Phone tax

Mr. Obama did get one thing right in his budget proposal.

Ever make a personal call on your company cell phone? Did you record the value of that call as taxable income to be reported come April 15?

No one else does, either.

But a 1989 law says personal use of a company cell phone should be taxed like other benefits, such as a company car.

The law was passed when cell phones — three-pound behemoths with roof antennas — were referred to as car phones and considered a luxury. Today, workers use company-issued mobile devices for texting, e-mailing and browsing the Internet — sometimes for work, sometimes for personal use.

Last summer, the IRS issued a request for comments on ways to improve compliance with the tax. There was such a backlash that the G-men did something unusual — they proposed repealing it.

At the time, IRS Commissioner Doug Shulman said the tax was “poorly understood by taxpayers” and acknowledged it was difficult to enforce consistently.

Some employers have faced big tax bills after failing to comply with the law. In 2008, the IRS audited two University of California branches, in Los Angeles and San Diego. As part of a settlement, UCLA paid a tax assessment of $238,474 and San Diego paid $186,471.

Hey, keep going at this rate, and pretty soon they’ll be able to afford a new aircraft carrier.

The good news is, President Obama has proposed repealing the widely ignored requirement as part of his 2011 budget plan.

The administration made a similar proposal in June, which was well-received in Congress. Lawmakers, however, subsequently became preoccupied with the proposed federal takeover of American medicine. Work on the law was postponed.

We could hire an IRS worker to prowl each American workplace, taking secret notes on workers making cell phone calls involving child care and supper menu planning. On due consideration, though, repeal the “cell phone benefit” tax.

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