The Los Angeles Times reported Monday that many companies have been hit hard for back taxes on cell phones given to their employees.
Although the prices of cell phones have plummeted since 1989, when IRS regulations for the devices were drafted, the tax rules have not been tweaked.
As a result, cellular phones continue to be treated by the IRS in the same way company cars and other executive perks are viewed, as extra compensation.
If companies do not keep records as to which calls made on the cell phone are business or personal, employees can be left on the hook for the phone and the wireless service, which are treated as taxable income to the employee, the report said.
The University of California at Los Angeles was recently given a $239,196 bill after IRS auditors found that employees with cell phones were not keeping logs.
"It's completely unreasonable to have to keep track of calls at that level," Mike O'Neill, payroll and tax manager for the U.C. system, told the newspaper. "Especially as the costs of these devices have come down, you can get these mega-minute plans where there's really no additional cost" for personal calls.