Jun 12, 2009 9:00 pm US/Eastern
Oft-Ignored Law Could Tax Work Cell Phones
PHILADELPHIA (CBS 3) ―
If you have a cell phone your boss makes you carry and you use that phone to make personal calls, it could cost you the next time you pay your taxes.
In response, Lindy Marlin of Marlton, N.J. told CBS3, "I don't think it's right. If they have the right to make personal calls from the company, then the government shouldn't tax it."
While the idea may not be popular with some taxpayers, it's actually a law that's been in the books since 1989.
"If you use company issued cell phones for personal calls, that personal use portion is money your company is paying on your behalf, but you're not picking up as income. So the IRS says, wait a minute, you need to pick this personal portion up as income," explained Anna Sachs, a CPA with Savran Benson LLP.
As a member of the Pennsylvania Institute of CPAs, Sachs added the 1989 law has largely been ignored by employers and employees because it's difficult to keep accurate logs of personal and business calls.
However in this weak economy, the agency is looking to generate revenue any way they can, and this is one of those ways.
Currently, the IRS is proposing to tax workers for 25 percent of the phone bill. You could be exempt if you can prove you did not use your company-issued cell phone for personal use during work hours.
"There's a little bit of a carry over between personal and business calls. I combine many calls so it's kind of hard to separate that out," Marc Zingarini of Old City said.
The IRS agrees, so the agency is accepting comments from the public from now until September 4, 2009 to fine-tune the existing tax code.
Sachs warned, "This isn't really looking for people to comment on whether they like the idea, but more comment on whether you have a better idea as to how to simplify the compliance."
You may email the agency via the following email address:
Notice.comments@irscounsel.treas.gov.
You are asked to include "Notice 2009-46" in the subject line.
Comments may also be submitted in writing and should include a reference to Notice 2009-46.
Submissions should be sent to:
Internal Revenue Service
Attn: CC:PA:LPD:PR
(Notice 2009-46), Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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