In guidance issued on Sept. 14 to clarify the tax treatment of employer-provided cell phones, the Internal Revenue Service said there is no tax or special record keeping required when the phones are primarily used for non-compensatory business reasons.

This also applies to arrangements in which small businesses provide cash allowances and reimbursements to their employees for work-related use of personally owned cell phones.

“Under this approach, employers that require employees, primarily for non-compensatory business reasons, to use their personal cell phones for business purposes may treat reimbursements of the employees’ expenses for reasonable cell phone coverage as nontaxable,” the guidance said.

“Under the guidance issued today, where employers provide cell phones to their employees or where employers reimburse employees for business use of their personal cell phones, tax-exempt treatment is available without burdensome recordkeeping requirements,” the IRS said.

The guidance relates to a provision in the Small Business Jobs Act of 2010, enacted last fall, that removed cell phones from the definition of listed property, a category under tax law that normally requires additional recordkeeping by taxpayers.

To read further details in Notice IR-2011-93, click here.

For more information, email Rob Dietz at NAHB, or call him at 800-368-5242 x8285.