Obama backs repeal of tax on personal cell phones

A businessman watches a presentation from a screen at the Thomson Reuters building in New York April 17, 2008. REUTERS/Carlos Barria

WASHINGTON (Reuters) - The Obama administration on Tuesday said it will back repealing a hard-to-enforce tax on personal use of work cell phones, appeasing the business community, phone makers and users.

A 1989 law requires companies seeking to deduct worker cellphones as an expense to track personal use with painstaking documentation of minutes. The government, in a notice last week sought public comment on making compliance easier, but now says the law should be scrapped altogether.

Treasury “Secretary (Timothy) Geithner and I ask that Congress act to make clear that there will be no tax consequence to employers or employees for personal use of work-related devices such as cellphones provided by employers,” Douglas Shulman, the Internal Revenue Service Commissioner, said in a statement.

“The passage of time, advances in technology, and the nature of communication in the modern workplace have rendered this law obsolete,” the statement added.

Under current law, workers are required to pay tax on personal use of a work cellphone as a fringe benefit.

The U.S. House of Representatives last year passed a repeal of the law, and the Senate got 60 sponsors for its bid. The measures, which have bipartisan backing, have been reintroduced again this year.

The Chamber of Commerce and cell phone trade group wrote key lawmakers earlier this month, arguing for repeal.