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For Immediate Release IRS Targets Cell Phone Private Usage Taxes Santa Clara, CA (June 12, 2009) - Amtel is monitoring very closely all developments on the question of which method the IRS will propose to satisfy the reporting requirements for cell phones usage. "Many proposals mentioned by the IRS are already built into our TIMS platform, since we have been for some time now actively working with large corporate clients on split billing and mobile policies," said PJ Gupta, CEO at Amtel. According to the Wall Street Journal, in the latest IRS Bulletin, the IRS and Treasury Department are considering the following proposals to simplify the § 274(d) substantiation requirements applicable to employee usage of employer-provided cell phones. A. Simplified Substantiation Methods The IRS and Treasury Department are considering three alternative methods to simplify the substantiation requirements applicable to employee usage of employer-provided cell phones:
Any simplified cell phone substantiation method will be optional; taxpayers may continue to comply with current § 274(d) substantiation requirements. The IRS and Treasury Department contemplate that any taxpayer who wishes to use a simplified cell phone substantiation method will be required to implement a written policy that requires employees to carry and use the employer-provided cell phones in connection with the employer's trade or business and that prohibits personal use of employer-provided cell phones, except for minimal personal use, similar to the requirements currently applicable to employer-provided automobiles in § 1.274-6T. In addition, the IRS and Treasury Department anticipate requiring that the employer must reasonably believe that the cell phone is not used for personal purposes except for minimal personal use. B. Simplified Fair Market Value Determination To the extent that an employee's use of an employer-provided cell phone does not qualify as a working condition fringe benefit (because the employer does not satisfy § 274(d) or the cell phone is used partially for personal purposes), the fair market value of an employee's use of the employer-provided cell phone is a taxable fringe benefit that is includable in the employee's gross income. An employer's cost to provide the cell phone is not determinative of the fair market value of an employee's fringe benefit. The IRS and Treasury Department are interested in understanding the methods employers currently use to arrive at the fair market value to an employee of an employer-provided cell phone. The IRS and Treasury Department are considering whether a simplified valuation method would be helpful and appropriate to determine such fair market value. About Amtel Amtel is the leading provider of total telecom cost management services for wireline and wireless services in the growing, ever-changing telecommunications industry. Amtel's complete solution for managing and optimizing telecom assets helps companies to simplify telecom management and reduce their costs. TIMS software platform and professional services help organizations in telecom financial management, auditing, infrastructure analysis, chargeback accounting, consolidation, contract management, and technology assessment.
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