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6/13/09

IRS Proposes Taxing 25% of Business Cell Phone Use

BY Phyllis Furman
DAILY NEWS BUSINESS WRITER

The IRS may dial up new rules that could cost you more in taxes if your employer gives you a cell phone.

The IRS may dial up new rules that could cost you more in taxes if your employer gives you a cell phone.

The feds have proposed taxing 25% of business cell phone use as income.

That means someone who's in a 28% tax bracket and whose work cell phone costs their company $1,000 a year would pay $70 more in federal income tax.

New York City residents now pay between 17% and 20% in cell phone taxes, charges and fees.

The IRS has had a law on the books regarding taxation of personal calls on business cell phones for two decades, but companies have rarely complied because of the difficulty of keeping such records.

The proposed procedures would make it easier for employers to comply with the law.

The IRS is proposing two other options to simplify the rules.

One choice would be for employees to offer proof that they have a personal cell phone that they use during working hours. That would substantiate that the business cell phone was being used solely for work purposes.

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Another option being floated would allow companies to use a statistical sampling to figure out how much of their employees' phone bills are for personal calls.

John Taylor, a spokesman for Sprint Nextel, said the law is no longer relevant at a time when work and personal lives no longer have boundaries.

"Cell phones are ubiquitous," he said. "The policy rationale of the 1980s doesn't make sense anymore."

The IRS said it is awaiting responses to its proposals from the public. "This notice was issued to solicit comments on ways the IRS can simplify the procedures for employers to substantiate the business use of employer-provided cell phones," the agency said in a statement.

Read more: http://www.nydailynews.com/money/2009/06/13/2009-06-13_irs_new_hangup_proposes_taxing_25_of_business_cell_phone_use.html#ixzz0IKbEwOPy&C

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