Policy

IRS Nostalgic for Time When Greed Was Good

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The IRS has dusted off a 1989 rule that treats cell phones like an exotic corporate perk, lumping a company cell phone in with private jets and corporate limos. Careful logs are supposed to be kept of such perks and the business justification for their use, lest companies chauffeur around their execs to dates and country houses in lieu of paying them in taxable income.

The cell phone rule dates from a slower, gentler, bulkier time:

Is this a personal call?

When the makers of the 1987 film "Wall Street" wanted to convey corporate raider Gordon Gekko's power and success, they gave him one of the era's most exotic executive perks: a cellphone.

The Motorola DynaTAC 8000X that actor Michael Douglas carried as he strolled along the beach was roughly the size of a brick and cost $3,995 when introduced three years earlier. A call during peak times cost upward of 50 cents a minute.

Recently the IRS decided to revive the rule, and has been hitting employers with big fines for inadequate record-keeping. UCLA, for instance paid a "$239,196 bill this year after IRS auditors found that employees with cellphones were not keeping logs. UC San Diego had to shell out $186,471 for the same reason." This, coincidentally, was the same amount as Gekko's monthly phone bill.

But never fear! Change is rumbling in the bowels of government, with Treasury Secretary Hank Paulson conceding that a change in the rules "like the right idea to me."

Via Jacob Grier.