Last week the IRS announced that it wanted to begin taxing personal use of employer-provider cellphones.  It then went on to create an amazing amount of required substantiation for the business use of those cellphones, or, in the alternative, a safe harbor assumption that 25% of the use would be considered personal and thus taxable to the employee through the employer.

In less than one week, however, the IRS pulled an Emily Litella and told employers, “Never mind.”  Secretary of the Treasury Geithner and IRS Commissioner Douglas Shulman issued a statement that upon further review they didn’t really mean it.

Quoting from the statement:  “Therefore, Secretary Geithner and I ask that Congress act to make clear that there will be no tax consequence to employers or employees for personal use of work-related devices such as cell phones provided by employers.”

We applaud Secretary Geithner and Commissioner Shulman for getting this right very quickly.