IRS Says Cell Phone Law Obsolete

June 16, 2009 ( - In a reversal of course, the Internal Revenue Service says it will suggest that there be no tax consequence for employers or employees for personal use of work-related cell phones.

In a statement, IRS Commissioner Doug Shulman said: “Although some of the proposed changes would add clarity, the current law will inevitably leave widespread confusion among employees and businesses. Therefore, (Treasury) Secretary (Timothy) 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.”

Earlier this month, the service proposed a new rule to tax a quarter of employees’ use of employer-provided cell phones as a fringe benefit, and asked for comments on its proposal (see IRS Proposes Safe Harbor Rule for Taxing Work Cell Phone Use). 

While some speculated that the IRS was “cracking down” on employee use of employer-provided cell phones , the tax agency asserted it was actually trying to save employers money by revamping the way employers and workers account to the IRS for the use of an employer-provided cell phone (see The IRS: We want to Save Employers $$ on Cell Phone Taxes).

According to Shulman, “The passage of time, advances in technology, and the nature of communication in the modern workplace have rendered this law obsolete.”