News about Internal Revenue Service’s plan to levy a tax on cell phones provided by the employers is making rounds within the Wireless circles. Such cell phones would now be available under the fringe benefit plan.
According to IRS, the proposed plan would now require that you to declare up to 25% of your yearly cell phone bills under tax benefits. I feel that many employees could avert this by proving that they used their personal cell phones for calls that were not related to work during the working hours. A fellow tax collector nodded in agreement with my remark.
I feel this might increase your tax burden by a slight amount but an excess burden is an excess burden, there is no debating that. Global marketing survey company, JD Power and Associates, an average cell phone bill per month comes to $73.
According to the proposed 25% limit, this would come up to $18.25. $18.25 over a period of twelve months would result in $219 as the yearly fringe benefit figure for cell phone usage. If your earnings are around $33,950-$82,250 then you might have to bear an additional yearly tax obligation of $54.75.
Trust me this could just backfire as to amass this extra bit, IRS would have to expect companies and workers to go through lots of documentation and track yearly bills for cell phones to check the percentage of personal and work related calls. I feel this is just pointless!
Look at it this way that, if you have good rapport with your clients or clients who are your friends, then your calls would be part work and part personal then how one would divide that call time as work and what is the proof. To be fair you might divide the call time by half but in fields like sales, some small talk would be a part of the sales process and the prerequisite for a good rapport with the client. Let’s say your call was 75 percent business and the rest 25 percent, how would you even fairly divide the talk time?
I think the tax structure is complex already and with all the tax money ending up in companies such as AIG, which misuse the money to pay out bonuses or go on spa retreats. I feel its stupid to invest time on a small revenue and tracing an ordinary person to pay up such taxes when it’s the big guys who need such stricter treatment.
