WASHINGTON (June 12, 2009)—The Internal Revenue Service is considering whether to tax the cell phones that some companies issue to workers as a fringe benefit.

“If an employer provides a cell phone to an employee, and the employer acquires and pays the costs of using the cell phone, the employee receives a fringe benefit,” the IRS says in a bulletin issued earlier this week.

The IRS says the extent to which a company-issued cell phone is used for business purposes qualifies the phone as a working-condition fringe benefit, which is a deductbile business expense for employers.

But if employees also use those phones for personal reasons, then the value of the use is included in the calculation of employees’ gross income, the IRS said.

An existing rule effectively requires employees to substantiate the business use of “listed property,” which includes cell phones, and the poposal appears to be an effort to enforce a provision that’s now largely ignored.