Bill Would Allow Tax-Free PC Benefits

May 9, 2000 ( - A bi-partisan bill introduced Tuesday in the House of Representatives would make an employer's gift of a free computer or cheap Internet access tax free.

Representatives Jerry Weller (R-Ill.) and John Lewis (D-Ga.) sponsored the proposal after tax experts said the Internal Revenue Service would probably tax the free computers being offered to an estimated 600,000 workers at Ford, American Airlines, Delta Air Lines and Intel.

Since the free-PC benefit is brand-new, the IRS hasn’t said whether it counts as income subject to tax. But Weller told a Washington news conference that he has spoken to many employers who are delaying similar programs on the advice of tax lawyers that it would be a taxable benefit.

“Our goal is to encourage more employers to step forward,” Weller said.

The bill would make a computer, software and peripheral equipment such as a printer or monitor worth up to $1,260 provided by a company to each employee, tax-free. Internet access fees would also be tax-free. These fees would not count toward the $1,260 total.

To qualify, a company would have to offer the computers to each employee working in the United States. An employee could receive only one computer every three years.

The bill would not change tax laws governing the impact on the employers. Some apparently plan to deduct the costs of the computers as a business expense.