The IRS has issued guidance on the tax treatment of employer-provided cell phones and similar telecommunications equipment

HRS Insight
The Internal Revenue Code provides that gross income does not include the value of any fringe benefit that qualifies as a working condition fringe, which is defined to mean any property or services provided to an employee of the employer to the extent that, if the employee paid for such property or services, such payment would be allowable as a deduction. For certain "listed property," the employee and the employer must maintain detailed records substantiating the business use of the property in order to exclude the value of the property as a working condition fringe benefit.

The Small Business Jobs Act of 2010, (the" Act") removed cell phones from the definition of listed property for taxable years beginning after December 31, 2009. The Act did not change the rule that an employer-provided cell phone is a fringe benefit, the value of which must be included in the employee’s gross income unless an exclusion applies.

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