Catching up on the news, I discovered this tidbit in the WSJ (full article behind subscriber wall):
The use of company-issued mobile phones could trigger new federal income taxes on millions of Americans as a “fringe benefit.”
The Internal Revenue Service proposed employers assign 25% of an employee’s annual phone expenses as a taxable benefit. Under that scenario, a worker in the 28% tax bracket, whose wireless device costs the company $1,500 a year, could see $105 in additional federal income tax.
The IRS, in a notice issued this week, said employees could avoid tax liability if they showed proof they used personal cellphones for nonbusiness calls during work hours.
Despite my disgust over the potential imposition of a new tax liability, I had to laugh. It’s the line, “if [employees] showed proof they used personal cellphones for nonbusiness calls during work hours.”
We all know of coworkers who spend hours on the phone dealing with “personal” business. How do you think a company will respond to a employee that shows proof of these hours spent on non-work related calls?
So, the employee has two choice: 1) pay the tax liability to avoid questions about time; or, 2) present the employer with a detailed list of time spent at work on personal issues. I think the tax man wins this round.
