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Mobile expenses are an attractive target for government taxes. Politicians have loaded all kinds of taxes on these services because most of us don't bother too look closely at wireless billing. Wireless carriers are notorious for adding extra charges so we end up paying much more for wireless services than the initial advertised price.

Now with President Obama's new budget comes hope that the 1989 tax on personal use of corporate paid wireless services will finally be repealed. Even the IRS has gotten into the act with an announcement in January that they have stopped trying to determine how to "simplify" how they will collect the tax. The repeal seems likely, but it has not happened. What should your company do?

Under the current tax requirements, employees must keep a record of each call, including the time it is incurred, and its business purpose. The documentation must be submitted to the employer. Employers must assign a pro rata share of monthly service charges for each personal call and include its value in the taxable wages of the employee.

While repeal of the tax on personal use of corporate paid wireless services seems likely, it has not happened. Companies' policies range from an outright ban on personal calls, to a monthly allowance of personal minutes, to no policy at all. The line between personal use and business use is blurred, but you should remember IRS penalties can be significant. In 2008, the IRS audited two University of California branches, in Los Angeles and San Diego. As part of a settlement, UCLA paid a tax assessment of $238,474 and San Diego paid $186,471.

This is a good time to examine your corporate policy for personal use of employer paid wireless services. The policy should clearly state if there is a monthly allowance and what is acceptable personal use of the device. If there is no policy, or it doesn’t address this issue, you must establish a policy now. I will be presenting a webcast in March on updating your corporate policy for today’s new realities. Send an email to me: joebasili at networktrendsnow.com if you want to attend.

Even if the law is overturned, organizations still need policies to manage costs for personal use of devices. TEM Suppliers can help with exception reporting that identifies the largest users (for both personal and business use). This will enable you to identify employees that are in the wrong plan or those who may be spending too much time on the phone based on their job role Do you have an accurate inventory of your devices, service plans, and visibility into usage? TEM Suppliers can help you address these challenges and more as you work to manage on the fastest growing expenses in the budget.