IRS Announces Telecom Excise Tax Refund Rates
The Internal Revenue Service (IRS) announced its standard telephone tax refund amounts, arising from an earlier decision to stop collecting federal excise tax on phone service. Refunds of $30-$60 will be available for 2006 tax returns filed next year. The agency killed the tax (CD May 26 p4) after losing a series of federal court fights over the 3% tax, which dated to the 1898 Spanish-American War.
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Anyone who paid the long-distance toll will qualify for the refund, the IRS said. Standard sums are $30 for a single filing; $40 for a double exemption; $50 for 3 exemptions; and $60 for 4 or more. To get the exemption, filers will have to fill in one line on a 2006 return form, with a special form available for those who don’t file a regular return. The IRS said the amounts are based on phone use data, reflecting the average tax paid by U.S. households. In a statement, the IRS said businesses and nonprofits will get their refunds based on actual use, and that it’s “considering an estimation method” to formulate that total.
AT&T lauded the agency’s “hard work” to devise a “simple, fair and equitable refund.” The system ensures customers get refunds with “minimal effort,” AT&T Vp-Tax Larry Ruzicka said. His sentiment was echoed by USTelecom, which said the process is eased by the “reasonable reimbursement amounts.” It will “continue to work diligently with Congress to repeal the remaining tax still imposed on local phone service,” it said.
Killing the federal phone tax will mean the govt. has $29 billion less to spend the next 5 years, the IRS said; doing the same to the local tax would cost another $1.8 billion in the same period. But many in Congress backed elimination, including Sen. Schumer (D-N.Y.), who at the time of the IRS announcement told Communications Daily his state’s citizens alone could save $644 million.