The Cell Phone Revolution Spurs New IRS Business Requirements

Two decades ago, it was highly unlikely that you would see someone talking on a cellular telephone. Back in those days, most cell phones were “car phones” or so large you had to have a separate bag in which to carry them. Today, you can’t walk down a sidewalk, through an airport or even down a beach without seeing someone on a cell phone or Bluetooth device. My, how times have changed.

Since this cell phone revolution has taken hold of everyday Americans, it’s no wonder that businesses are incorporating cell phones, blackberries, etc. into their IT equipment needs. Customers expect that sales or support contacts are available to answer calls anytime, and, to stay competitive, that’s what businesses must do.

In the wake of, what is essentially, a cultural shift, there is bound to be some backlash. New rules and regulations regarding business use of cell phones and blackberries are popping up left and right. Specifically, the IRS has started to implement regulations for identifying personal versus business usage on company cell phones.

“To be able to exclude the use by an employee from taxable income from an employer-owned cell phone, the employer must have some method to require the employee to keep records that distinguish business from personal phone charges. If the telephone is used exclusively for business, all use is excludable from income (as a working condition fringe benefit). The amount that represents personal use is included in the wages of the employee. This includes individual personal calls, as well as a pro rata share of monthly service charges.” http://www.irs.gov/govt/fslg/article/0,,id=167154,00.html.

Essentially, the IRS is claiming that any personal use of business-owned cell phones can be considered additional taxable income – that’s right, they want their cut, too. While these regulations are only in their infancy phase at this time and only applicable to government agencies, it is only a matter of time before these regulations become a requirement for all businesses.

So, the question is “How on earth do you keep track of every single call you make?” Well, the good news is that this sort of call tracking has been a requirement in Europe for quite some time, so there are tried and true electronic bill presentment solutions out there to help.

In Europe, most companies use electronic bill presentation software to split the bill into business and personal call groups automatically so that the individual or company doesn’t have to scour the bill line by line. This allows companies to appropriately account for the personal cell phone use, and thereby, adhere to government regulations, without bogging down their accounting departments in the process.

What sales or support representative has time to go through their bill line by line??

With these new IRS requirements going into affect in the United States, it’s only a matter of time before all businesses are required to separate and track cell phone usage. And in order to stay efficient, it will be an absolute necessity to find an easy, low cost way to track and separate that cell phone usage. eBilling could be the solution for you.