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Mixed signals about work cellphones

June 17, 2009|DAVID LAZARUS

The Internal Revenue Service had a moment of clarity Tuesday and backed off from its plan to crack down on personal use of office cellphones -- sort of.

Just last week, the agency stirred up a hornets' nest of bad publicity by announcing it would ramp up enforcement of a long-standing -- and largely ignored -- federal law requiring that personal calls made on company cellphones be taxed as income.


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The agency still stands by that notion and intends to proceed with its crackdown on cellphone scofflaws in the workplace.

But IRS Commissioner Doug Shulman said Tuesday that he and the Obama administration also believe the law should be repealed.

"The passage of time, advances in technology and the nature of communication in the modern workplace have rendered this law obsolete," Shulman said in a statement.

"The current law, which has been on the books for many years, is burdensome, poorly understood by taxpayers and difficult for the IRS to administer consistently."

To recap: The IRS wants to get rid of a troublesome tax that it simultaneously says it's determined to enforce.

And people say bureaucrats have no sense of humor.

The law in question dates back 20 years, when cellphones were the size of cement blocks and not all that common an accessory.

Remember when Michael Douglas used a heavyweight handset while strolling the beach in the 1987 film "Wall Street"?

It was something exotic and rarefied, the sort of extravagance only the mega-rich would indulge in.

These days almost everyone sports a cell. More than 270 million people -- 87% of the U.S. population -- have wireless accounts, according to industry figures.

"You can't argue with the fact that this 1989 law was enacted at a different time," said a senior IRS official, who refused to have her name published as per some equally arcane agency rule.

The official, speaking by cellphone, readily acknowledged that cellphones have become an indispensable aspect of people's lives.

"We have no disagreement with that," she said. "The problem is the 1989 law."

Specifically, the law says employers must prove that any cellphones given to workers are used exclusively for business purposes. Workers, in turn, must carefully document all usage and separate any personal calls from business calls.

Needless to say, few companies and workers go to this much trouble, meaning that potentially thousands of employers are failing to comply with a rule that even the IRS says is outdated.

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