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TEMIA: Abolish Employer Paid Mobility Tax


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July 30, 2009

TEMIA: Abolish Employer Paid Mobility Tax

By Stefania Viscusi, Assignment Desk Editor

The Telecommunications Expense Management Industry Association ,also known as “TEMIA (News - Alert),” works to promote the benefits and value of TEM solutions and to improve the quality of solutions through the development of industry standards.

Recently, the organization announced its position on the IRS tax for personal use of employer-paid mobile devices.
According to their position paper, TEMIA believes this tax should be abolished and that a corporate liable plan is a better solution for helping to control telecom expenses and manage security.
I took some time recently to chat with Joe Basili, managing director at TEMIA about the tax for personal use of employer paid cell phones and mobility services, and how the way the law is currently written, affects the TEM industry.

Basili said that while it may appear that the law creates more demand for TEM services, the industry is “working to eliminate the law, because it obstructs economic growth, compliance, and security of corporate networks.”

As a result of this tax, “the size of the business market is reduced and innovative uses of mobile devices in the workplace are depressed. Some organizations will avoid the issue of tracking personal use by having employees pay for their own mobile devices. With no central control, there are security risks” Basili said.

In addition to security concerns, Basili mentioned that with this tax in place, the TEM industry would be responsible for separating all personal and business calls and employers would need to assign a pro-rata share of monthly service charges for each personal call as well as track which calls which occurred during on- and -off peak hours.
The documentation, Basili said, would need to be submitted to the employer who must then validate it and assign a pro rata share of monthly service charges for each personal call as well as include its value in the taxable wages of the employee. If personal use cannot be established, the entire value of the mobile device and service charges is taxable income to the employee.
The IRS’ proposed solution for streamlining how this tax is calculated includes a “Minimal Personal Use” method that would set aside a minimal personal use of minutes on the phone that would not be taxed or to have employees show proof that they use a personal cell phone for non-business calls while working.
Also, the IRS is proposing a “Safe Harbor Substantiation” method that asks 25 percent of employer-paid cell phone use to be set aside for personal calls. This would add $105 in federal income tax to workers in the 28 percent bracket who use a wireless device that costs the business $1,500 per year.
As another method, the IRS is also suggesting is that employer’s use “Statistical Sampling” to establish a set portion of business vs. personal use of cell phones, and use that number across the entire enterprise.
According to Basili, TEMIA’s hope is to have the law abolished. Until that time however, the association feels the “Minimal Personal Use Method” would be the best solution.
A number of providers in the industry, including telecom lifecycle management solutions provider Spectrum (News - Alert), offer services to help organizations comply with the law as it is currently written.
Spectrum’s TrueVue offering provides one unified platform for processing invoices so it’s possible to improve efficiency and drive down communications costs.
To help companies manage personal use of employer-paid mobile devices, Spectrum President Trent McCracken (News - Alert) said, “Our patent-pending technology allows us to extract every line item of the electronic or paper invoice and dynamically load it into TrueVue.  At that point, we have additional intelligence to classify the call as personal or business.”
For more, check out the Telecom Lifecycle Management channel on TMCnet.

Stefania Viscusi is an assignment editor for TMCnet, covering VoIP, CRM, call center and wireless technologies. To read more of Stefania’s articles, please visit her columnist page.

Edited by Michael Dinan

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