IRS Commissioner Doug Shulman announced during a January 8 television interview that the IRS is abandoning plans to draft guidance on the tax treatment of employer-provided cell phones in light of proposed legislation that would remove them from listed property.
In 2009, the IRS published proposed guidance for to help employers determine how to treat employees’ personal use of cell phones (IRS Notice 2009-46). Shulman’s statements are evidence that the IRS halted development of final rules in anticipation that H.R. 390/S. 144, the Modernize Our Bookkeeping in the Law for Employees (MOBILE) Cell Phone Act of 2009 will pass. While the bills have broad support in both the House and Senate, it is unlikely that they will pass as stand-alone bills.
During the interview, Commissioner Shulman stated, “We’re quite hopeful Congress is going to act on this. In the meantime, we’re not doing anything special or moving forward with any initiatives.” The bottom line is that no guidance will be drafted or published. Until legislation is enacted, the existing rules on listed property are in effect and could create an issue for organizations that are being audited.
Ellis Carter is a nonprofit lawyer licensed to practice in Washington and Arizona. Ellis advises tax-exempt clients on federal tax matters nationwide.