title:

The missing phone device and the IRS

By: Scott Bradner

We are becoming ever more disconnected. Telephone-wise anyway. In the last few years there has been a move for people to drop their landline phones and get by with just their cell phones. Even with the significant growth in cell phone-only households this trend may have been slowed by the lack of what seems to me to be the right device and may be partially derailed by an IRS move to tax employees for company provided equipment including cell phones.

In December the Centers for Disease Control and Prevention (CDC) released a report on the results of a survey covering communication choices in the first half of 2007. (http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless200712.pdf) The CDC started collecting phone numbers of survey participants to enable follow up calls. Starting in 2003 they started asking about the type of phone that people had.

The results of the most recent survey, which covered the first half of 2007, showed that 12.6% of US adults lived in a cell-phone only household, up from 9.6% a year earlier. The results, as one might expect, also showed an uneven distribution of such households along age lines. Nearly 31% of adults 25-29 lived in cell phone only households, but only 2% for those over 65 did. There is plenty of room for growth, 59% households have both landlines and cell phones. (Just to be complete, 1.8% of adults live in households with no phone.) The CDC notes that this trend could introduce bias in marketing and opinion surveys since the survey companies do not include known cell phones in their list of targets.

In my experience, most business people that work in an office still have both a cell and landline phone and many list both on their business cards. If all they were interested in was being able to be reached on the phone this would not make much sense. Maybe one reason to continue the landline is because it is just easier to use for many of us -- text messaging aside. The bigger keypad, more comfortable handset, a screen you can see while you are talking, etc. all make for a better user experience. Yes, even with the iPhone.) So why doesn't someone make a cell phone dock that looks and acts like a regular desk phone? When you walk into your office you stick your cell phone into the dock which recharges the phone and provides you with the key pad, display and handset you are used to. I'd switch to that if I could get it -- and the Harvard phone people supported it.

For many people, this would be great - they would be reachable on the "office" phone both when they were in the office and when they were elsewhere. Most companies permit some personal use of company provided computers and cell phones so, as long as you are not too much of a chatterbox, this would work out just fine.

Well, just fine if it were not for the IRS. The IRS has recently reinforced an old rule that says that company provided "real estate, furniture, equipment, personal computers and or cellular phones" should be listed as income for the employee and that the employee should pay taxes on that income. (See http://www.irs.gov/businesses/corporations/article/0,,id=134943,00.html) The IRS does provide an out -- the employee has to maintain a log of use, it's not enough to just say "no personal use." (See http://www.thompson.com/public/headlines.jsp?id=39 for an English explanation.)

In spite of the IRS the trend away from landline phones is likely to accelerate, not good news to the providers of landline-based services.

disclaimer: I have no idea what Harvard's opinion of the IRS might be -- it is my own opinion that this rule does not make life easier.