Human Resource & Labor News
www.agc.orgNovember 8, 2011 / Issue No. 6-11
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On the Inside
Regulations & Enforcement
Government Agencies Partner to Enforce Independent Contractor Misclassifications; IRS Offers Risky Settlement Program
FAR Council Issues Final Rules on Labor Laws Notice and on Labor Relations Costs
AGC Objects to Labor Department’s “Persuader Rule”
NLRB Delays Effective Date of Posting Requirement While AGC-Supported Coalition Joins Lawsuit to Block Rule
Labor Department Provides Interim Guidance on Electronic Fee Disclosures
EEOC Opinion Letter Provides Guidance on Use of Arrest and Conviction Records When Hiring
IRS Provides Guidance on Tax Treatment of Employer-Provided Cell Phones
Union Contracting
Union Contractors Meet with Basic Trade Leaders and Hold Strategic Planning Session
FASB Issues New Multiemployer Plan Disclosure Standard; Update Represents Victory for AGC
Professional Development
AGC to Provide Two-Part, Advanced Davis-Bacon Webinar
Co-located HR Professionals and TED Conferences Continue to Grow; 2012 Conference Dates & Location Announced
IRS Provides Guidance on Tax Treatment of Employer-Provided Cell Phones
 

The Internal Revenue Service (IRS) has recently issued guidance designed to clarify the tax treatment of employer-provided cell phones.

The guidance relates to a provision in the Small Business Jobs Act of 2010, that removed cell phones from the definition of listed property, a category under tax law that normally requires additional recordkeeping by taxpayers.  According to the clarification, when an employer provides an employee with a cell phone primarily for noncompensatory business reasons, the business and personal use of the cell phone is generally nontaxable to the employee. The IRS will not require recordkeeping of business use in order to receive this tax-free treatment.

The IRS also announced, in a memo to its audit examiners, a similar administrative approach that applies with respect to arrangements common to small businesses that provide cash allowances and reimbursements for work-related use of personally-owned cell phones. Under this approach, employers that require employees, primarily for noncompensatory business reasons, to use their personal cell phones for business purposes may treat reimbursements of the employees’ expenses for reasonable cell phone coverage as nontaxable. This treatment does not apply to reimbursements of unusual or excessive expenses or to reimbursements made as a substitute for a portion of the employee’s regular wages.

The guidance does not apply to the provision of cell phones or reimbursement for cell-phone use that is not primarily business-related, as such arrangements are generally taxable.

In light of these changes, employers should review their cell phone policies to ensure that any employer-provided cell phone or reimbursement is for a noncompensatory business purpose and is not merely to promote morale, attract employees or to add to an employee’s compensation.


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