Legislation Drops Cell Phones from "Listed Property"
But churches shouldn't make changes until the IRS issues its guidance.

The small business tax relief legislation just passed by Congress and signed by the president includes a long-awaited provision removing cell phones from "listed property" under federal tax law effective for tax years beginning after December 31, 2009. As a result, the stringent record-keeping requirements that have applied for decades will no longer apply to cell phones or similar devices.

"We expect that the practical impact of the legislation will be that employers will be able to provide employees with cell phones primarily for business use on a tax-free basis, with little requirement to document the actual business vs. personal use," said Mike Batts, managing shareholder of the accounting firm Batts Morrison Wales & Lee, P.A.

Batts, who also serves as an editorial advisor for Church Law & Tax Report, Church Finance Today, and ChurchSafety.com, says he expects the law to result in cell phones being treated like any other pieces of equipment, such as regular telephones, for which detailed usage records are not required.

"While the legislative change applies to all U.S. employers and employees, the impact on nonprofit organizations is especially important because violations of the record-keeping requirements for 'listed property' by nonprofits can result in 'automatic excess benefit transaction' penalties on the individuals involved," he says.

The IRS is expected to issue guidance soon on the practical impact of the legislation, which may affect the specific manner in which employer-provided cell phones are treated for tax purposes. Batts says churches should anticipate a change, but not make official changes to their own cell phone policies until the IRS weighs in. While waiting for IRS guidance, Batts says churches may want to use the time to begin shopping carriers and comparing prices for group plans. The key, according to Batts: Don't act hastily.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations."


Displaying 1–1 of 1 comments

Robert Manter

November 09, 2010  9:23am

Those tax provisions went into effect when cell phones were as big as a brick and only top executives had them. Things are much different today. If the church has a plan of say 400 minutes as a base rate, and the total personal & business use does not exdeed the 400 minutes, there is no additional cost to the church and the personal use is just using minutes that would be wasted anyway. That tax law is antiquated and should have been abandoned years ago. This may be one of those situations where the law was technically "on the books" but the IRS was not requiring it of churches.

Report Abuse
Recent Posts
Subscribe to Church, Law & Tax
Church Finance

Church Finance

Learn about budgeting, financial reporting, tax compliance, insurance coverage, and more
Protecting Your Church from Crime and Violence

Protecting Your Church from Crime and Violence

Assess the security of your church and learn how to prevent crime.