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Getting taxed for cell usage of a company provided cell phone?

Kelemvor

Kelemvor

Lifer
Howdy,

My wife's company has recently changed to a new company to handle their finances and such. Apparently this new company is pulling all kinds of things out of their butts that no one has ever heard of. The company provides each person with a cell phone as a benefit/perk of working there. The latest one is that each person is supposed to go through their monthly cell phone bill and highlight all the "Personal" calls. They say that the IRS says each person has to get taxed for any personal minutes because the phone is for company use.

Anyone know if this is a real law or not? I know plenty of places that give people cel phones to use for work and also let them use it for personal usage. This is no different than providing someone with a health club membership or a discount on products the company makes/sells.

Everyone thinks is a bunch of BS but none of them are accountants or tax professionals so they don't know what's true and what's not.

Any help would be great.

THanks.
 
I am a CPA, but I don't specialize in income taxes. However, I can tell you that any company provided benefit that is for personal use is considered compensation and technically should be taxed.

However, in practice you don't see that applied to the extreme (such as in your case). For example, I work for a large bank and as a benefit of being an employee, I get a free safe deposit box. Normally this is about $10/month charge. My company (thankfully) definitely does not add $120 to my W-2 and withould for this.

Unfortunately, in your case, the company is simply following the letter of the law.

 
Yeah that's kind of what I figured they were thinking. Problem is that since it's a cell phone, they figure each line is $50/mo and that each person should figure out the percentage of personal calls and get taked on that percentage of the $50. However the receptionist uses about 100 minutes a month total and 99% of them are personal use so she'd get taxed on $49.98 for those 99 minutes. However one other person might use 2000 minutes per month and only 50% of theirs are personal. SO they'd only get taxed on $25 even though it's for 1000 minutes.

They just can't seem to figure out a way to make it fair.
 
There are only certain things that do not get taxed if it is a person Benifit (IE expenses) Seeing how they are proveing her with a Cell phone that she is free to use that is kinda like pay.

My Last Job I had access to car but the taxzes would have killed me so I turned it down.
 
The best advice I can give you for this situation is to have your wife and her fellow employees politically and tactfully explain to this new company that they will be happy to comply and calculate and mark the personal calls on the cell phone bill......but not on their own time. Rather, on company time.

And then they might point out the fact that it'll cost the company more in man-hours wasted on phone review/editing than it's worth!
 
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