| Don't Forget to Claim your Telephone Tax Refund
By Allan
Keiter
If you’ve made a phone call in the last four years, you’re probably eligible.
- One-time credit on 2006 federal income tax return
- Standard $30 to $60 refund for qualifying individuals - or claim actual amount paid
- Eligibility based on making a long distance call or having bundled phone service
- Available even if no tax return filed or no taxes owed
- Only applies to specific excise tax; not other phone taxes or fees
This story begins back in 1898, when the U.S. government needed a way to fund the Spanish-American War. One solution to raise revenues was to implement an excise tax on the use of a luxury item of the day - a fairly new technology called the telephone.
In one form or another, the excise tax has been around for most of the time since that conflict. The modern tax rate of 3%, on most local and long distance phone services, was collected until the summer of 2006. After losing a series of court cases, the IRS is no longer collecting the tax, except on local-only phone service.
The IRS will refund excise taxes on long distance or bundled services billed after February 28, 2003 and before August 1, 2006. Anyone that paid the tax during that period is eligible for a refund if claimed on their 2006 return or, if no return is required, on a new form created for this purpose. Tax billed before February 28, 2003 is not eligible for credit due to the statue of limitations in the tax code.
If you made any long distance calls or had a bundled telephone plan during the above-referenced period and received a monthly bill, you were automatically charged excise tax by your phone company, and you are eligible to claim the refund. Bundled services include flat-rate local plus long distance packages on your home phone, as well as just about any cellular or VoIP phone plan.
The easiest approach to claiming your refund is to take the standard credit calculated by the IRS. It is based on the number of exemptions claimed on your tax return. The credit is $30 for one exemption, $40 for two, $50 for three, and $60 for four or more. Since this is a credit, it is a dollar-for-dollar reduction in your tax bill (or increase to your refund check). The more difficult approach requires you to locate all of your phone bills from the eligibility period (41 months) and calculate the actual amount of excise taxes you've paid. Your phone company is not required to provide copies of these to you.
Allan
Keiter is president of MyRatePlan.com.
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