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Eliminating Tax For Employer-Issued Cell Phones

Press Release

Location: Washington, DC

U.S. Senator Mel Martinez (R-FL) today joined an effort to block the Internal Revenue Service (IRS) from taxing employer-issued cell phones as an employee benefit. Current regulations allow for the taxation of certain employer-provided assets including automobiles, portable computers, and other types of property used for transportation, entertainment or recreation. In 1989, cell phones were identified as a taxable ‘luxury' benefit, but only recently has the IRS begun enforcing the taxation of the devices.

"Cell phones and other mobile devices issued at work are not luxury items; they've become essential elements both inside and outside of the workplace. Calling a cell phone or Blackberry a ‘luxury' and then taxing an employee who's required to carry it is offensive," said Martinez, a member of the Senate's Commerce Committee. "We're proposing a fix that will remove cell phones and similar mobile devices from the IRS' ‘taxable benefit' list."

In the IRS Code of 1989, Section 280F(d)(4), cell phones are treated as "listed property" and therefore require detailed documentation to show that the use of them is for more than 50 percent of business purposes. If this documentation is not met, the devices will be included as taxable income. This proposal would remove cell phones and other similar mobile devices as "listed property" and update the IRS code to recognize the growth of business-use mobile communications devices.

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