IRS Enforcement of Wireless Devices as ‘Listed Property’ seems Sketchy

Last week we were quite interested to find out about an employer that had in fact been audited by the IRS for compliance on this issue. As most of us know, many larger employers have decided to implement a stipend policy in an attempt to avoid the possibility of an audit. While some employers feel this makes sense for them, they may want to reconsider once they see Matsch’s upcoming whitepaper on stipends and their effect on employer cell phone costs. In any event, it is a topic that many involved with telecom are wary of.

The official IRS wording of the rule is actually straightforward in that it requires employers to document the personal use of employer-provided cell phones. Though most employers believe this would be burdensome, it is not nearly as burdensome as they think it is, and is a lot less expensive than the other options. The thing that interested us as Cellular Information Management service providers is that the end result of this specific audit was that each employee with a provided cell phone would pay the IRS (directly via payroll deduction) a flat tax payment per month via payroll deduction! Let that sink in for a moment…

As you might imagine, some of the employees of this organization were a little ahem… ‘put out’ by the decision. Though this is a seemingly simple thing to do, and is much more acceptable to the employer, since it resolves all their concerns regarding IRS compliance, it is hardly fair to those employees that did not use their employer provided cell phones for personal use, but purchased their own personal plans

Stay tuned for more on this topic!!


 
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