This week Obama continued plans to introduce an overhaul of the U.S. healthcare system in town hall meetings across America. Still, the question remains how do you pay for it? Where do you get over $1 trillion? How do you provide a net spending bill (i.e. no increased deficit)? We've heard just about everything the past couple of weeks including a proposal on taxing coke products by 2-5%.

The IRS has come up with their own proposal by releasing a notice to businesses. Soon they will start enforcing the 1989 guidelines in regards to employees use of cellular services (i.e. personal cell phone use).

business tax credit? or consumer tax increase?

(Sign Posted During Hawaii Tea Party Protest - Not Working #)

In 1989, a cell phone would be considered a luxurious benefit - today a necessity.

In 1989, you could compare the use of a cellular phone to the use of a corporate jet. After all the cost of cellular service in 1989 and the cost of a flight on a corporate jet would be comparably-plausible.

With the ever-growing base of the wireless industry and consumer demand it makes perfect sense why the IRS would put a blanket on the then proposed guidelines. And why now with the political pressure to dramatically defeated the deficit it would be reinforced.

The debate arises from the options an employee has in reporting - in some cases he or she will pay more taxes regardless.

IRS proposals:

1. Completing a log for personal use for non-business during working hours.
2. Setting a number of phone minutes as minimal for personal use that would be untaxed.
3. Employers could use statistical sampling methods to determine personal use as compared to work related use. Workers would be taxed on the difference.

"The practical effect" of the rules and the audits "is that many businesses have stopped subscribing to multi-line business accounts and provide their employees with a taxable allowance to sign up for wireless services that will be used for business purpose"

Scott Mackey testifying for the House Small Business Committee in 2008.

What's this mean?

Jay Driscoll, director of government affairs at the Washington-based CTIA international wireless association said, The way this works is you have to go out and sell cellphones to each employee" under the current rules.

However, there is hope Sen. Ron Wyden of Oregon (Democrat) and Sen. Olympia Snowe (Republican) have proposed a prohibition of federal, state and local tax increases on wireless services and infrastructures. While the average tax rate for goods and services is approximately 7% the average wireless taxes that appear on your bill 16%, according to figures from Phoenix business Journal.

The beauty within living in a Republic is you get to call the shots. Call, write or e-mail your representative!

http://www.irs.gov