US IRS: cellphone tax notice to save firms money

By Kim Dixon

WASHINGTON, June 12 (Reuters) - An effort by the U.S. Internal Revenue Service to revamp the way employers and workers account for personal cellphone use is intended to save companies money, an IRS official said on Friday.

A law dating to 1989 requires companies seeking to deduct worker cellphones as an expense to track personal use with painstaking documentation of minutes. The IRS says a notice issued this week is intended to make it easier for employers and workers to comply with the law.

"Minute by minute documentation really doesn't make any sense -- we've been hearing all about it, and we said yes it makes no sense," said a senior IRS official, who was not authorized to speak for attribution.

Proposed changes issued by the IRS are intended to "reduce how much employers have to spend trying to comply with the tax law," the official added.

Under current law, workers are required to pay tax on personal cellphone use on a work phone as a fringe benefit.

The IRS this week issued a notice seeking public comment on ways to revise the current system. Options include letting employers deduct the entire sum of a worker's cellphone use if a worker can establish she uses a personal phone for some period, and letting employers use statistical sampling to generalize about usage.

Another idea is for employers to assign a set rate for business use, 75 percent proposed by the IRS, with the remaining treated as personal use.

"For employers we thought we should give them alternative ways to take these deductions," the IRS official said.