whatever silly, arbitrary, fair or unfair, burdensome (or impossible) recordkeeping requirement that the IRS or Congress enacts IF AND ONLY IF the same rules apply to all elected officials.

    A comment from a CPA: that “expense allowance” would be considered a “non-accountable” plan according to IRS rules – which means that the expenses would be miscellaneous itemized deductions. The deduction for such expenses are never fully deductible. Will our representatives in Congress abide by the same rules by paying taxes on the amount exactly the same way that “ordinary taxpayers” have to pay?

12. Chris Nordhoff Says:
    June 26th, 2009 at 10:29 am

    One solution is to take the benefit portion out of the equation. Define the company-provided cell-phone as useable for both personal and business purposes and take a payroll deduction from the employees check for a nominal amount to cover the personal part. This is tyipcally much less expensive for the employee than having a separate personal cell phone and is generally easier for them to manage (i.e. 1 number for everyone). Under this mechanism, it’s not a benefit – the employee is paying for the personal use – provided the price the employee is charged reasonably approximates the 25% of cost discussed above.

13. RWA Says:
    June 29th, 2009 at 9:43 am

    I run my company’s cell phone plan. We have a group plan and you can still see all the calls and identify the usage. However, we do have employees on the plan where it is almost entirely personal calls and it is more of a benefit to them, and to others that it’s strictly business. I agree to some that this is a fringe benefit. If my company were to pay for my cell phone, it would totally be a fringe benefit. We can actually go through the bill and identify the calls and figure out what’s personal and what’s business, but we do have some heavy users that make that very time consuming. I would propose, however, a better plan would be to just reimburse employees for their personal plans and reimburse for business usage. I would set caps at what we would pay for them to be on our group plan but would reimburse them more if they showed that the business usage made them go over. It also puts the costs on the employee first, meaning the money for abuse and such has to come from them first and you’re not stuck trying to collect it from them as you would be with them on a group plan. One phone is also much simpler to keep track of and be responsible for. I have seen quite a few lost chargers!

14. RWA Says:
    June 29th, 2009 at 9:44 am

    Oh, and it would make it a lot easier to just reimburse for the business usage and have the employee do their own paperwork for reimbursement.

15. LC Says:
    June 30th, 2009 at 8:20 am

    What about the company that reimburses an employee a portion (or all) of the costs of a personal cell phone that is also used for business?

16. Gail Says:
    July 2nd, 2009 at 5:50 pm

    I say to the Feds — let businesses alone so they can actually thrive and succeed. Instead of figuring every minute way to tax them out of existence.

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