Log in

View Full Version : IRS Wants To Tax Citizens For Personal Use Of Company Phone


Ed Hansberry
06-12-2009, 09:00 PM
<div class='os_post_top_link'><a href='http://www.foxnews.com/politics/2009/06/12/irs-considers-taxing-personal-use-work-cell-phones-fringe-benefit/' target='_blank'>http://www.foxnews.com/politics/200...fringe-benefit/</a><br /><br /></div><p><em>"The IRS is weighing a proposal to deem one-quarter of employees' use of work cell phones as personal use and therefore subject to tax as a fringe benefit."</em></p><p>For those of you in the US of A, hold on to your wallet. The IRS wants to clamp down on personal use of your employer provided cell phone. Say your employer pays $100 per month for the phone you use and you have a 20% marginal rate. You'd pay an extra $60 in taxes each year ($1,200 X 25% usage X 20% tax rate). That may not sound like much, but it makes calling your spouse a few times a week to tell them you'll be late for dinner pretty expensive. I'm not sure about you, but my company provides drinking water for free and bathrooms with no charge for toilet paper or soap. Will the IRS try to tax us for personal use of our employer's facilities next?</p>

Craig Horlacher
06-12-2009, 09:23 PM
I hope the government is ready to give ATT and Verizon stimulus money. They'll need it after they loose all their corporate accounts. About 9 out of 10 in my office were ready to give back their work phones when we saw that. Most of us have personal and work mobile phones.

Ok, no stimulus would be needed I'm sure the way the telcos can get away with ripping people off so badly.

I think your point Ed is great. When will they start taxing our use of tp and water!!!

cweeks
06-12-2009, 09:51 PM
As usual with Faux News, the truth is buried after the attention-getting outrage.

"Current law already requires that the value of those cell phone services be included in a worker's gross income"

This change would simply make it easier for businesses and would actually cost the individual less on their personal income tax.

Cattle-Dog
06-13-2009, 02:22 PM
Interesting that the only mainstream site that was trying to spin this as a good thing for consumers was MSNBC. I don't want to get dragged into a political battle but there is a reason that network is often dead last of all the major news channels.

The Fox News article is actually just a syndication of the original Wall Street Journal article. The point of the article was not that this was a new tax, but that they are rewriting the way that it works. Right now if I use my work mobile for 1500 minutes in a month (ever been on a 12 hour conference call? :mad:) and for personal 100 minutes, then I'd pay taxes on 6.6% of my bill. This new bill says that it is too cumbersome for employers and employees to track those minutes (because the IRS really care about you... really... honest..., STOP LAUGHING!), so lets just assume that EVERYONE uses their business cell phone for personal use 25% of the time and call it a day.

An now my cell phone taxes went up by 380%.

Ed Hansberry
06-13-2009, 04:15 PM
As usual with Faux News, the truth is buried after the attention-getting outrage
Hahaha.... oh, i cannot tell you that the spelling of Fox as Faux just never ceases to get a chuckle out of me, expecially given that if you have a clue as to how to pronounce it, you are saying "as usual with Foe News" which just absolutely makes no freaking sense.

The Fox News article is actually just a syndication of the original Wall Street Journal article. The point of the article was not that this was a new tax, but that they are rewriting the way that it works.
Yeah, i wanted to link to the WSJ but the only article I could find required a subscription and I don't like linking to those, expecially since the meat of the article was unavaible to the public.

doogald
06-15-2009, 01:26 AM
This is always a tough issue because, like, say, company provided vehicles, some employees are given tools by their employers, paid for by their employers, that provide some private benefit that others who do not get these benefits enjoy. Looked at it that way, it seems completely fair to find a way to value these benefits that adds to an employee's reported compensation. At the same time, there is the ugly issue of employer provided healthcare benefits, which are very expensive - more so that any cell phone plan - are are provided tax-free to the employee.

Company cars are generally provided either to employees who work on the road rather than in an office, or as a perquisite to upper-level management, so it's easy to justify going after the big guys who bull in big bucks and could easily afford these automobiles on their salaries. Cell phones are very different, as I think their general effect is one that makes the employee work far more hours for the benefit of the company. In this particular case, it seems as if the company is benefiting far more than the employee who makes and receives a few personal calls.

All that said, the tax laws should be consistent, and it's hard to defend a tax-free benefit like health care while suddenly changing enforcement of cell phone policy which has been largely ignored lately. I'd hope that the IRS realizes that this is a dumb thing to go after and decides instead that it is a necessary tool of the particular employees, such as pencils and paper (which, let's face it, are often used for personal reasons), internet access at work, etc.

cweeks
06-15-2009, 03:06 PM
Hahaha.... oh, i cannot tell you that the spelling of Fox as Faux just never ceases to get a chuckle out of me, expecially given that if you have a clue as to how to pronounce it, you are saying "as usual with Foe News" which just absolutely makes no freaking sense.

HAHAHA ... I never tire of guys with no sense of humor. The reference was more to the meaning of "faux" rather than to its pronunciation. But, hey, to each his own. Besides, F***s News is, though accurate, even worse.

TimeHunter
06-16-2009, 02:18 AM
Reasons I have a personal mobile:
1. So I can have the tech and provider I want; not what someone dictates as acceptable to the company.
2. So no one can question my ethics regarding using company resources for personal benefit.
3. So I don't have to give everyone in my life that I don't work with a new number if I switch jobs.
4. So I have proof to keep the evil IRS out of my pockets any more than absolutely necessary.

follick
06-17-2009, 12:58 AM
IRS, Treasury want cell phone tax repealed

http://federalnewsradio.com/?nid=27&sid=1697789

IRS Commissioner Doug Shulman called the tax burdensome, confusing and "poorly understood by taxpayers." He acknowledged it was difficult to enforce consistently.

"The passage of time, advances in technology and the nature of communication in the modern workplace have rendered this law obsolete," Shulman said in a statement.

Ed Hansberry
06-17-2009, 01:33 AM
IRS, Treasury want cell phone tax repealed

http://federalnewsradio.com/?nid=27&sid=1697789

Nice. A little bit of public outcry helps sometimes. :)

cweeks
06-17-2009, 03:09 PM
If you read the article carefully you'll notice that Congress tried to repeal this tax last year, so current public outcry had nothing to do with it. I see the IRS rules changes earlier as their way of trying to enforce an unenforceable law that they knew should have been repealed earlier.

If they were stuck with trying to enforce this dog, then they had the responsibility to at least try to make it work.

Even though I am currently having my own problems with the IRS, I don't see them as evil. These guys are just trying to do a job whether they think the law is right or not.

whydidnt
06-19-2009, 03:19 PM
One more reason that trying to tax income and benefits is ridiculous! We tax income but millionaires like John Kerry and Ted Kennedy don't have huge income, they have huge wealth, which isn't taxed. Let's do away with the income tax and tax all non-essential (food, clothing, medical) purchases at 30% and call it a day.

doogald
06-19-2009, 04:08 PM
One more reason that trying to tax income and benefits is ridiculous! We tax income but millionaires like John Kerry and Ted Kennedy don't have huge income, they have huge wealth, which isn't taxed.

Well, that wealth does generate income (though they are probably careful to have much if invested in tax free municipal bonds and such) and also invested in securities and real estate that generate capital gains when sold, which are taxed (though, thanks to the last few tax bills, they are taxed at a much lower rate than salaried income will be.)

But actually wealth used to be taxed quite heavily when people with large estates died through estate taxes. They are due to come back in 2011 without new legislation, but (not that I would wish this on him or anything) if Ted Kennedy dies next year, there will be an awful lot of wealth that would have been taxed through estate taxes in the past that will pass on to the next generation tax-free (or with very minimal taxes).

(And, to be honest, Senators are actually paid quite well. I'm sure that most people would love to be paid what they are for the few hours of actual work that they do.)

whydidnt
06-19-2009, 04:26 PM
But actually wealth used to be taxed quite heavily when people with large estates died through estate taxes. They are due to come back in 2011 without new legislation, but (not that I would wish this on him or anything) if Ted Kennedy dies next year, there will be an awful lot of wealth that would have been taxed through estate taxes in the past that will pass on to the next generation tax-free (or with very minimal taxes).


All the more reason to do away with income tax, not every family is in the stratosphere of the Kennedy's where a few million in taxes is just a drop in the bucket. Some families don't have the liquidity to pay a huge tax when a family member dies, and with a large estate tax end up having to sell assets just to pay a tax. Not positive for the family or if it's productive business, for the economy. A consumption tax is much more logical and fair, it can also be adjusted annually to reflect the budgetary needs of the country.

For the record, US Senators make $174,000/year. It sounds like a lot, but hardly an amount that would make someone "rich" in the terms of Rockefeller, Kennedy, Kerry, Gates, etc. I would not classify someone making this kind of money as rich, nor should that income be taxed as someone who is rich.

doogald
06-19-2009, 05:17 PM
All the more reason to do away with income tax, not every family is in the stratosphere of the Kennedy's where a few million in taxes is just a drop in the bucket. Some families don't have the liquidity to pay a huge tax when a family member dies, and with a large estate tax end up having to sell assets just to pay a tax. Not positive for the family or if it's productive business, for the economy. A consumption tax is much more logical and fair, it can also be adjusted annually to reflect the budgetary needs of the country.

I really do not mean to turn this into a political discussion, and this is my last post about taxes, but when discussions were first made about repealing estate taxes opponents asked to give examples of families that were forced to sell assets in order to pay taxes, and there were very, very few ever discovered. (In fact, there may have been none.) All along estates that had highly illiquid assets - stock in privately held companies, family farms, etc. - were able to discount the amount of that asset by a substantial amount (so, for example, back when the exclusion was $1 million, family farms and privately held companies - defined where the descendants of a single person two generations deep owned more than [I believe] 40% of the asset value of the company in question - were able to exclude over $4 million from estate taxes.) And, trust me - as somebody who knows from experience - there are various things that families can do to pass on estate wealth with a minimal estate tax being owed at the time of death of both spouses. For example, you can make a gift of $1 million estate tax free to your children once in your life, plus $12,000 or so per year to any person estate or gift tax free. That gift does not need to be cash - it can be a percentage of the value of those privately held businesses or family farms.

The problem with a consumption tax is that you are shifting the burden of taxation from the wealthy to the poor. By eliminating the estate tax we have already lost something close to $20 to $30 billion in tax collections annually from very wealthy people (who are inheriting estates worth more than $3.5 million this year), which means either that the regular income tax is raised, which also tends to tax the wealthy much more, so it's even steven - however, taxes, you will recall, have been cut, disproportionately to the wealthy - or services are cut, and those tend to affect the poor and middle class more than the wealthy. (Or we increase the federal debt, which, again will mean those two things will happen further on down the road, in a far more painful manner.) A consumption tax has no income exclusion, so the very poor have the same tax burden - but probably pay a higher percentage of their wealth and income in taxes than they do now, and than the wealthy will do, as the poor are far more likely to spend all that they have and save very little. All of that Kennedy ad Kerry wealth you were complaining about does not get taxed at all - it just sits in investment accounts, generating income that is not being taxed, earning capital gains that are not being taxed, until the money is actually spent. And my guess is that in both cases those families spend a far lower percentage of their family wealth and income in a given year than the average American does.

I apologize for the digression . . .

whydidnt
06-19-2009, 06:03 PM
The problem with a consumption tax is that you are shifting the burden of taxation from the wealthy to the poor.... A consumption tax has no income exclusion, so the very poor have the same tax burden - but probably pay a higher percentage of their wealth and income in taxes than they do now, and than the wealthy will do, as the poor are far more likely to spend all that they have and save very little. ...

I apologize for the digression . . .

I had a nice long rebuttal written, but you're right, we don't need to turn this political. I still think a consumption tax is MORE fair, particularly if you consider essentials such as food and clothing are exempt from the tax. If you aren't so poor that you can afford beyond this, shouldn't you contribute something? You're still using services, correct? While spending 1,000,000 bucks on a vacation home would net the government a cool 300,000 when our rich friends decided that place in Aspen was nice.

Anyway, perhaps we can enjoy a more meaningful debate somewhere over a cold one in a pub sometime.