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June 16 (Bloomberg) -- The Obama administration asked Congress to repeal a 20-year-old law requiring employees to pay taxes on the value of their personal use of employer-provided cell phones.

Internal Revenue Commissioner Doug Shulman said today a notice issued this month by his agency had been “incorrectly interpreted” as an effort to “crack down” on employees who aren’t paying the tax. Rather, he said, the IRS was trying to simplify record-keeping rules to ease compliance burdens for employers.

“Although some of the proposed changes would add clarity, the current law will inevitably leave widespread confusion among employees and businesses,” Shulman said in a statement. He said he and Treasury Secretary Timothy Geithner “ask that Congress act to make 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.”

Companies such as Little Rock, Arkansas-based Alltel Corp., Dallas-based AT&T Inc., Overland Park, Kansas-based Sprint Nextel Corp., and New York-based Verizon Communications Inc. have been urging the IRS to relax the rules for years, saying they are too burdensome. The rules are designed in part to monitor how much people use employer-issued cell phones for personal calls.

A Washington-based trade group, CTIA-the Wireless Association, applauded Shulman’s comments today.

“We agree with the IRS that times have changed and that this law hasn’t kept up,” said Steve Largent, the group’s president and a former Republican congressman from Oklahoma. “This would be a big win for wireless consumers.”

1989 Law

Under a law adopted in 1989, employer-provided cell phones, laptop computers, BlackBerries and similar devices are considered taxable fringe benefits for workers. Determining their use for personal reasons has proven difficult for employers to document and the IRS to enforce.

“The passage of time, advances in technology, and the nature of communication in the modern workplace have rendered this law obsolete,” Shulman said.

Legislation to ease the record-keeping rules has been introduced in the House by Representatives by Earl Pomeroy, a North Dakota Democrat and Sam Johnson, a Texas Republican, and in the Senate by Democrat John Kerry of Massachusetts.

In a statement today, Johnson said the IRS’s comments should provide the legislation a boost.