IRS Holds Employer-Provided Cell Phones Generally Tax-Free To Employees

The IRS, in Notice 2011-72, held that the use of cell phones and other telecommunications equipment provided by employers to employees primarily for noncompensatory business purposes are generally tax-free to the employees.  This tax-free treatment applies even when the employee uses the cell phone for personal purposes.  In short, the IRS reasoned that the use of the cell phone constituted a fringe benefit under Section 132, and thus does not constitute gross income under Section 61.For more information, see Kelly Phillip's Erb's blog.