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June 08, 2009

Back when cell phones were a status symbol, Congress enacted rules requiring special substantiation the use of of employer-provided cell phones. Technology marches on, and cell phones are now common even in homeless shelters, but Congress has never updated its rules. As a result, the IRS is now updating its rules for employer-provided cell phones. Notice 2009-46 (page 13 of the link) offers three alternative proposals for dealing with this obsolete rule:

- a) Treat all employee cell-phone use as business use (so no amount has to go on the employee W-2)
- b) Treat 75% of use as business use; or
- c) Require statistical sampling of business use.

I vote "a." There's no way that the taxes raised by tracking cell phone use, or by putting it on W-2s, exceed the compliance cost.