Jim Puzzanghera in the LA Times reports that the IRS is going after major employers, including the University of California system, for back taxes for being unable to document the personal calls made or received by employees over employer-provided cell phones.
The Internal Revenue Service still considers cellphones to be a pricey fringe benefit and has started enforcing regulations beginning in 1989. That’s when Congress decided that mobile phones should be treated like company cars and other executive perks: Their personal use qualifies as extra compensation.
The law requires employees to keep detailed records of all calls made on their work-issue cellphones, indicating whether they were business or personal. If they don’t, the phone and wireless service are deemed a perk that must be listed as taxable income to the employee.
Most employers were unaware of the rules until the last few years, when the IRS began cracking down and requiring additional taxes to cover the value of the cellphone service provided to employees.
I haven’t heard of any law firms getting tagged for this, but will have to check it out. With all of those Blackberrys out there there must have been someone who hasn’t kept logs. And think of all of the personal e-mails that are received and sent using an employer-supplied Smart Phone. Or do the IRS rules cover only phone calls?
In the meantime it is sort of fun to watch Wall Street on one of the old movie channels, and remember that,k in 1987:
The Motorola DynaTAC 8000X that actor Michael Douglas carried as he strolled along the beach was roughly the size of a brick and cost $3,995 when introduced three years earlier. A call during peak times cost upward of 50 cents a minute.
And how much did you pay for your first cell phone?
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