If you have a company-provided cell phone that you use for personal calls, or if your company’s tracking of such usage has grown a little lax (as it has at many organizations), here’s a heads-up: The IRS wants to overhaul the way businesses report this fringe benefit.

But in pressing for change, the agency claims, it’s only trying to save companies time and money.

When an employer-provided cell phone is used for business purposes, it’s a deductible business expense for the employer as long as the substantiation requirements are met, the IRS pointed out in a bulletin issued last week. When the phone is used for personal purposes, though, “the fair market value of such usage is includable in the employee’s gross income.”

The problem, of course, is the onerous nature of those substantiation requirements and the sheer work involved in sorting out business-related calls from personal calls. Over the years, as mobile phone usage has become more diffused throughout the workforce and call plan options have grown more diverse, documenting usage has become a real headache for companies and employees alike.

The IRS bulletin calls for comments on three “simplified” procedures:

1. Minimal personal use method. All employee usage of the employer-provided phone would be regarded as business usage — as long as the employee can provide records to show that he or she uses a private (not company-provided) cell for personal purposes during work hours. Alternatively, the IRS could define a “minimal” amount of personal time that would be disregarded in determining personal use.

2. Safe harbor substantiation method. The employer would simply treat a certain percentage of each employee’s use — say 75 percent — as business-related.

3. Statistical sampling method. The company would use an approved methodology to figure out the percentage of cell phone usage for personal calls, and then multiply that by each employee’s total usage.

While cynics might see the proposals as simply a cover for stricter enforcement of an obsolete rule that should be scrapped altogether, the IRS insists that its goal is to lighten the compliance load for corporate taxpayers. “Minute-by-minute documentation really doesn’t make any sense; we’ve been hearing all about it, and we said, ‘Yes, it makes no sense,’ ” says a senior IRS official quoted in this Reuters article. The agency’s intention is to “reduce how much employers have to spend in trying to comply with the tax law,” the official added. ###