CTIA pushes for repeal of tax on work-issued cell phones

CTIA is throwing its support behind an effort to a repeal a 20-year-old law that taxes personal use of work-issued cell phones, according to comments the group filed with the Internal Revenue Service.

The wireless industry's trade group said that, while Congress reviews the tax, the IRS should "consider suspending all audit activity on the taxation of the personal use of employer-provided cellphones."

"Unfortunately, the alternatives proposed by the IRS are either incomplete or inadequate solutions that would continue to subject employees and employers to onerous call log requirements," CTIA President Steve Largent said in a statement.

Thus, CTIA is pushing for the passage of the MOBILE Act--sponsored by Sens. John Kerry (D-Mass.) and John Ensign (R-Nev.) in the Senate and Reps. Sam Johnson (R-Texas) and Earl Pomeroy (D-N.D.) in the House--which would remove mobile devices from the listed property rule, thereby exempting them from the tax. The 1989 law mandated that workers who use company-provided cell phones for personal calls count the value of those calls--i.e. that portion of the bill--as income, and then pay taxes on that income. However, employers and their employees have long ignored the rule.

The issue flared up in June after the IRS--in one proposal--said that employers would have to declare 25 percent of an employee's annual cell phone expenses as a taxable benefit, something wireless carriers vehemently opposed. The IRS subsequently backed away from proposals to more strictly enforce the law, and said it was going to ask Congress to repeal the law altogether. In announcing the tax collector's decision to reverse its position, IRS Commissioner Doug Shulman called the law "obsolete," bringing the IRS into agreement with the likes of Sprint Nextel and Verizon Wireless.       

For more:
- see this WSJ article (sub. req.)
- see this CTIA statement

Related Articles:
IRS backs away from tax on work-issued cell phones
IRS defends tax proposals for work cell phones
IRS may tax work cell phones as a 'fringe benefit'
Cell tax bill debated at House hearing