The IRS announced on September 14 in Notice 2011-72 , that an employee’s business and personal use of an employer-provided cell phone is not taxable income to the employee as long as the employer can show it provided the cell phone to the employee for a legitimate business reason, and not as a substitute for extra compensation. In a memo to its employment tax auditors, the IRS also said that an employer’s reimbursement of an employee’s cost for a personal cell phone plan is not income if the employer requires the employee to use the phone for business.