IRS issues guidance on tax treatment of cell phones
BY MICHAEL COHN / WASHINGTON, D.C.
The Internal Revenue Service has released
guidance aimed at clarifying the tax treatment
of mobile phones provided by employers to
their employees.
The guidance explains a provision of last
fall’s Small Business Jobs Act of 2010 that
removed cell phones from the definition of
listed property, a category under tax law that
normally requires taxpayers to perform additional recordkeeping.
IRS Notice 2011-72, issued in mid-Sep-
tember, provides guidance on the treatment
of employer-provided cell phones as an ex-
cludible fringe benefit. According to the new
guidance from the IRS, when an employer
provides an employee with a cell phone pri-
marily for noncompensatory business rea-
sons, the business and personal use of the
cell phone is generally nontaxable to the em-
ployee. The IRS will not require recordkeep-
ing of business use in order to receive this
tax-free treatment.
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