Cell phones have become a ubiquitous part of the workday. Many businesses give them to their sales and service personnel so they can be in constant contact with their co-workers and customers. Cells have become equally popular in the public sector as many municipalities use them to deploy and keep tabs on their work crews. Recent estimates show that more than 6 million Americans are provided cell phones by their employers.
According to the Internal Revenue Service, that’s 6 million people who should be paying an income tax for that work tool. A law on the books since 1989 empowers the IRS to collect income taxes on cell phones, putting them in the listed property category along with the likes of company-provided vehicles. In their eyes, a cell phone easily lends itself to personal use so a portion of its cost should be designated as a perk for that employee.
Back in the early 1990s it was a tax that was relatively easy to enforce because, back then, cellular phones were clunky, expensive luxury items that few small businesses or the self-employed could afford. But the times have changed. Developments in technology have made the phones truly portable and affordable so, now, a great many employers issue them to their workers. Some have even abandoned landlines entirely.
Despite that explosion in cellular usage, tax collections have been lethargic. Most employers are unaware that a portion of a work-related cell phone is taxable, so the IRS has not seen the revenues that should be expected. The agency has been making it a point to change that of late, motivated by the almighty dollar. Since the start of the recession the federal government has brought in less money due to job cuts and shortened workweeks. To make up for that loss of income, the IRS has directed its staff to focus on fraud and lesser-known taxes like this one. So, they have been looking at cell phone policies of businesses, universities, and municipalities with a fine-tooth comb since late 2007 and made examples of some well-known entities including UCLA (which they charged $240,000 for back taxes) and the city of Columbus, Ohio, which settled with the IRS for $400,000.
This recent venture has proven to be problematic for both the IRS and those it hopes to collect from. Most employers and employees are ill-prepared to track cell phone use (and, quite frankly, there are more important things to do) and the modern way of billing — the all-inclusive, unlimited packages provided by Verizon, Sprint and the like — makes cost segregation nearly impossible.
The IRS has some ideas for addressing those problems. Two weeks ago they opened a public comment period (running until Sept. 4) for individuals to offer their two cents about three distinct tax recording and collecting methods the IRS thinks might work. Under the first scenario, your cell phone can be fully-designated as a work phone and therefore non-taxable to you only if you can provide substantial evidence that shows you have a second phone for personal use and that you have not used the work phone to place a personal call. The second concept would assume that anyone who has a work phone must use it at home, too, so they would be charged a rate equal to 25 percent of the phone’s fees, regardless of how true the assumption may be. The third IRS plan would force the employer to use statistical sampling to calculate the billable rate for the employee.
It is suggested that you not engage the IRS in this discussion. Unless you like paying taxes you should instead train your public comments upon Congress. Last Tuesday, following the outcry over the IRS’s announcement, the Obama Administration, through IRS Commissioner Doug Shulman no less (can you sense the irony and hypocrisy?), asked that the law be repealed because the way we communicate has changed significantly, making the law outdated and almost unenforceable. Some in Congress agree with the President and bills have been introduced by John Kerry in the Senate and by Sam Johnson in the House asking for the removal of cell phones from the listed property category.
Take the time to write your senator or congressperson about this simple issue that could become a complex one if the IRS focuses on your and your employer’s pocketbooks. Not only will you have to pay taxes for the phone, but you and your employer will have to waste time (that probably costs more than the taxes paid) on recordkeeping for this law. It’s a headache financially, and philosophically, too: Why pay an income tax on something you need to do your job?
Bob Confer is a Gasport resident and vice president of Confer Plastics Inc. in North Tonawanda. E-mail him at bobconfer@juno.com.
Bob Confer
Related Photos
COLUMN: Your cell phone as government income
- Bob Confer
-
-
CONFER: The reality of rationed health care
The ongoing debate over Obamacare has brought to light the concept of rationed healthcare. Opponents of health care reform keenly point out that while the bill never explicitly calls out rationing, it features certain provisions that will lead the markets to adjust to strict federal demands and, therefore, dispense certain procedures in smaller amounts or not at all. Because of it being the first time that the subject has really come up in public circles, most people, especially on the right, believe that rationing is something new. It’s not. The free markets have been practicing that for quite some time. I should know; with a 4-inch long, 1-inch wide scar running south of my belly button – and a couple of related scars around my groin – I could be the poster child for rationed health care.
-
CONFER: Property taxes: Paying unfair share
A debate that has dominated the American political scene for months has been this premise that everyone should “pay their fair share.” So much attention has been trained on this matter at the national level (in the form of federal income tax) that most people have almost totally ignored the concept at the local level (in the form of property taxes) where it would carry even greater weight.
-
CONFER: The dangers of feral cats
The town of Newfane — more specifically the lakeshore hamlet of Olcott — has a feral cat problem. The community is inundated with dozens of free-roaming, essentially-wild felines which have created health and safety issues galore as well as major inconveniences to property owners, businesses and tourists.
-
CONFER: Yahoo! layoffs not good for area
Last month, Yahoo! announced layoffs of 2,000 jobs. That’s their sixth layoff - and largest – since 2008. The other five ranged from 150 to 1,000 job cuts each and totaled 3,950 jobs lost. In the aggregate, the internet giant has cut 5,950 jobs (or 30 percent of its workforce) in 4 years.
-
CONFER: Take a kid fishing and hunting
The outdoor sports face an unknown future. Hunting and fishing license sales are decreasing at an alarming rate. The population of hunters could be under 10 million for the first time in 2025 after numbering 19 million just 30 year ago and 12.5 million in recent years. The average hunter is now 45 years old and that age continues to rise.
-
CONFER: Obama's policies promote outsourcing
As a manufacturer, I’ve been interested in President Barack Obama’s insourcing kick. By “insourcing,” the President refers to a reversal of the outsourcing trend by American companies; some of them — very little in number — are bringing jobs back to the US.
-
CONFER: Do yourself a favor — read newspapers
Quite often I speak to large groups — like Leadership Niagara or students at SUNY Brockport — about leadership skills. When discussing some of the more important tools for leading their organization — be it a business, a non-profit, a government agency, or even their household — I always mention that they need to read a newspaper (or a few newspapers) every day.
-
CONFER: Senator Maziarz stands his ground
Quite a few years ago I wrote a column about bringing the Castle Doctrine to New York State. The Doctrine would empower the individual by recognizing, within the confines of the home, the natural right to self-defense.
-
CONFER: It’s time to end the minimum wage
Early in this legislative session, New York senators and assemblypeople debated Sheldon Silver’s proposal to increase the minimum wage in New York by $1.25. The argument — whether to maintain the status quo or strive for $8.50 — is wasteful political rhetoric in itself, for the determination of the lowest wages is best left to the free markets, not the government.
-
CONFER: Getting schooled on new disclosure law
For years, the model citizens who engaged in their civic duty by attending and speaking at town and school meetings had faced an uphill battle in their quest to make their voice heard as best as it could be.
- More Bob Confer Headlines
-
FAMU Bandmates: Victim Volunteered to Be Hazed
Raw Video: Bride Who Faked Cancer Released
Raw Video: Tornado Appears During Wedding
HP to Cut 27,000 Jobs, Save Up to $3.5B
Inquiry Hears Wider Secret Service Misbehavior
Md. 911 Dispatcher Caught Sleeping on Job
Raw Video: Toddler Trapped in Washing Machine
Iowa Man With Zebra, Parrot in Truck Gets DUI
Egyptians Pick New President in Free Election
Giant Bull Head Draws Drivers to South Dakota
Astrodome Fades As Houston Decides Fate
Franciscan Files Tell Stories of Priest Abuse
Wildfire Destroys 2 Homes
Flight Diverted After Suspicious Note
Joplin Remembers Deadly Tornado, 1 Year Later
Panel Recommends Against Routine Prostate Test
Fired Lingerie Employee Claims Discrimination
Facebook Shares Continue Negative Slide
Cuba Waiting for Cyber Age to Come
8 Hurt in Oklahoma Shooting After NBA Playoff
