IRS wants to tax cell phone use

The IRS wants to tax the use of cell phones issued to individuals as a fringe benefit. According toThe Wall Street Journal, "The Internal Revenue Service proposed employers assign 25% of an employee's annual phone expenses as a taxable benefit."

It is not a novel idea. Since 1989, the IRS has expected people who use company-issued phones for personal calls to count the value of those calls as income.

The question for the mobile phone industry, particularly companies like RIM (RIMM), which sells its Blackberry primarily for business use, will see any drop off in sales if the IRS is effective in enforcing the rule.

The tax could end up being "regressive," thereby decreasing use of the thing it wishes to tax. That still could bring the IRS revenue, but it may make some people think twice about how and when they use cellphones.

A recession makes for odd notions from the government about how it can raise income to offset deficits. Maybe cell phone use will lower the national debt.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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