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No More Federal Excise Tax on Long-Distance - and a Refund

Moms View Message Board: General Discussion: Archive May 2006: No More Federal Excise Tax on Long-Distance - and a Refund
By Ginny~moderator on Thursday, May 25, 2006 - 08:06 pm:

According to the Washington Post today:

"Beginning July 31, consumers will stop paying a 3 percent federal excise tax on long-distance calls and bundled services. Consumers next year can also obtain a refund of taxes paid since March 2003, with interest, by asking for the money back through their 2006 tax returns."

This has been in the courts for a long time. This tax began during the Spanish-American War, and has been, essentially, a war tax. Right now it is about 3% of your long-distance charges. The reason the courts have been throwing this out is that the law is written for long-distance services that charge by *time and distance*, and nowadays we are, essentially, charged only for time - but the phone companies have continued to collect this tax and forward it to the federal government, and the IRS has continued to appeal the various court rulings.

This particular battle was won by businesses, Office Max being a leader in the courts, I believe.

More from the Washington Post:

"Individuals can use one of two methods next year for calculating a refund. Those who have records of the taxes they've paid between March 2003 and July 2006 can add them up and request their money back. Those who did not retain their records can use a simplified method under development by the Treasury Department and Internal Revenue Service, which will be announced later. The IRS will also develop a special form to deliver the refund to individuals who do not have to file a tax return."

The article notes that it would be very costly for the phone companies to go through their records and tell consumers how much they've paid in this tax since March 2003 (though I suspect it is really a fairly simple computer program), so don't expect your phone company to tell you. Start checking your records. (Mine, fortunately, are on line and I can check back to January 2003.)

By Hlgmom on Thursday, May 25, 2006 - 08:41 pm:

What exactly do you look for ???
Thanks!
Heather

By Ginny~moderator on Thursday, May 25, 2006 - 08:54 pm:

Check your phone bill in the sections on taxes. There will be a number of items:

On mine I see:
Gross Receipts Tax
Public Safety Emergency Telephone Act (9-1-1) Fee
PA Relay Surcharge - Residential
PA State Sales Tax
Federal Excise Tax
FCC Access Charge on 1 Line
Local Number Portability on 1 Line

The one you want is either Federal Excise Tax or Federal Tax (that's how it's listed on Scott's Verizon bill). One way to tell is to check your bill next August or September against an earlier bill, and look for the tax that *should* be missing - that's the one that is supposed to stop after July and the one for which you can get a refund on your 2006 tax return.

By Hlgmom on Thursday, May 25, 2006 - 10:22 pm:

Thanks! You are always so helpful! :)

By Cocoabutter on Thursday, May 25, 2006 - 10:27 pm:

Gee, I only keep mine for a year, then I shred them. I wish I had kept them, now! :)

By Ginny~moderator on Friday, May 26, 2006 - 07:10 am:

Lisa, according to the Washington Post article, the IRS said it would set up a formula for people who don't keep their bills for 3 years - heaven knows I don't. If my bills weren't on line, I'd have to use whatever formula they devise.

By Dana on Friday, May 26, 2006 - 08:03 am:

Great news. Thanks for posting this!!!


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