Personal use of employer provided cell phones nontaxable
In an unusual move, the IRS recently issued Notice 2011-72 determining personal use of employer provided cell phones is not taxable to the employee. Additionally, no record-keeping of usage is required. This is in stark contrast to many other provisions of the Internal Revenue Code that have strict record-keeping and substantiation requirements.
The move follows a change to the Code last year by the 2010 Small Business Jobs Act removing cell phones and other similar telecommunications equipment from the “listed property” category of business assets. Typically “listed property” is subject to strict record-keeping guidelines to prevent tax abuse by employers and employees.
The new rules apply for tax years beginning after December 31, 2009 and should make it easier for businesses and individuals to stay in compliance. It seems at least once in a while the IRS does get something right.