IRS Owes You Money If You Paid Long Distance Phone Taxes
Below is a MRR and PLR article in category Finance -> subcategory Taxes.
IRS Owes You Money If You Paid Long Distance Phone Taxes
The IRS has decided to resolve an ongoing legal issue regarding taxes collected on long distance telephone services. Here’s what you need to know.
Background
If you've ever paid for long distance telephone service, you’re familiar with the federal tax on your bill. This tax, known as the federal excise tax, is three percent of your total charge and can quickly add up, especially for those with high long distance bills.
History
The federal excise tax on long distance service was established in 1898. Given the evolution of telephone technology, many questioned its relevance today. After reviewing this issue, five appellate courts ruled the tax invalid.
IRS Decision
In response to these rulings, the IRS has decided not to contest the courts’ decisions. Instead, they will issue credits or refunds for the excise taxes paid over the past three years. You can claim a refund for taxes paid from February 28, 2003, until the date the IRS stopped collecting them.
How to Get Your Refund
For the 2006 tax year, the IRS will add a new box to the 1040 filing forms. When preparing your 2006 tax return in 2007, you can simply check the box to receive your refund. Plus, the IRS will pay interest on these funds.
What You Need to Know
The refund applies only to the long distance excise tax. You are still responsible for local service taxes, and the refund does not cover state-collected taxes. Regardless, any refund is a welcome benefit.
This decision marks a win for taxpayers, so make sure to take advantage of this refund opportunity when filing your return.
You can find the original non-AI version of this article here: IRS Owes You Money If You Paid Long Distance Phone Taxes.
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