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One-Time IRS Credit for Telephone Tax

January 25, 2007

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Telephone customers -- don't forget, there's a special one-time refund available through your federal tax forms this year.

As part of a U.S. Treasury Department decision in May 2006, customers are entitled to refunds equal to the excise taxes paid on long-distance service after Feb. 28, 2003 and before Aug. 1, 2006. The federal excise tax on local service remains in effect.

Originally established in 1898 as a "luxury" tax on wealthy Americans who had telephones, the federal excise tax was adopted under the War Revenue Act as a temporary levy to help fund the Spanish-American War. The war, which ended in October of that year, established the independence of Cuba, ceded Puerto Rico and Guam to the United States, and allowed the U.S. to purchase the Philippines Islands from Spain for $20 million.

Residential consumers can receive up to a $60 refund as reimbursement for a federal long-distance excise tax eliminated by the Treasury Department. Refunds either will reduce the amount owed by the consumer in federal taxes or increase the amount of their overall refund, Ohio Consumers' Counsel notes.

"As (consumers) receive their 2006 payroll statements and other financial information, they need to know about the one-time refund when filing their federal income tax forms," said Janine Migden-Ostrander, Consumers' Counsel. "Many consumers have tight budgets and this is an opportunity to receive up to $60 from the federal government."

"If consumers prepare their own taxes, they need to find out where on the form they should claim the refund" said Migden-Ostrander. "Those consumers having professionals prepare their taxes should be sure to discuss the refund with them."

Consumers will not need documentation proving that they paid the tax to receive a standard refund amount of between $30 and $60, depending on the number of exemptions claimed on their income tax return:

• $30 refund for those filing with one exemption
• $40 refund for those filing with two exemptions
• $50 refund for those filing with three exemptions
• $60 refund for those filing with four exemptions

For example, an individual with one exemption is eligible for a $30 refund. A married couple filing jointly and claiming two children or more is eligible for a $60 refund.

According to the Internal Revenue Service (IRS), consumers claiming the standard refund amount need only fill out one additional line on their federal tax return. The taxes can be based on a consumer's traditional home, cellular or Internet-based telephone charges.

Residential consumers who believe they are owed over the standard refund amount may base the refund on an actual calculation of the taxes they paid if they have their old bills.

They may be able to receive copies of long-distance bills from their company, but may need to pay for those copies. Customers who choose to calculate their paid federal long-distance taxes can fill out IRS Form 8913 and attach it to their tax return.

Consumers may choose either the standard refund amount or their own calculated refund, whichever method results in the largest refund.

More information about the tax refund is available from the IRS website at www.irs.gov.

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