Resolution Urging Congress to Update Tax Treatment of Cell Phones Exposed

The Resolution Urging Congress to Update Tax Treatment of Cell Phones is listed under ALEC's Tax and Fiscal Policy Task Force, but does not include the date that it was adopted or approved. ALEC has attempted to distance itself from this piece of legislation after the launch of ALECexposed.org in 2011, but it has done nothing to get it repealed in the states where it previously pushed for it to be made into law.

ALEC Resolution Text

WHEREAS, in 1989 Congress passed a law treating cell phones or similar telecommunications equipment as “listed property” that an employer must report as income on an employee’ W-2 unless the employee satisfies onerous rules documenting the cell phone or equipment is used for business more than 50% of the time; and

WHEREAS, the Internal Revenue Service (IRS) confirmed this tax treatment of employer-provided cell phones or similar telecommunications equipment as a “fringe benefit” in a 2005 technical guide; and

WHEREAS, it is expensive and difficult for employees to maintain logs listing every call, the time of such calls and the purpose of such calls; and

WHEREAS, the specter of IRS agents continuing to raise the issue of cell phone calls and documentation on audits has prompted many employers to stop providing cell phones to employees but instead give them taxable cell phone allowances; and

WHEREAS, the Tax Code places no similar rules governing personal calls made on land-line telephones; and

WHEREAS, there significant advances in the reliability, versatility, ubiquity, sizing, and pricing of cell phone and other telecommunications technologies in the last 20 years; and

WHEREAS, the Tax Code’s treatment of cell phones and similar telecommunications equipment is outdated, does not correspond to technological advancement in wireless, fails to reflect the integration of wireless technology in American businesses, and is ill-suited to the 21st Century American economy;

NOW THEREFORE BE IT RESOLVED, that the American Legislative Exchange Council urges the United States Congress to repeal the Tax Code’s treatment of cell phones and similar telecommunications equipment as listed property and its burdensome reporting requirements for employees; and

BE IT FURTHER RESOLVED, copies of this resolution will be distributed to all governors and members of the U.S. Senate and the U.S. House of Representatives, and to the Commissioner of the IRS.

Passed Unanimously