CTIA - The Wireless Association® Blog - Wireless Taxes

The Small Business Take on Cell Tax Fairness: Give Consumers a 5-Year Break from New Wireless Taxes

Fri, 25 Sep 2009 10:50:00 -0500

Yesterday I posted an interview I had done with Bill Rys, Counsel for Tax Policy at the National Federation of Independent Business (NFIB) on listed property. Today, we’re talking about the unfair taxes and fees wireless consumers pay.

Our groups have a lot in common when it comes to fighting excessive wireless taxes and fees. State and local governments levy regressive taxes and unnecessary fee hikes which add up and for business, they can really affect productivity and impact the bottom line. It's hard to understate the importance of affordable and accessible wireless service in the current economy for consumers and small business owners.

An American wireless consumer now pays on average more than 15% on their monthly bill in wireless taxes, fees and surcharges. That's more than twice the average tax rate imposed on the sale of other goods and services, which is about 6%. And for a small business owner, that effect is multiplied even further.

Fortunately, both sides of Congress are currently working to pass strong bi-partisan legislation called the “Cell (or Mobile Wireless) Tax Fairness Act of 2009” (S. 1192 and H.R. 1521), that would put a five-year freeze on all new, discriminatory state and local wireless taxes and fees.

Listen to what Bill had to say about the “Cell Tax Fairness Act” and how it’d impact the nation's small business community.

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We certainly appreciate Bill's time for coming by to discuss these important issues, and also we want to thank the NFIB for their willingness to engage on these pro-business, pro-consumer, anti-tax legislative measures currently being considered before the 111th Congress. We look forward to continuing to work with them this year and beyond, to see this legislation pass through Congress and ultimately become law.

To learn more about wireless tax issues, please click here.

To take action by contacting your elected officials, please click here.

The Small Business Viewpoint on Listed Property: IRS Taxation of Employer-Provided Devices

Thu, 24 Sep 2009 12:42:00 -0500

A couple of weeks ago, I spoke with Bill Rys, Counsel for Tax Policy at the National Federation of Independent Business (NFIB), about a couple of tax issues that are important to both their membership and the wireless industry. The NFIB is a small business advocacy association, based in Washington, D.C., with more than 300,000 members around the country and representation in all 50 states.

The first issue we are working on together is known as listed property. There is currently strong support to update the archaic and outdated IRS tax treatment of employer-provided wireless devices. Right now, the law says that if you use that cell phone for personal reasons (such as calls, emails, texts), it’s a fringe benefit and is subject to income tax. As an employee, you’re supposed to keep a detailed ledger of every personal call you make, and as an employer, you're supposed to report that usage for tax purposes. Sounds like a real hassle for all NFIB members, and certainly adds a lot of government red tape.

The good news is that bi-partisan legislation called the “M.O.B.I.L.E Act” from both sides of Congress (S. 144 and H.R. 690) has been introduced to remove wireless devices from the IRS listed property rules. In addition to strong Congressional support, IRS Commissioner Shulman and Treasury Secretary Geithner have voiced their support for repealing this measure.

I asked Bill how his membership feels about the listed property tax law and what NFIB is doing to help repeal this IRS rule.

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CTIA Continues to Call for Repeal of Outdated IRS Rule on Listed Property

Mon, 14 Sep 2009 08:51:00 -0500

September 4th was the deadline to file comments at the IRS on the listed property rule for employer-provided cell phones. Prior to the filing deadline, CTIA submitted comments and issued a statement urging Congress to pass the MOBILE Act (S. 144/H.R. 690) that would remove mobile devices from the listed property rule and accomplish Treasury Secretary Geithner’s and IRS Commissioner Shulman’s goal of repealing this outdated and poorly understood tax rule.

Listed property was first implemented two decades ago when cell phones were considered luxury items. Despite the fact that more than 270 million Americans use wireless devices today, employees are still required to maintain logs detailing cell phone calls placed for business versus personal use. This is a classic example of how the law has failed to keep up with the rapidly changing wireless marketplace.

The good news is that the MOBILE Act has broad, bi-partisan support, and with the support of both Secretary Geithner and Commissioner Shulman, we’re hopeful that Congress will act on it this year.

Here are a few of the stories that have been published on listed property recently:

9/6 - The Hill - IRS asked to repeal cell phone tax
9/2 - PC World - Group Asks IRS to Repeal Tax of Personal Mobile-Phone Use
9/2 - Wireless Week - CTIA Urges Action on Old IRS Rule
9/1 - The Wall Street Journal - Wireless Group Wants Repeal of Cell Phone Tax Law
9/1 – FierceWireless - CTIA Pushes for Repeal of Tax on Work-Issued Cell Phones
9/1 – eWeek - CTIA Pushes for Repeal of Enterprise Cell Phone Tax

Labor Day and Listed Property: Help Hard Working Americans By Repealing Outdated IRS Rule

Tue, 08 Sep 2009 10:37:00 -0500

This past holiday weekend marked an important time to highlight a critical wireless issue for businesses and consumers that we’ve been discussing for about a year now. It’s an issue that has a negative effect on jobs and businesses right now, and could definitely impact workers, consumers and families in an even more serious way down the road if not handled properly.

The issue is “listed property” and how the IRS officially views cell phones issued by companies to their employees. The deadline to file comments on the IRS listed property issue was September 4th, and with yesterday being Labor Day, I think it’s a perfect time to look at what Congress can do when it comes back to D.C. to help hard working American workers.

As we were celebrating Labor Day, Americans rested up and finished the summer strong, while honoring the real backbone of our nation’s society – the American workers. And in today’s economic climate, it’s particularly important to think of ways to make for a better workplace experience for both employers and employees. I’m talking about enhancing productivity, and having an even more positive impact on the bottom line. These days a wireless device truly has become a daily necessity and a must-have tool for many employees to maintain efficiency and increasing productivity, and we should be doing all we can to encourage its use.

Here’s the problem though – If your employer provides you with a wireless device (e.g. smart phone or cell phone), you have to keep a detailed log of all your activity on the work-provided wireless device. Then your employer must compile that data for the IRS to tax you for any personal calls, e-mails or texts made with that device. That use is known as “listed property.” It sounds outrageous, but that requirement is already part of our tax code.

Disturbing? Of course it is.

Thankfully, back at the beginning of summer IRS Commissioner Shulman and Treasury Secretary Geithner issued a statement backed by the White House that it must be ‘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.’

With the Administration clearly now on board, it’s important to note that the U.S. Congress has the power to repeal a ridiculous provision of the Internal Revenue Code of 1986, which today only increases bureaucracy, stifles businesses and employees and creates more unnecessary government red tape.

The good news is that the companion legislation from both sides of Congress has been introduced this year to prevent the IRS from imposing this ridiculous law. Senators Kerry (D-MA) and Ensign (R-NV) have introduced bipartisan legislation, S. 144, with 62 co-sponsors in the Senate, and Representatives Pomeroy (D-ND) and Johnson (R-TX) have introduced a bipartisan bill, H.R. 690, with 105 co-sponsors in the House.

Passing the “M.O.B.I.L.E. Cell Phone Act of 2009” would repeal that poorly understood tax law. It will update an outdated archaic piece of the U.S. tax code, that if enforced only hinders wireless consumers' and businesses' efficiency and productivity. Our federal representatives can protect small businesses, workers and consumers. And what better time is there than to recognize the American worker than right after Labor Day to have Congress step up and pass the MOBILE Act?

Later this week we’ll link to a discussion on listed property with Bill Rys, Counsel for Tax Policy at the National Federation of Independent Business (NFIB), who dropped by to talk about the issue and their membership.

To learn more about this issue, please click here.

To take action by contacting your elected officials, please click here.

Insider Interview: CTIA President & CEO, Steve Largent

Wed, 02 Sep 2009 10:26:00 -0500

The FCC is interested in learning more about the wireless industry's competitiveness, innovation, and billing practices. CTIA President & CEO Steve Largent discusses the association's eagerness to share the great wireless story with the Commission, and emphasizes the need for additional spectrum to satisfy the growing consumer demand for wireless data services. To learn more watch this segment from our September installment of our Wonder of Wireless webcast, and take a few moments to see what else we have to offer in our September WOW.

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CTIA Files Comments to IRS on Listed Property

Tue, 01 Sep 2009 10:44:00 -0500

Today, I issued the following statement after CTIA filed comments at the U.S. Internal Revenue Service (IRS) on the listed property rule for employer-provided cell phones. When cell phones were added to the listed property rule in 1989, mobile phone use was uncommon and cell phones were considered luxury items. Despite the near ubiquity of mobile devices today, employees are still required to maintain logs detailing their business use on a mobile device. Specifically, individuals are expected to record: (1) the amount of such expense or other item, (2) the time and place of the use of the property, (3) the business purpose of the expense, and (4) the business relationship to the taxpayer of the persons using the property. Senators John Kerry (D-MA) and John Ensign (R-NV) and Representatives Sam Johnson (R-TX) and Earl Pomeroy (D-ND) have sponsored the MOBILE Act (S. 144/H.R. 690) to address this matter.

“We agree with Secretary Geithner’s and Commissioner Shulman’s June 16 statement that said it must be ‘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.’

“Unfortunately, the alternatives proposed by the IRS are either incomplete or inadequate solutions that would continue to subject employees and employers to onerous call log requirements.

“Instead, CTIA and the wireless industry support the MOBILE Act, which would remove mobile devices from the listed property rule and accomplish Secretary Geithner’s and Commissioner Shulman’s goal of repealing a burdensome and poorly understood tax rule. There is broad, bi-partisan support for this legislation and we urge the Congress to act on it this year.”

To see CTIA's filing to the IRS, please click here.

Sounding the Alarm on E-911 Fund Raiding

Mon, 10 Aug 2009 14:21:00 -0500

Over the last few months, you've heard us sound the alarm on Governors who are raiding their state's E-911 funds to cover things other than their state's E-911 costs. If you haven't been following this issue, here's our policy position.

Here are a few recent postings as well:

Policy point video explaining Enhanced 911 (aka next-gen 911 which would allow consumers to text for help, improve triangulation/location identification, etc.)
Enough is Enough and Stop Raiding E-911 Funds - Background blog posts explaining how some Governors are spending their state's E-911 funds (hint, it's for purposes other than upgrading the E-911 capabilities and technologies)

This past weekend, two state newspapers covered what's happening to their state's E-911 fund. On Sunday, the Press of Atlantic City in New Jersey wrote a "Watchdog Report" on how New Jersey has taken millions of dollars from the E911 fund for other purposes. According to the story, New Jersey is the worst offender by spending more than $100 million on services other than 911.

In today's Honolulu Star-Bulletin, the reporter's story shows that while Hawaii's E-911 fund did have enough money to upgrade their system, they no longer do since the state diverted "$16 million to balance the [state's] budget." Now, the Chairman of the Wireless E-911 Board said they have to ask their legislators for money to pay for this upgrade -- or risk the chance of being behind.

You can see the FCC's report to Congress and see if your state is on the list for using the E-911 funds for other purposes. If it is, contact your elected officials and let them know what you think!

E-911 Fund Raiding-Enough is Enough!

Tue, 28 Jul 2009 13:50:00 -0500

Last week, a story from The Associated Press raised another red flag on the alarming trend of states raiding E-911 funds to plug budget holes. The article highlights the fact that over the last two years, more than $200 million collected from wireless customers under the premise of an E-911 charge for the purpose of upgrading emergency communications services has been diverted to meet general revenue needs.

I had the opportunity to discuss the E-911 fund raiding in a recent segment on Fox News Channel. During the interview, I mentioned the FCC’s recently released report to Congress on how states collect and distribute the E-911 taxes and fees. The report found that in 2008 alone, 12 states were guilty of raiding their E-911 funds for other budget purposes. To see a copy of the FCC report, please click here.

While we understand the difficult financial crisis many states are facing, the bottom line is that fund raiding violates the intent for which this money was originally set aside. The end result is that millions of citizens across the country aren’t getting the upgraded, more reliable emergency communications services that they are dutifully paying for every month.

Enough is enough.

An editorial in today’s edition of The News Journal in Delaware sums it up best by saying that, “shifting money from one fund to another deceives taxpayers.” The editorial closes with a poignant question, “why can’t we have a little more truth in advertising?”

Congress Considers Wireless Consumer Relief

Tue, 07 Jul 2009 12:45:00 -0500

Two proposed bills in Congress are receiving bipartisan support, and are aimed at providing rational and fair tax relief for American wireless consumers. CTIA Vice-President, Government Affairs, Jot Carpenter discusses the legislation on cell tax fairness and an archaic IRS policy related to listed property. To learn more watch this segment from our July installment of our Wonder of Wireless webcast, and take a few moments to see what else we have to offer in our July WOW.

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Sec. Geithner & IRS Cmmr. Shulman Agree with Wireless Industry: Repeal IRS Listed Property Rule

Tue, 16 Jun 2009 15:53:00 -0500

This afternoon, IRS Commissioner Shulman issued a statement on employer-provided cell phones, or listed property. In response to his statement, I said:

"We agree with the IRS that times have changed and that this law hasn't kept up. A repeal of the archaic listed property rule is the most sensible and fair action to take on behalf of every American who uses their wireless device for professional and personal purposes. We appreciate the support of Secretary Geithner and Commissioner Shulman for the bipartisan congressional legislation that would repeal the outdated, existing law. This would be a big win for wireless consumers."

Wireless Consumers Need a Break on Wireless Taxes

Tue, 09 Jun 2009 15:07:00 -0500

This morning the House Judiciary Subcommittee on Commercial and Administrative Law held a hearing on the “Cell Tax Fairness Act of 2009” (H.R. 1521) to examine current local and state tax rates and fees imposed on wireless service. While the complete line-up of panelists who testified at the hearing can be found here, I’d like to focus on the testimony of Indiana State Representative Mara Candelaria Reardon and Florida State Representative Joseph Gibbons.

The overall tone from the hearing was positive and it was great that Reardon and Gibbons repeatedly mentioned that wireless users are unfairly taxed. For the past four years, wireless products and services have been taxed four times more than other taxable goods and services. This makes no sense in an economy that is increasingly mobile and information-driven.

Representatives Gibbons and Reardon made the important point that wireless taxes are regressive in nature, with Gibbons pointing to a compelling statistic from the Center for Disease Control’s annual survey that illustrates how high wireless taxes place the greatest burden on those Americans who can least afford it. According to the CDC, adults living in poverty (21.6%) were more likely than higher income adults to be living in wireless-only households. These folks deserve a break.

Reardon commented that access to wireless services is no longer a luxury for a select few, but rather a vital necessity for more than 270 million Americans, and especially for those facing economic challenges. When taking into account how important wireless services have become to consumers, taxing these services at such an excessive level doesn’t make sense. That will be even more true in the future, as the mobile device continues its evolution from being a phone into a handheld computer that promises to radically expand consumers' access to electronic commerce, health care solutions, education and opportunities for civic participation.

Finally, Reardon also addressed the claim that state and local governments would miss out on critical revenue generated from wireless taxes and fees. This is a complete red-herring advanced by opponents of sensible tax policy. The reality is that H.R. 1521 preserves existing state and local revenue streams and does not take away any existing revenue from state and local governments. Instead, this bill will put a 5-year moratorium on new discriminatory taxes and fees from being added to what’s currently imposed on consumers.

This is a very modest ask, and one on which we hope the Congress will act swiftly.

CTIA Commends Introduction of Mobile Wireless Tax Fairness Act of 2009

Fri, 05 Jun 2009 13:40:00 -0500

Yesterday, U.S. Senators Ron Wyden (D-OR) and Olympia Snowe (R-ME) introduced the Mobile Wireless Tax Fairness Act (S.1192). The bill is similar to the Cell Tax Fairness Act (H.R. 1521), which has attracted substantial, bipartisan support in the U.S. House. Below is the statement I issued today in response to the introduction of the Senate bill:

Senators Wyden and Snowe have shown their support for wireless consumers across America by sponsoring the Mobile Wireless Tax Fairness Act of 2009. On behalf of the more than 270 million U.S. wireless subscribers, we thank them for their leadership and commitment to easing the costly and discriminatory tax burden imposed on wireless services.

It is very troubling that wireless consumers have been taxed four times more than other taxable goods and services over an almost four-year period. The Wyden-Snowe bill will protect consumers from new discriminatory taxes and fees while preserving existing revenue for states and localities.

We look forward to working with Members of Congress on both sides of the Capitol to get this pro-consumer legislation passed this year.

Stop Raiding E 9-1-1 Funds

Fri, 29 May 2009 13:44:00 -0500

Earlier this week, I did an interview with Urgent Communications, a leading public safety communications publication, about the recent alarming trend of state and local governments raiding E 9-1-1 funds to make up for budget shortfalls. The two articles below call attention to the work the National Emergency Number Association (NENA) is doing, along with CTIA, on behalf of wireless consumers to raise awareness about this important issue.

To learn more about E 9-1-1, watch this brief “Policy Point” video, check out a recent CTIA Position Brief , or go to our E 9-1-1 Policy Section on CTIA.org.

WI Legislators Say "No" To Fleecing Wireless Consumers

Fri, 22 May 2009 14:13:00 -0500

Below is a statement I issued this afternoon in response to Governor Jim Doyle's budget proposal:

On behalf of the wireless industry and Wisconsin consumers, I am disappointed that Governor Doyle decided to place the state's deficit on the backs' of wireless consumers. Wisconsin wireless customers already pay 11.58% in taxes and fees and to burden them with more is unfair. It will also move Wisconsin to become one of the highest wireless tax and fee states in the country.

The purpose of the E9-1-1 funds is to improve public safety systems and infrastructures and ensure 9-1-1 callers can be quickly located in emergency situations and receive an effective emergency response -- from locating missing children to alerting firefighters and police.

Considering Wisconsin has four counties that haven't started implementing Wireless Phase I and since more than 20% of Americans going wireless-only, taking money away from the E9-1-1 fund is a poor decision. In other words, in the event a wireless caller gets dropped, the Public Safety Centers would be able to identify the wireless phone number and call the person back.

While we understand the difficult financial situation Wisconsin is facing, we ask legislators to remember that public safety officials are seeing vital funds disappear and wireless consumers are getting fleeced.

H.R. 1521: The Perfect Call

Wed, 18 Mar 2009 11:03:00 -0500

Avid readers of the blog know that we talk a lot about the ridiculous taxes and fees that wireless consumers are paying.

I’ve never been a fan of taxes but this one really irritates me. In this economy, no one has “extra” money to throw around. So why are wireless consumers, on average, paying an additional 15 percent in taxes and fees?

These excessive taxes and fees hurt consumers, small businesses, and those on a fixed income. It’s not fair and it’s not right.

Our industry has always been on the side of consumers and we promise to fight to stop these unnecessary taxes and fees for wireless users. Yesterday, U.S. Representatives Zoe Lofgren (D-CA) and Trent Franks (R-AZ) introduced “Cell Tax Fairness Act of 2009” (H.R. 1521) in the U.S. House. We are also supported by more than 20 Members of Congress from both sides of the aisle.

I assure you that you're going to hear much more from us in the coming months about this as we work together with Congress to get this bill passed. In fact, you might have already seen the advertisement we placed in today's editions of Roll Call and CQ Today, and you'll see the add in The Hill and CongressDaily tomorrow.

In the meantime, here’s my statement that was issued Tuesday that provides more details about the bill:

“On behalf of the wireless industry and its consumers, I want to thank Representatives Zoe Lofgren (D-CA) and Trent Franks (R-AZ) for their leadership, dedication and continued commitment to defending wireless users across the country from costly and discriminatory taxation. This pro-consumer legislation has gained tremendous bipartisan support, and we are pleased to see Congress moving ahead in the right direction to ease the tax burden on wireless customers.

Last year, Americans paid nearly $21 billion in federal, state, and local wireless taxes and fees. The Cell Tax Fairness Act will protect consumers from new discriminatory taxes and fees, but preserve existing revenue for states and localities.

The wireless industry continues to be a critical driver for growth in our nation’s economy by providing essential and affordable services that help millions of Americans cut costs and increase productivity and efficiency. We look forward to working with the sponsors and all Members of Congress to see that this important legislation becomes law.”

H.R. 1521: The Perfect Call Ad.

Click on photo to see full PDF Ad.