IRS Makes a Fuss About Personal Calls at Work

Katherine Mangu-Ward | June 15, 2009

About a year ago, I wrote about how the IRS was attempting to revive an old rule to make people pay taxes on minutes spent making personal calls on work-issued cell phones. That rule was written in 1987, when cell phones were quite the fancy, bulky corporate perk. Of course, back in the halcyon days of August 2008, this seemed like the IRS deciding to be sticklers about an outdated rule, probably just for giggles. 

At the time, I quoted Hank Paulson as saying that a change in the rules seems "like the right idea to me." Paulson has since become distracted by a few other issues. And today's Wall Street Journal reports that our cash-strapped government may be gunning those nickles and dimes after all. 

The Journal article also highlights a potential unintended consequence:

It's one thing if the next Tom Daschle forgets to pay taxes on his company chauffeur. But it'll be quite another if the next nominee goes down for taking too many personal calls without giving the government its due.

Comments

Mike|6.15.09 @ 12:16PM|#

Why the heck is there a phone tax anyway? Soon the goverment is going to complain that people are sending emails in order to avoid the phone tax. Next, they will start taxing private conversations.

JB|6.15.09 @ 12:21PM|#

So stupid. The government has to have their hands in everyone's pants because they are a bunch of sick fucks.

I look forward to Durbin being burned at the stake for his insider trading:
http://www.suntimes.com/news/1620776,CST-NWS-durbin13.article

|6.15.09 @ 12:21PM|#

Why the heck is there a phone tax anyway?

Because everyone has at least one phone, and families can have on the order of 6 or so? That's a lot of taxing going on.

|6.15.09 @ 12:22PM|#

Just think of the jobs created or saved by requiring everybody who carries an employer-provided cell phone to log and track every minute of use.

|6.15.09 @ 12:23PM|#

The phone tax is helping us pay down the debt we incurred during the Spanish-American War, as I recall.

|6.15.09 @ 12:25PM|#

"Just think of the jobs created or saved by requiring everybody who carries an employer-provided cell phone to log and track every minute of use."

You are right P Brooks. Companies will have to hire people to inspect records and keep track of these things. That could be millions of jobs. This rule may solve all of our problems. We can all just go to work tracking each other's cell phone use.

Naga Sadow|6.15.09 @ 12:45PM|#

I already do that playing Halo 3, John. You may be onto something.

robc|6.15.09 @ 12:47PM|#

My counter-argument would be that I am on call 24-7-365 so my phone is ALWAYS doing a business related activity - waiting (usually). It does this successfully even if Im talking on it or playing games or whatever.

Of course, most people dont have that argument.

However, that doesnt make the IRS pushing this any less stupid. Especially since we are talking about a low dollar item, its not like we are talking about a car here. At a point, they need to acknowledge that tracking is more expensive than the item itself.

|6.15.09 @ 12:48PM|#

"Why the heck is there a [fill in the blank] tax anyway?"

That's where the money is.

|6.15.09 @ 12:58PM|#

Can I get a tax deduction for every time I have to make or take a work-related call on my personal cell phone?

|6.15.09 @ 1:02PM|#

Don't tell the IRS this, but many companies provide free coffee for their employees that is not declared as income from said employees. Some also provide free parking that the IRS should be able to get a piece of.

|6.15.09 @ 1:07PM|#

Can somebody ask Obama this question, in case I don't get a chance:

In December of last year, I got a call on my compnay provided cell phone informing me that I had a malignant brain tumor. Since then, I have made and received countless calls on that same cellphone, regarding my surgery, radiation, chemotherapy and all other medical matters. With the exception of two and a half weeks, medical leave, I have worked the rest of the time up to inclduing an MRI today.

Do I really need to keep a record of those calls? Are they really personal calls since the timing of my appointments also impacts my availability for work related meetings or conference calls?

Will a Government option health care plan help me out with these questions?

Now the money question: The kind of question that if one nutless White House Press corps memeber would ask would piss EVERYONE off, but elicit the full-blown crack in the Joe Cool facade and Southside Melt Down they all in the press want to see (even the corps memebrs who Love the O):

When Obama got the call that his Grandmother passed away, was that call made to a campaign or Senate provided cell phone? Did Obama make or receive other calls related to her medical condition, death or arrangements on a non-personal cell phone? Did Obama pay taxes on those calls on his 2008 tax returns?

If that doesn't work, "Did Michelle make any calls to Obama on her UofC Hospital provided cellphone? How long after her taking leave from that job did she turn in that cellphone?

|6.15.09 @ 1:08PM|#

"Some also provide free parking that the IRS should be able to get a piece of."

They already do.

There is a cap on the amount your company can underwrite your parking. It's like $200/month, so if your parking costs $300/month, they tax you on $1,200 of it.

|6.15.09 @ 1:11PM|#

"Do I really need to keep a record of those calls?"

No. My understanding is that they will consider 25% of the cost of your employer-provided cell phone bill as taxable income. This will obviate the need for keeping track of your business v. personal calls. It's being spun as thoughtful and considerate on the part of the IRS.

|6.15.09 @ 1:13PM|#

"they tax you on $1,200 of it."

that's $1,200 per year.

creech|6.15.09 @ 1:14PM|#

The IRS won't expect companies to track cell phone use. They will simply require each company to add 25% of the value of the cell phone use to each carrying individual's W-2.
Next up, what is the value of that free birthday cake you gorped down in the break room this lunch hour?

|6.15.09 @ 1:18PM|#

Think about all that free toilet use you get.

"On your bathroom reimbursement you noted Took a dump the size of a birthday cake, but I don't see a receipt here."

Zombie Douglas Adams|6.15.09 @ 1:28PM|#

the fabulously beautiful planet Bethselamin is now so worried about the cumulative erosion by ten billion visiting tourists a year that any net imbalance between the amount you eat and the amount you excrete whilst on the planet is surgically removed from your bodyweight when you leave: so every time you go to the lavatory it is vitally important to get a receipt

|6.15.09 @ 1:51PM|#

Don't tell the IRS this, but many companies provide free coffee for their employees that is not declared as income from said employees. Some also provide free parking that the IRS should be able to get a piece of.

I've also heard that many companies provide their workers with personal computers that they can use to surf the Intrawebs and post blog comments.

ee|6.15.09 @ 1:51PM|#

I think the cell phone tax would work the same as the tax for personal use of a company owned vehicle. I own my own electrical engineering company and use a company car for all my travels. So what happens at tax time is that my accountant (who charges $50/hr more than me because accounting math is much more difficult than engineering math) pulls a number out of his ass that somehow equates to the value of my personal car use and tells me to add this number to my personal income.

|6.15.09 @ 2:05PM|#

So let me make sure I've got this straight. In order to deduct expenses for a home office, that space has to be exclusively used for business, and nothing else.

But I have to pay a tax for even minimal personal use of company property?

WTF?!

wingnutx|6.15.09 @ 2:19PM|#

Think about all that free toilet use you get.

It will be vitally important to get a receipt every time you use the bathroom.

monkey on juice|6.15.09 @ 2:38PM|#

"It will be vitally important to get a receipt every time you use the bathroom."


Thats what the 2-ply stuff in the company bathroom is for - just make sure the IRS gets the first copy.

Russ 2000|6.15.09 @ 2:43PM|#

If they tax company internet usage, this website is dead.

robc|6.15.09 @ 2:57PM|#

In order to deduct expenses for a home office, that space has to be exclusively used for business, and nothing else.

Not only that, but when you later sell the house, the business gets a taxable capital gain for the sale of the office space (assuming there is a gain).

PC|6.15.09 @ 3:15PM|#

What if I use the company jet and work furnished security to take my fatassed wife to a Broadway show?

|6.15.09 @ 3:27PM|#

"What if I use the company jet and work furnished security to take my fatassed wife to a Broadway show?"

There's a specific JDE code for that.

|6.15.09 @ 4:47PM|#

In December of last year, I got a call on my compnay provided cell phone informing me that I had a malignant brain tumor.

I was looking for this post to be a joke about cell phone use causing brain tumors.

Imagine my disappointment when it was on topic and made a valid point.

|6.15.09 @ 5:29PM|#

What if I use a carrier (MetroPCS) that doesn't keep track of minutes? This is stupid, the IRS ordinarily doesn't care about "de minimis" use of company assets like phones and copiers. Do I have to keep track of my personal use of the company computer now?