Is there any way to install a switch to kill the tag when you don't plan on using it? If that's possible, how difficult would it be to control this on/off switch with a spare smart phone based on approved GPS location?
Yes, you can put it in a special bag that blocks its signals. If you buy a FastTrak device for the SF Bay Area, it actually comes in the bag. Still, you have a license plate. (Unless you are like Steve Jobs, and lease a new car every 6 months)
Seattle's equivalent has a few models, and one of them lets you turn it on and off by having the RFID part slide into the case. Though this has a practical use case---some lanes around here are tolled for single-occupant vehicles but not with two or more occupants, so that's how you indicate whether you need to pay or not.
I had a rental car in Boston a few weeks ago and the rental car came with an EZ-Pass that flipped into a little box. I was told by the rental company that if I didn't want to use it and pay cash tolls, just keep it inside the box. So I'm assuming the box stops the readers from reading the pass.
Do they all do this? I live in a state that has exactly two toll roads, so I'm not sure what SOP is for those kind of things.
Here in the bay area, they give you a mylar/antistatic bag with new FasTrak transponders for precisely this purpose. Put the transponder in the bag, nobody can read it.
(Also useful if you're using the new FasTrak-enabled carpool lanes in the east bay, when you actually have a carpool quorum and therefore are exempt from the toll.)
An on/off switch on the FasTrak transponder would be a lot more convenient than taking it out of or into a mylar bag... I have considered modifying mine with a switch.