Numerous employers provide cell phones to their employees for business use. Unsurprisingly, such phones are often used by employees for both business and personal use.
Code Section 132 provides that an employee may exclude from gross income the value of the cell phone use allocable to business use. However, personal use by the employee is a taxable fringe benefit. Further, since such phones are listed property under Code Section 280F, strict substantiation requirements are required to determine what portion of use relates to business use.
Such rules are a nuisance and an accounting nightmare. Recognizing this, Treasury Secretary Geithner previously called upon Congress to remove any tax consequences from personal use of employer provided cell phones. In a statement issued by the IRS Commissioner, he is also joining in the request. Hopefully, Congress is listening.