Since 1989, employers and employees have been required to keep a log of business and personal use of employer-provided mobile communication devices to substantiate costs that are allowable as business expenses. Cell phone and other mobile communication plans today provide free minutes, and in many cases unlimited calling, making it extremely difficult to separate business from personal use. The realities of mobile communication devices no longer justify the administrative burden caused by the record-keeping requirement. Failure to complete an employee-use log has been raised during IRS audits of charities.

STATUS
The President signed into law small business legislation (PL 111-240) that contains a provision that “de-lists” cell phones from listed property so that their cost can be depreciated or deducted like other qualified business property, and employers no longer need to maintain records of personal use by employees of employer-provided cell phones or other mobile communications devices.

• Just In: The IRS has issued guidance (Notice 2011-72) on the tax treatment of cellphones that employers provide to employees primarily for noncompensatory business purposes, explaining that the business and personal use of the phone generally is tax-free to the employee and that the IRS won't require recordkeeping of business use to receive the tax-free treatment. The notice is effective for tax years after December 31, 2009.