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January 2007

Don’t overlook the New Federal Telephone
Excise Tax Refund Available!

As of July, 2006, the Internal Revenue Service stopped requiring the collection of a federal excise tax on long-distance telephone service, a tax first imposed in 1898 to finance the Spanish-American War.  The IRS will refund federal excise tax paid on long distance charges after February 28, 2003, and before August 1, 2006.  This one-time, Telephone Tax Refund is provided to all individuals or businesses for the 2006 tax year that paid such taxes on landline, wireless, long-distance Internet plan or Voice over Internet Protocol (VoIP). 

Those who are eligible to request the telephone tax refund are any individual business or nonprofit organization that paid the tax for long distance or bundled service during the dates stated above.  Individuals can apply for a standard refund amount in an effort to keep from digging out all of their old phone bills.  The standard refund amount is from $30 to $60 based on the number of exemptions claimed on their tax return.  Individuals choosing the standard amount can fill in the amount on Form 1040, 1040A, 1040NR or 1040EZ.  Businesses must fill out IRS form 8913. If the individual records are easily accessible then individuals can also fill out an 8913.

The refund must be requested on your 2006 Federal income tax returns.  There will not be a separate check for this refund.  This refund will be treated as a one-time payment on your 2006 return which will be reduced or increased accordingly. 

To access the Telephone Excise Tax Refund Client Letter and Draft IRS form 8913 you can click on or copy and paste the links below: 

http://kreidercpa.com/media/PDF/Telephonetax.pdf